Investment Performance

  • Annareetta Lumme
  • Colin Mason
  • Markku Suomi


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.


Venture Capital Investment Opportunity Venture Capital Fund Venture Capital Firm Investee Business 
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Notes to Chapter 9

  1. 2.
    This chapter is based on Lumme, Mason and Suomi (1996)Google Scholar
  2. 2.
    The full scoring system is as follows: 1 point for a very successful exit, 2 points for a moderately successful exit, 3 points for an exit that broke even, 4 points for an investment that resulted in a partial loss and 5 points for an investment that produced a total loss. See pages 75–76 for definitions of “very” and “moderately” successful.Google Scholar

Copyright information

© Springer Science+Business Media Dordrecht 1998

Authors and Affiliations

  • Annareetta Lumme
    • 1
  • Colin Mason
    • 2
  • Markku Suomi
    • 3
  1. 1.Kera Ltd.UK
  2. 2.University of SouthamptonUK
  3. 3.Helsinki University of TechnologyFinland

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