Patterns of Successful Angel Investing by Simeon Simeonov

Simeon Simeonov
Simeon SimeonovFounder & CTO at Swoop
Data-Driven Patterns for
Successful Angel Investing
Sim Simeonov
sim@fastignite.com
@simeons
Founding. Funding.
Growing. Startups.
Have fun
  & make   $$$
58
 %
 IRR
Cash-on-Cash
  3.2x
66% lose money
45% total loss
What determines investment success?
quality deal flow
  picking winners
 winning the deal
market environment
Can you pick winners?
If you can have asymmetric information
   most of the time, ignore the advice here
quality deal flow
  picking winners
 winning the deal
market environment
investment optionality

dollar cost averaging
be a player

 investment optionality
  dollar cost averaging

play a lot
Angel Investment
 Returns Analysis

Ingredients          Instructions
• Kaufmann angel     1. Clean data
  return data set
                     2. Analyze data set
• Additional data
                     3. Reverse-engineer
  from angels
                        returns probability
Tools                   distribution

• Big data kitchen   4. Do Monte Carlo
                     5. Adjust & repeat #4
                        for all interesting
                        questions
Two things you don’t
want to see made:
sausage & econometrics
The end result, however…
100%


80%

                                         >10x
60%                                      5-10x
                                         3-5x
40%                                      2-3x
                                         1-2x
20%                                      <1x


 0%
        % of    % of    % of    % of
       Angels   deals   $inv   $return
Monte Carlo results
100%


                                                        Portfolio
                   75%                                    Size Size
                                                            Portfolio
P(return > X), %




                                                             5
                                                             10
                                                             25
                   50%
                                                             50
                                                             100

                   25%



                    0%
                          0x   2x       4x      6x      8x        10x
                                    Cash-on-Cash Return
Why do a few angels get the
 lion’s share of returns?
Lucky?   Smart?
Portfolio Size
P(return > X), %


                   15%             200%
                                          5    10    25    50     100
                                                                Portfolio Size




                   10%



                   5%



                   0%
                         5x   6x          7x        8x     9x             10x

                               Cash-on-Cash Return
Answer: most likely luck
Patterns of Successful Angel Investing by Simeon Simeonov
100%


                                                   Portfolio
                             200%
                                                     Size Size
                                                       Portfolio
P(return>X), %




                 75%                                    5
                                                        10
                                                        25
                                                        50
                 50%                                    100




                 25%
                        0x   1x      2x       3x             4x
                             Cash-on-Cash Return
Patterns of Successful Angel Investing by Simeon Simeonov
Does the lean startup movement
   benefit angel investors?
P(failure) reduced from 60% to 50%
125%

100%

 75%

 50%

 25%

  0%
         5
               10
                      20
                              25
                                      50
                                           100
       DiffP(x > 1)        DiffP(x > 2)    DiffP(x > 3)
Answer: yes but very active angels
  get disproportionate benefits
What’s the effect of big bets?
50x vs. 1000x returns cap
80%


60%


40%


20%


 0%
       5
              10
                     20
                             25
                                     50
                                          100

      DiffP(x > 1)        DiffP(x > 2)    DiffP(x > 3)
20%

                   50x cap, 55% fail
                         vs.
10%
                  1000x cap, 60% fail

 0%
       5          10      20      25      50       100


-10%



-20%
           DiffP(x > 1)   DiffP(x > 2)   DiffP(x > 3)
Answer: big bets make the most
  sense for very active angels
Patterns of Successful Angel Investing by Simeon Simeonov
Be an active angel.
Benefit from:
 - portfolio effects
 - lean startup ecosystem
 - making big bets
Be a selective angel.
Focus on:
 - information asymmetry
 - low-failure opportunities
 - price
Econometrician seeks
angel investor data for
    discrete long-term
 relationship and intense
  anything-goes analysis.
Must be clean and BS-free.
  http://sim.vc/angels
Patterns of Successful Angel Investing by Simeon Simeonov
1 of 39

More Related Content

What's hot(20)

Founders Factory overview AugustFounders Factory overview August
Founders Factory overview August
TechMeetups1K views
Vc fund raising & pitch deck outlineVc fund raising & pitch deck outline
Vc fund raising & pitch deck outline
The Rudder Group4.9K views
5-minute primer on VC Term Sheets5-minute primer on VC Term Sheets
5-minute primer on VC Term Sheets
Leo Dirac26.5K views
Notation: Pre-seed Investing & RiskNotation: Pre-seed Investing & Risk
Notation: Pre-seed Investing & Risk
Notation Capital2.2K views
Early Stage Startup ValuationEarly Stage Startup Valuation
Early Stage Startup Valuation
startany7.3K views
The Best Way to Fund your StartupThe Best Way to Fund your Startup
The Best Way to Fund your Startup
Inflection Point Executive Coaching & Consulting for Med/Tech, BioPharma and Healthcare Services41K views
OATV Fund III Pitch DeckOATV Fund III Pitch Deck
OATV Fund III Pitch Deck
Bryce Roberts24.1K views
Pitch Deck Templates for StartupsPitch Deck Templates for Startups
Pitch Deck Templates for Startups
NextView Ventures256.6K views
Seedcamp Fund IV Fundraising DeckSeedcamp Fund IV Fundraising Deck
Seedcamp Fund IV Fundraising Deck
Seedcamp86.5K views
Corporate VC - Qualcomm VenturesCorporate VC - Qualcomm Ventures
Corporate VC - Qualcomm Ventures
StartupAlliance3.2K views
How to be an Angel Investor, Part 3How to be an Angel Investor, Part 3
How to be an Angel Investor, Part 3
Tyler Willis546.9K views
Venture Capital 101Venture Capital 101
Venture Capital 101
Eventbrite9.9K views

Viewers also liked(20)

Similar to Patterns of Successful Angel Investing by Simeon Simeonov

1LineLegend e1LineLegend e
1LineLegend eKen Chin
131 views10 slides
Crg ratoCrg rato
Crg ratoeushakhan
154 views6 slides
Percentages guidedollarsPercentages guidedollars
Percentages guidedollarsSmithnz
1.7K views14 slides

Similar to Patterns of Successful Angel Investing by Simeon Simeonov(18)

1LineLegend e1LineLegend e
1LineLegend e
Ken Chin131 views
Using HR Processes to Grow Your BusinessUsing HR Processes to Grow Your Business
Using HR Processes to Grow Your Business
The Virtual HR Director, LLC1.4K views
Crg ratoCrg rato
Crg rato
eushakhan154 views
Percentages guidedollarsPercentages guidedollars
Percentages guidedollars
Smithnz1.7K views
(5)percentage (pg 37 49)(5)percentage (pg 37 49)
(5)percentage (pg 37 49)
anakarmy381 views
Complete he clearbookComplete he clearbook
Complete he clearbook
Ompong Piramide233 views
Percentages and discounts tutorialPercentages and discounts tutorial
Percentages and discounts tutorial
EdTechonGC Mallett4.7K views
Establishing effective ort requirementsEstablishing effective ort requirements
Establishing effective ort requirements
Accendo Reliability316 views
Establishing effective ort requirementsEstablishing effective ort requirements
Establishing effective ort requirements
Accendo Reliability402 views
Cash flowCash flow
Cash flow
Isha Misra260 views
Dividend Policy 2.pptxDividend Policy 2.pptx
Dividend Policy 2.pptx
hemant19522597 views
P6 PercentageP6 Percentage
P6 Percentage
idahisyam3.7K views
PercentagePercentage
Percentage
Andi Mohamad878 views

More from Simeon Simeonov(11)

Recently uploaded(20)

Stock Market Brief Deck 1124.pdfStock Market Brief Deck 1124.pdf
Stock Market Brief Deck 1124.pdf
Michael Silva57 views
DDKT-SAET.pdfDDKT-SAET.pdf
DDKT-SAET.pdf
GRAPE27 views
Motivation TheoryMotivation Theory
Motivation Theory
lamluanvan.net Viết thuê luận văn6 views
Presentation.pdfPresentation.pdf
Presentation.pdf
GRAPE12 views
DDKT-Praga.pdfDDKT-Praga.pdf
DDKT-Praga.pdf
GRAPE10 views
MATRIX.pptxMATRIX.pptx
MATRIX.pptx
baijup414 views
MEMU Nov 2023 En.pdfMEMU Nov 2023 En.pdf
MEMU Nov 2023 En.pdf
Інститут економічних досліджень та політичних консультацій60 views
score 10000.pdfscore 10000.pdf
score 10000.pdf
sadimd0076 views
Slides.pdfSlides.pdf
Slides.pdf
GRAPE12 views
DDKT-Munich.pdfDDKT-Munich.pdf
DDKT-Munich.pdf
GRAPE7 views

Patterns of Successful Angel Investing by Simeon Simeonov