at the individual level l.
Skip this Video
Download Presentation
At the Individual Level

Loading in 2 Seconds...

play fullscreen
1 / 10

At the Individual Level - PowerPoint PPT Presentation

  • Uploaded on

At the Individual Level. National Survey of Angel Investing Rob Wiltbank Asst Professor of Strategic & Entrepreneurship International study of decision making under uncertainty Angels, VC’s, entrepreneurs and managers 1,038 Angel Investments, 414 exit events.

I am the owner, or an agent authorized to act on behalf of the owner, of the copyrighted work described.
Download Presentation

PowerPoint Slideshow about 'At the Individual Level' - Jeffrey

Download Now An Image/Link below is provided (as is) to download presentation

Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author.While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server.

- - - - - - - - - - - - - - - - - - - - - - - - - - E N D - - - - - - - - - - - - - - - - - - - - - - - - - -
Presentation Transcript
at the individual level
At the Individual Level
  • National Survey of Angel Investing
    • Rob Wiltbank Asst Professor of Strategic & Entrepreneurship
    • International study of decision making under uncertainty Angels, VC’s, entrepreneurs and managers
    • 1,038 Angel Investments, 414 exit events.
    • 624 on going investments, approximately $85M.



At the Individual Level

  • Factors of Interest
    • Investing and Entrepreneurial Experience

Years, number of investments, and number of startups

    • Aspects of the investment process

Stage & Industry focus, Due Diligence, Deal Sources, Participation post investment

    • Prediction vs. Control in Selection and Development

Entrepreneurial scenario responses


At the Individual Level

  • Prediction vs. Control in Selection and Development

Prediction:To the extent that I can predict the future, I can control my outcomes.

efforts to insightfully position for success based on expectations/forecasts for the development of important market elements. This often includes modeling event spaces, estimating probabilities and consequences, and forming sophisticated portfolio strategies with multiple options. Assumes that market elements are predominantly independent of the organization.

Control:To the extent that I can control the future, I do not need to predict it.

efforts to deliberately construct/create market elements, such as defined products, articulated demand preferences, and market structures (i.e. channels, technical standards, common practices). Assumes either the non-existence of some key elements, or the organization’s ability to significantly affect the evolution of those elements.

Prediction is uniquely difficult with new ventures,

while efforts to directly construct markets may be particularly effective.

Affordable Loss, Pre-Commitments, and Leveraging Uncertainty


Strategy Making Under Uncertainty


Predictive Control



Persistently build

your vision

of a valuable future

Try harder to predict and

position more accurately

Emphasis On Prediction

Non-Predictive Control


Transform current means

into goals created

with others that commit

to build a possible future


Move faster to adapt to a

rapidly changing environment




Emphasis on Control


At the Individual Level

  • Non Predictive Control in Angel Investing:
    • Select ventures that appear most capable of influencing critical market elements.

Create and Influence local or smaller markets, rather than compete in large “ideal” ones.

    • Emphasize the current means and capabilities of the venture rather than on plans for acquiring the “best” means to reach their original goals.

Adjusting goals is less expensive than acquiring different means.

Commitment is more important than Best.

    • Encourage the venture to make smaller investments that get to cash flow positive rather than investing in the resources suggested by market research to “hit plan.”

Overhead trails growth

    • Avoid prediction as the basis for investment decisions.

Emphasize affordable loss rather than maximizing expected values.

Control is likely to reduce failures, but possibly at the expense of homeruns.

Prediction may increase failures, but when predictions are on target…..


At the Individual Level

  • Overall Outcomes
    • Success vs. Failure: 1,038 investments, 23% Successful.

Perception of success by the investor

    • Distribution of IRR at Exit: 414 Exits, 2/3 < 0% IRR

# of exits across IRR categories

    • Cash on Cash Estimated Multiple: 2.9

assumes consistent investment size across deals.

keep in mind possible self selection bias.

the majority of deals remain open.


At the Individual Level

  • Explaining Outcomes

Investing and Entrepreneurial Experience

    • Years as an investor increases homeruns, and perception of success.
    • Entrepreneurial experience not strongly related.

Investment Approach

    • Focus in seed stage deals reduced negative AND homerun exits,

and improved success/fail ratios

    • Deals from personal relationships increased negative exits
    • Due diligence is nearly related to increased homeruns
    • Participation post investment, and Industry breadth had no effects.

Development Strategy: Prediction vs. Control

    • Control increases percent of successful deals,

decreases negative exits without reducing homeruns.

    • Prediction has moderate effects on increased negative exits.

At the Individual Level

  • The Details


Shaded areas are key regression factors.


At the Individual Level: Tidbits

  • Fail in 3, win after 5 years. About 1 year std dev in both.
  • 80 investors underwater (currently), 40 investors had over 3X.
  • PVG very comparable mix of deals to overall sample.

2/3 computer related, 15% nontech, 15% healthcare related.

  • 50 hours of due diligence, but very broad range on this measure. From virtually none to several hundred hours.
  • Over 40% of investments were made in the first year of the venture’s life, over 70% were less than 3 years old.
  • 20% of the ventures employed more than 50 people (and growing).

Robert Wiltbank


At the Individual Level: Summary

  • Emphasis on market construction rather than prediction, with a seed stage focus and broad deal sources are success factors.
    • The control variable has the single largest effects, reducing negative exits.
    • efforts to deliberately construct/create market elements.

To the extent that I can control the future, I do not need to predict it.

  • Nearly 2/3 of angel investments do not pass Go.
  • While due diligence & participation post investment aren’t statistically strong, it’s hasty to reduce them below current levels.

Robert Wiltbank