Crowd Funding Edition: Real life Angel Investing Returns 2012–2016

8 min readOct 20, 2020

The crowd funding platforms have experienced astronomical growth since I started startup investing in 2012. IMO, They are pretty good places for angel investors to get started. There are many equity crowd funding platforms but I only have experiences with AngelList, FundersClub, MicroVentures and TheSyndicate.com. I have great experiences with all of them actually and I following my previous post, I am sharing my returns here.

The Platforms

Let me start with a brief introduction to the four platforms and their differences. I want to note that you will typically have little or no interaction with the founders. It’s still not clear if it affects the final returns but I would say you will have to rely on the syndicate lead input to make the investment decision. All the platforms charge ~20% carry.

AngelList

AngelList is the largest equity crowdfunding platform in the world. At any given time, there are tons of deals flowing through the platform. AngelList itself doesn’t vet the deals. They rely on the syndicate leads to vet the investments. Syndicate leads then use AngelList as the distribution platform to find investors. If you want to see deal flow, AL is a great place to get started. I also have a quick tip for you. Apply to join the following syndicates and you will be flooded with deals. You can then pick and choose the deals you like to invest and see how they turn out.

I invest quite a bit on AL and am also a subscriber to the Access Fund where they invest in the top deals flowing through the platform. When AL started, they famously syndicated UberCab which later changed its name to Uber. I think that’s where you hear the urban legend about how $100K turns into $100M from an angel investment. I suspect the urban legend might actually be true.

TheSyndicate.com

Jason Calacanis has been running the amazing Launch Accelerator where they admit 7 companies in each cohort and work with them for 14 weeks. That’s 14 weeks of vetting! Based on the companies’ progress and investor interest, they syndicate the top companies from the accelerator through theSyndicate.com. I have been investing with Jason on top deals like Calm. It took multiple iterations for him and the team to arrive the current form but I think they are at a really good place right now. Jason himself invested in 7 unicorns including Uber and Robinhood. I suspect he is the actual person who 1000X his Uber investment.

Most recently I invested in Cafe X and Fluent Forever through theSyndicate.com. These are the deals that would not have flowed to me if it were not for Launch Accelerator. Jason also runs angel university. It’s a more cozy group of investors compared to the giant AngelList platform but they go for quality not quantity. It’s a great place to learn and dip your toes into angel investing.

FundersClub

FundersClub is a Y Combinator company so they have great access and insights to investing in YC startups. They syndicated blockbuster companies like Coinbase and Instacart. I didn’t invest in these companies but I think the multiples they generate for their investors are probably at least 100X . They don’t seem to have a lot of investments on their platform at any given time but I regularly subscribe to their Accelerate FC Y Combinator Fund Series to gain access to top YC companies.

Microventures

If you want to buy shares from the secondary market, Microventures is the way to do. They have syndicated household names like Impossible Foods, Reddit and Spotify. If you were to do a regular secondary transaction, you probably need to invest a really significant amount. But they are using LLCs to house the investments, so you can invest just a few thousands to gain exposure. I think the main concern with the secondary investments is you will have to do your own due diligence and look at price comps to decide if it’s worth the risk as the shares you are purchasing are most likely common stocks.

The Methodology

For the return calculation, I am including the investments made between 2012–2016 to give enough time for the companies to mature, similar to what I did in the previous post. I am also assuming I invest in same amount of money for each investment so people can reproduce the results.

I am only including companies that I made through equity crowdfunding platforms where the investment amount was less than $20,000. This plus the investments covered in the previous article pretty much cover all the startup investments I made on companies during 2012–2016. I also invest in funds, which deserve its own post if people are interested.

The following is the complete list of 57 companies I invested during 2012–2016 and their current multiples. Again, I am publishing the list here for transparency and accountability. I am lumping companies into groups if they haven’t achieve at least 3X markup. I use the multiples provided by the platforms. My understanding is that AngelList tends to be conservative on the markup (most of my syndicate investments are from AL) but I don’t know their exact methodology.

Before I get into the numbers, I want to preface with that when I started investing in the AngelList syndicates, the program was very nascent. A lot of deals had very little information in the deal memo. Out of curiosity, I invested in everything. What ended up happening is a lot of these deals were super early stage like pre-traction or pre-protype. Most of the deals ended up going to zero. Fast forward to today, the equity crowdfunding platforms provide a lot more information in the deal memo and regularly host Q&A sessions for investors. Investors could apply more judgment and their own criteria and decide which deals to invest instead of relying on very thin information to invest on these platforms.

Top 8 Companies

I don’t have particular insights on the top companies because I am a follower in all these investments. But I am so happy I got to invest in Calm, my first real Unicorn. They are about to mark up the valuation again so we are giving the conservative estimate here. It’s the classic example of the top investment of the portfolio returns the whole portfolio and more. I actually don’t really have any insights for most of the companies. I don’t know the founders. I was doing this in a truly mechanical spray-and-pray style.

Other Companies

25 of the remaining 49 companies are still active. The aggregate multiple is 0.99 based on the valuations from the platforms. The companies are:

Sanguine, Suiteness, Qbox, Structured Polymer, Videopixie, HoneyBook, Mattermark, Wanderable, Little Bird, Say Media, Red Tricycle, Verbling, Conekta, PAKIBLE, MoviePass, Signpost, Dwell, Localize, Mosaic, Checkbook, Pillow, Zeel, Managed by Q, Onfleet, Madison Reed

24 of the 49companies are realized. The aggregate multiple is 0.38. The realized companies are:

SendHub, OpenLabel, PopApp,Swiftype, attune, Drync, Abacus, Birdi, Mouth, Contactually, Vouch Financial, Worklife, Red Clay, Ratter, Butterfleye, Zirtual, Scripted, Bento, Pocket, Bluesmart, STRATIM, Hello Scout, Proven, SchoolMint

If you prefer to see the numbers in spreadsheets, please visit this google sheet for more number crunching.

The Returns

Using the multiples from the crowdfunding platform, my personal return multiple will be (12.51*8 + 0.99*25 + 0.38*24)/57 =~ 2.35. (Note: The multiple factored in all the fees and carry so it’s the return investors are actually getting according to the platforms.)

It is definitely not as good as my direct investments but their average age is also a bit younger than my direct investments.

If we apply the same methodology in the previous article and compare the number to public market returns, the SPY and QQQ multiples would have been 1.87 and 2.39. So the return is slightly worse than QQQ. I think people do have to expect the multiples on the equity funding platform to be lower than direct investments due to the built-in fees and carry. But if my Calm investment doubles again, I can effectively increase my multiple by 1, which will be 3.35.

On the other hand, if I didn’t invest in Calm, the return multiple would have been 1.24, which is mediocre. A valid question to ask myself will be

“If I didn’t spray and pray and applied my own judgment, would I have invested in Calm?”

It’s impossible to answer this question today but let’s assume the answer is no since I don’t typically invest in consumer startups without significant traction and meditation apps weren’t really a thing back in 2014.

I guess what I am trying to say here is there’s so much randomness in the very early stage. The reason I got a lot of zeros from these investments is the same reason I invested in Calm. I invested in Calm in a really low valuation but low valuation implied less progress and traction. If I were to raise the bar, my portfolio composition would be very different. I probably would have seen better ratios for realized and medium performers but I probably wouldn’t have caught stars like Calm.

Let’s assume I didn’t invest in Calm and I applied some judgment so my realized and medium ratios are similar to my direct investments, which are 0.61 and 1.49 respectively. My hypothetical return multiple would be (12.51*8-63.51 + 1.49*25 + 0.61*24)/56 =~ 1.58. 1.58 obviously doesn’t even beat SPY.

There’s a lot to think and unpack here. But what I am grappling with as an angel investor is how much judgment I should apply to my investment decisions. The (very small amount of) data shown here is don’t apply too much judgment, just spray and pray into the unicorn land. But my human brain is wired to believe I should do more, which can very well be a fallacy. Currently, I have a very simple filter for my syndicated angel investments based on sectors and the companies have to be post-MVP. We will see how that works out in the end. But in general, I cast a pretty wide net.

There are practical differences between direct and syndicate investments. If I were to invest in a company directly, I have to source the deals, setup a meeting, read through the deck, do some light due diligence like looking at their cap table and financial statements and wire a good amount of money. This process limits the number of companies I can vet so I have to apply a much stronger filter than the syndicate investments where everything is organized and well presented by the lead before I look at it. It’s still yet to be seen the long term investment performance differences of these two approaches. But I will report back a few years later.

The Takeaways

If you are just getting started with angel investing, I believe participating in the crowdfunding platforms will be worthwhile. You can start with looking through hundreds of deals, invest in the deals you like and overtime build a portfolio of 50 –100 investments. The minimum of a syndicated deal is typically $1000, which means you can invest in $100K across 100 deals to test the water and verify results. It would also be a super fun experience if you like to learn how a company looks like when they are young and how they grow to be unicorns.

The original post about my angel investing returns: Real-life Angel Investing Returns 2012–2016.