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Exits With VC and Angel Investors – The Wiltbank Data

by Basil Peters on September 1, 2010 · 2 comments

The most important new data on angel investing comes from Robert Wiltbank of Willamette University and Warren Boeker of the University of   Washington.

Robert Wiltbank is one of the world’s pre-eminent researchers on angel and VC investment.

One of the fascinating aspects of this research is  how VC investors affect the exits of angel-backed companies.

When I first saw this data, it leapt off the page at me.

Exits with VCs and Angels

This graph shows what the greybeard VCs and angels have known for a while. If your company has VC investors, they will reduce the probabilities of an exit that would produce a 1-5x return for the angels. That exit might have produced a 100x return for the entrepreneurs (because they paid much less than the angels for their shares).

Having VC investors does increase the probabilities of exits above a 5x return.

But there is no free lunch. This data shows that after a VC invests your chances of failing completely  also increase significantly.

The other important factor, which unfortunately this data doesn’t show, is that adding VC investors will also increase the time until a successful exit by about a decade.

This is an important message in my new book: “Early Exits – Exit Strategies for Entrepreneurs and Angel Investors – But Maybe Not VCs“.

{ 2 comments… read them below or add one }

Basil Peters August 31, 2011 at 9:27 am

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1 person liked this (via Disqus 2011-08-30)

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Basil Peters August 31, 2011 at 9:30 am

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Is the Venture Capital Model Broken? by Ben Yoskovitz on Instigator Blog

“Basil Peters has a great post based on a recent study done on the results of VC investments into angel-backed companies. (Incidentally, if you’re raising money or thinking about it, read Basil’s blog.)”

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