I’m often asked what return angels and venture capital investors seek in their startup investments.

Angels generally seek around a 30% IRR (Internal Rate of Return). That would be 3X their investment in four years.

For longer timeframes, angel investors will be looking for a 5X-10X return for a startup investment.

The longer it takes the higher the multiple.

VC funds operate on a 10-year cycle and look for an exit in that timeframe. Most seek a 10X return in the 5-7 year window.

If your company growth is low, then that signals a longer-term exit and thus a higher required return.

If you find investors are not interested in your deal, it may be because your deal doesn’t fit into this expectation.

Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.

Let’s go startup something today.
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Thank you for joining your host Hall T. Martin with the Startup Funding Espresso — your daily shot of startup funding and investing.

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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.