Investor Expectations of Returns

Investor Expectations of Returns

June 19, 2020 by investor

Hello, this is Hall T. Martin with the Startup Funding Espresso — your daily shot of startup funding and investing.

Investors in the startup space have a certain expectation for returns. 

Startups raising funding should keep in mind these expectations and only approach them if they have a deal that is in the game for it. 

Venture investors including angels, venture capitalists, and limited partners, typically look for a 20-30 percent internal rate of return (IRR) over a 5-year time horizon. 

This can also be expressed as a “two and a half to four times” the original money invested.

If it takes longer than five years, then investors will look for a 5-10X ROI to maintain a 20-30 percent IRR.


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Disclaimer:
Hall T Martin is the director of Investor Connect, which is a 501(c)(3) nonprofit dedicated to the education of investors for early-stage funding. All opinions expressed by Hall and podcast guests are solely their own opinions and do not reflect the opinion of Investor Connect. This podcast is for informational purposes only and should not be relied upon for the basis of investment decisions.

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