State contact: DFI Secretary Lorrie Keating Heinemann at 608-267-1719
Kauffman Foundation contact: Barbara Pruitt, 816-932-1288,

National study highlights angel group investment returns;
Wisconsin strategy has reinforced angel investments

MADISON – A national study released on the eve of the Wisconsin Early Stage Symposium shows that angel investors participating in organized angel groups achieved an average 27 percent internal rate of return on their investments.

The largest study on the financial returns of angel investors in North America was released Monday by the Ewing Marion Kauffman Foundation and the Angel Capital Education Foundation.

Overall, the study concluded angel investors affiliated with angel groups experienced exits that generated 2.6 times their invested capital in 3.5 years from investment to exit. This return compares favorably to that of other private equity investments, including those of early-stage venture capital. Seven percent of exits generated returns above 10 times their initial investment.

The “Returns of Angel Investors in Groups” study was conducted over the past year and analyzed results from 86 organized angel investor groups throughout the United States, involving 539 individual angel group investors who have experienced more than 1,130 exits in which companies that had received the investments were acquired, went public, or were closed. It comprises the largest data set of angel investor exits ever collected.
Under Governor Jim Doyle’s ‘Grow Wisconsin’ plan, the state has become a leader in building sustainable, visible angel networks in our state,” said Lorrie Keating Heinemann, secretary of the state Department of Financial Institutions. “The creation of the Wisconsin Angel Network along with the Act 255 tax credits for angel investors has significantly raised the amount of capital invested into Wisconsin’s start up and early stage businesses.” 
The study, conducted by Robert Wiltbank of Willamette University and Warren Boeker of the University of Washington, also assessed how these strategic factors impact the angel investors’ outcomes: due diligence time, industry experience, participation with the company after the investment is made, and follow-on investing. In addition, the study provides key demographic information about angel group investors.

The results demonstrate the risk inherent in angel investing. In slightly more than half the venture investments, some or all of the study respondents’ investment capital was lost. 

“As the largest empirical study of the investment returns of angel investing, it sets  a benchmark on returns and performance factors for angel investors connected to angel groups,” said Robert Litan, vice president of Research and Policy at the Kauffman Foundation.
Angel investors are high net worth individuals who make equity investments directly into growing companies, usually as the ventures are starting up. These investors are often the first outside, arm’s-length investors that an entrepreneur engages. The study’s respondents had made investments in mostly early-stage firms, with nearly 45 percent of the investments in companies that had no revenues at the time of the first investment.

In recent years, individual angels began forming angel group organizations with other individual angels to share in due diligence, to make larger investments, and to make more sophisticated investments. Despite the growth of angel group investors, little research has been conducted on their financial performance or demographic profiles.
“The report solidifies the theory that risk is directly related to return, and that angel investors who have expertise and background in the companies they invest in provide the needed mentoring and connections to help companies excel and achieve high rates of returns for their investors,” Heinemann said. “The Wisconsin Technology Council’s Early Stage Conference on Wednesday and Thursday is a perfect example of how Wisconsin connects capital to innovation in our state.”
The study can be downloaded at

To learn more about the Early Stage Symposium or to download a full agenda, go to