My reasoning is that if you accept something like the efficient market hypothesis, investing in startups is higher risk than investing in the S&P500, so the ret

My reasoning is that if you accept something like the efficient market hypothesis, investing in startups is higher risk than investing in the S&P500, so the return should be higher. You could also just buy the S&P500 with leverage. I've also seen some empirical evidence in support, though I haven't vetted it: http://sites.kauffman.org/pdf/angel_groups_111207.pdf http://sites.kauffman.org/pdf/angel_groups_111207.pdf