

50% of angels regret investments made this year - blo
http://venturebeat.com/2013/11/21/half-of-angel-investors-regret-investments-they-made-this-year-survey/

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birken
This almost makes it seem like angel investing has some risk associated with
it.

But seriously, this is about as low content as a post as you could imagine:

\- Angel investors regret bad decisions

\- Angel investors want lower valuations

\- Angel investors want less "hot air" (which is ironic because most media
sources highly recommend you "hustle" when raising money)

All of this is obvious. And a company that is replacing the guesswork of
valuing early-stage companies with their own arbitrary guesswork doesn't
strike me as an upgrade, especially since I'm sure they take a cut somehow.

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chimeracoder
Yes, this is a very silly article.

In fact, since it's saying that "50% of angel investors regret at least one
investment this year", that could be taken to mean that the other 50% of angel
investors are being _too conservative_ with their investments:
[http://www.avc.com/a_vc/2013/11/loss-ratios-in-early-
stage-v...](http://www.avc.com/a_vc/2013/11/loss-ratios-in-early-stage-
vc.html)

This assumes that angel investors have the same incentives as institutional VC
firms do, which is not always the case, but I'm just highlighting how silly it
is to have a headline that "only" 50% of angel investors this year have no
regrets.

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sharkweek
That's it huh? I'd assume ~100% would regret some investment they made.

~~~
samspenc
Yeah, that was exactly my thought.

50% is not actually that bad - given that its really hard to say which
investment will work or not.

Put another way, it means 50% weren't too unhappy with their investments!
That's a lot!

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Codhisattva
If I'm not mistaken angels anticipate that 90% or more of their investments
will fail. It's high risk so that's why they command high equity.

"Regret" (ie hindsight) is a useless metric.

But that's the not the point of the article anyway. Hello sales pitch for
Worthworm!

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LandoCalrissian
All things considered I think a 50% regret rate is pretty damn good,
considering the majority of those companies will probably not pan out.

~~~
thatthatis
Especially when it is that 50% regret 1 or more investments.

What percentage of stock market investors make at least one investment per
year that goes down?

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auctiontheory
The last paragraph is self-contradictory. And the entire article, while
telling entrepreneurs not to inflate their projections, implies that inflating
your projections is exactly how to get funded.

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lpolovets
As the article mentions, 1/2 of all investments lose money (source:
[http://sites.kauffman.org/pdf/angel_groups_111207.pdf](http://sites.kauffman.org/pdf/angel_groups_111207.pdf)).
Given that, plus the fact that 6-12 months usually provides a lot of hints
about whether an investment will be a good one, these findings don't seem very
surprising.

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joshdance
Don't most angels regret investments every year? I was under the impression
that you invested expecting to lost 90% but get a 10x return on 10% to pay off
the fund and then everything else was gravy?

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thatthatis
The more I think about it the more I think the real headline here is that 50%
of angel investors don't regret a single investment they've made in the past
year.

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moocowduckquack
I bet half of them were below average...

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gojomo
It's 46%. And, there's no comparison to other years. Maybe "46% regret" is a
record low for the industry.

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6d0debc071
Uhm. 50% actually seems quite conservative. If you have no data, the
probability halves with each concurrent requirement. If Angels invested, on
average, in two start ups a year, looking at the issue with no data, you'd
expect 75% of them to regret at least one of their investments. If they
invested in four you'd expect 93.75% of them to regret.

According to Almeida Capital Research, as cited by the DTI, the average number
of annual investments by angel-backed funds in the UK is 6.5

[http://www.bis.gov.uk/files/file38273.pdf](http://www.bis.gov.uk/files/file38273.pdf)
(see page 47)

Granted the UK is not the US, granted that angel-backed funds isn't
necessarily the same as saying that each Angel made 6.5 investments.

Still, if those numbers are even vaguely in the right ballpark, that's a lot
of uncertainty being reduced to get down to 50% regret.

And then, is their regret rational, do they only regret things on which
they've lost money, and how much? If you make 80% of your income from 20% of
your projects (I don't know the actual numbers) and you regret on average >
15.38% of your investments you may well be able to take on a fair bit more
risk.

 _> Investors would basically prefer if entrepreneurs didn’t blow a lot of hot
air. Considering that angel-funded startups are significantly more likely to
survive at least four years and raise additional financing, its in
entrepreneurs’ best interest to be honest and back their claims up with real
information._

If they gave an honest valuation maybe they wouldn't get funded at all. The
motivation of an entrepreneur is not necessarily to reduce investor regret.

