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I've always wondered about the implicit economics of some of these angel groups. They seem to spend an awful lot of time getting to the point where they can wri

I've always wondered about the implicit economics of some of these angel groups. They seem to spend an awful lot of time getting to the point where they can write a small check. If the expected value of the rate of return of venture investments is ~20%, then it would seem they're barely making minimum wage. On the other hand, contra the article, I've made angel investments after a pitch. Angels write small-ish checks, so making the founder do a song-and-dance over the course of many meetings would be uneconomic for him. It's a bit different if you're a partner at Greylock writing multi-million dollar checks.

hugorodgerbrown 13y ago
In the UK there is a scheme called SEIS (Seed Enterprise Investment Scheme) which gives investors 50% tax relief on equity investments up to £100K per annum. This is great for startups, as it has resulted in a lot of people investing for tax efficiency (and hence why most angels look to invest up £50K in any single investment, so that they can spread the risk); however, the side-effect of this is that a lot of people who would otherwise have simply invested in markets have become 'angel investors'. Joining an investment club seems like a sensible idea for these investors, however they often lack the experience required to understand (or indeed empathise) with the entrepeneurs they meet.
- lucisferre 13y ago
  Canada has similar programs. EBC (in British Columbia) provides a direct 30% refund on investment in eligible companies [1]. [1]: http://www.pushormitchell.com/law-library/article/30-tax-refund-investors http://www.pushormitchell.com/law-library/article/30-tax-ref...
Pxtl 13y ago
Yeah, that. When I watch Dragon's Den in Canada, I'm always struck by how small-potatoes these investments are, considering the kind of people who are in the room. And yet they so rarely even chip in. I think a lot of the appeal of working on one of those shows, as an investor, is what it does for their own personal "brand" more than the direct salary or the investments they make.

hugorodgerbrown 13y ago

In the UK there is a scheme called SEIS (Seed Enterprise Investment Scheme) which gives investors 50% tax relief on equity investments up to £100K per annum. This is great for startups, as it has resulted in a lot of people investing for tax efficiency (and hence why most angels look to invest up £50K in any single investment, so that they can spread the risk); however, the side-effect of this is that a lot of people who would otherwise have simply invested in markets have become 'angel investors'. Joining an investment club seems like a sensible idea for these investors, however they often lack the experience required to understand (or indeed empathise) with the entrepeneurs they meet.

lucisferre 13y ago
Canada has similar programs. EBC (in British Columbia) provides a direct 30% refund on investment in eligible companies [1]. [1]: http://www.pushormitchell.com/law-library/article/30-tax-refund-investors http://www.pushormitchell.com/law-library/article/30-tax-ref...

Pxtl 13y ago

Yeah, that. When I watch Dragon's Den in Canada, I'm always struck by how small-potatoes these investments are, considering the kind of people who are in the room. And yet they so rarely even chip in. I think a lot of the appeal of working on one of those shows, as an investor, is what it does for their own personal "brand" more than the direct salary or the investments they make.