What Rewards Do They Expect ?

Angel investors generally expect 30 to 50 percent returns per annum or even more

Their returns come from two sources viz. capital gains from the sale of shares and compensation, wholly or partially, for the time they spend on the business, either as part time consultants or as non-executive board members.

The returns that they expect are much higher that what they can expect to make in the stock market. The reason for this expectation of high returns is due to the fact that the investments they make carry tremendous risks. These risks include:

• Untested ideas or ventures. Angels invest in early stages of the venture's development.  In the event that venture's products are not accepted by the market, or if there is a change in the market dynamics, their entire investment may be wiped out.
• Limited information availability about the company.
• Funds get irretrievably tied-up for a long period of time with no exit as the shares are neither listed nor freely tradable.
• Even at the time of exit, they may have to negotiate very hard to get the right price, as there is no set market price for the investments.

Click here to learn about the Returns Venture Capitalists Expect on their investments