Join an angel group! Studies consistently show higher returns to angels in groups than angels investing individually. There are various services that we provide to mitigate risk, however there is no way to entirely eliminate the risk of early stage investing. It is a high risk, high potential reward activity. Educated investors take it as such and “hedge their bets,” or diversify their portfolios across numerous companies and industries. Smart angel investors generally seek to invest in companies that have the potential to return 10x+ over five years with a clearly defined exit strategy in order to mitigate the impact of failed investments. They also do thorough due diligence or get assistance with the process. All of these strategies are nearly impossible to execute outside of an angel group for most individuals because of the time required.
Average IRR for a professional angel investor in a group is 20-30%, however, there is no guarantee that an investor will experience such gains. Angel investing can be an exciting and rewarding experience for a person who wants to help entrepreneurs, have intellectually stimulating investment activities and are willing to undergo the risk of early stage investing.