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Q: "A typical ROI for a 5M investment" ( No Answer,   1 Comment )
Question  
Subject: "A typical ROI for a 5M investment"
Category: Business and Money
Asked by: roiman-ga
List Price: $5.00
Posted: 13 Feb 2006 17:13 PST
Expires: 15 Mar 2006 17:13 PST
Question ID: 445448
What would be the preferred forecasted ROI over 5 years for an angel
investor investing 5 million in a start-up?  Assuming that the Angel
is happy with the nature of the deal and management.  Please be
specific regarding the amount for instance "A good exit for an angel
investing 5M on a high risk venture would be $4.00 for every $1.00
invested after taxes."
Answer  
There is no answer at this time.

Comments  
Subject: Re: "A typical ROI for a 5M investment"
From: yorker-ga on 31 Mar 2006 23:56 PST
 
First of all, an angel investor is not going to invest $5 million in a
start up. A typical angel investment is in the range of $25,000 -
$100,000, and even when banding together in groups, a typical complete
angel round (usually consisting of four to six angels) would still be
only in the range of $250,000 - $750,000. Indeed, $5 million is even a
pretty big chunk for a first round investment from a venture capital
firm, which is investing a large pool of institutional money.

That said, both angel investors and VCs would typically hope to get a
10x return within five years or so. In your terms, "a good exit for an
angel investing 5M on a high risk venture would be $10.00 for every
$1.00 invested after taxes"...or, put another way, something in the
$100,000,000 range.

A good source of information on financing entrepreneurial ventures is
the eVenturing site from the Kauffman Foundation, at
http://www.eventuring.org, and the primary site for angel investors is
the Angel Capital Association, at
http://www.angelcapitalassociation.com/ (click on the Directory tab).

Good luck!

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