Angels' delight

News

New research suggests that 'business angels' stand to make a substantial profit from investing in start-ups, with an average internal rate of return of 22 per cent over four years.

A group of British investors that put personal money directly into young unquoted companies has reported a substantial profit.

The British Business Angels Association (BBAA) has claimed an average internal rate of return (IRR) of 22 per cent over four years.

The results were revealed through a joint research report with the National Endowment for Science, Technology and the Arts (Nesta).

The report reviewed 1,080 investments.

More than half were directed at early-stage pre-revenue start-ups, the riskiest time of a company’s life.

This was reflected in the investment returns.

Despite the fact that 56 per cent of investments in the study made a loss, 44 per cent led to positive returns, with nine per cent generating more than 10-times the capital invested.

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