Startup Growth and Venture Returns

AngelList presents their findings from a first-of-its-kind report released in December 2019, Startup Growth and Venture Returns. The report calculates possible outcomes for VC’s who diversify their investments between many startups.

The study also proposes “steps to open broad-based early-stage venture capital indexing to the 90+% of retail investors who are unaccredited, while maintaining appropriate investor protections.”

“Infinite Regret” from Missing Out on the Right Deal

Putting all eggs in one basket increases long term “infinite regret” associated with losing out on another missed deal.

Simulations on 10-year investing windows for seed-stage deals suggest fewer than 10% of investors will beat the index, even if those investors have skill in picking deals. Like Vanguard has taught us in the public markets, individual investors could benefit from viewing the index as the default and then overlaying individual deals that they like.

Companies Stay Private Longer

The recent trend has been for startups to stay private longer, which takes potential wealth gains away from the general public. Current policy does not allow startup investments from the unaccredited public.

But policymakers should be concerned that changes in the structure of private investing have created a powerful wealth-generating mechanism entirely out of the hands of the investing public

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