Angel Investing — Success or Failure ? Devil is in the (depressing) details

A few days back, as part of a group of angel investor friends; I got an opportunity to study the prospects of angel investing. This was being touted as a very attractive investing option, notwithstanding the controversy of angel investing tax in India. However, our research revealed that in spite of many rosy scenarios being painted of angel investments, one needs to dig deep to discover the devil in the (often depressing) details. The data points below are realistic but pretty depressing. All Indian data is on a pre-tax basis. So, the impact of angel tax if any will be further negative.

David S. Rose, Founder and CEO, Gust has been described as “the Father of Angel Investing in New York” by Crain’s New York Business, & a “world conquering entrepreneur” by BusinessWeek. He is a serial entrepreneur & Inc 500 CEO who chairs New York Angels, one of the most active angel investment groups . His verdict is “3 profitable exits out of 100 based on my personal investments in over 100 companies, New York Angels’ involvement in several hundred others and nearly two decades of familiarity with active angel investors”.

As per Apoorv Ranjan Sharma, co-founder of startup incubation platform Venture Catalysts; “Ratio of Indian startups getting Series A Funding as compared to US/ Chinese startups is 60%.” Hence, all US funding success hit ratios could be…