Investment Performance

Abstract

This chapter examines the returns from making informal venture capital investments. It is surprising that the performance of informal venture capital investments, and the associated issue of how these investments are harvested, is one of the aspects of the informal venture capital market for which no information exists and where Wetzel’s call for research which “put[s] boundaries on our ignorance” (Wetzel, 1986, p. 131; Freear, Sohl and Wetzel, 1996a) still remains relevant, despite the expansion of research. Although there is some evidence on the expectations of business angels, in terms of their exit horizon, method of exit, the rate of return and proportion of ‘winners’ and ‘losers’ (Wetzel, 1981; Tymes and Krasner, 1983; Mason and Harrison, 1994b) there have been no studies of the actual returns achieved by business angels nor their actual timing and method of exit.

This chapter is based on Lumme, Mason and Suomi (1996)