Some angel investors achieved 700pc return on investment in Irish start-ups in Q1

12 May 2014

Pictured: HBAP national manager John Phelan

Some angel investors in Ireland have seen a 700pc return on their investment following the sale of companies they had invested in during the first quarter, according to the Halo Business Angel Partnership.

International research shows that investors would typically expect to achieve 2.5 times (22pc Internal Rate of Return) their investment in a portfolio of companies.

Angel investment is increasingly valued as an asset class and it is estimated that approximately €264 million was invested by business angels on the island of Ireland in 2012, up 7pc on 2011.

According to the Halo Business Angel Partnership (HBAP) numbers registering with HBAP are up by 12pc year on year.  

HBAP angels invested €4.5m in 29 deals in 2013 (25 deals in 2012), leveraging an additional €11m.

HBAP registered business angels have invested in 139 deals since 2007, with the total angel amount invested in excess of €25 million (average of €180,000 per deal).

An additional €36 million of investment was leveraged by HBAP through seed funds, Enterprise Ireland and syndicates managed by HBAN (Halo Business Angel Network).

Return on investment

Among the sales to drive a return on investment for business angels were:

·         Activation Energy was acquired by Nasdaq-listed EnerNOC in February 2014 with the business angel realising a significant return on his investment

·         HBAP business angel investor made a return of seven times his investment when Storyful was sold to Rupert Murdoch’s News Corp for €18million in January 2014

·         Developer of innovative loyalty programmes and business intelligence, 20 20 Insights was sold to Swiss Post providing a return on investment of seven times to the original angel investor

·         It took only three years for two HBAP angel investors to receive a return in excess of six times their investment of €150K after investing in a software company from the mid-west in 2010

“At HBAP, we work on the basis that a business angel wants, first and foremost, a solid return,” HBAP’s national manager John Phelan said.

“We see from our portfolio of companies that, on average, revenues have increased 5.6 times since investment and this bodes very well for future performance of angel investments and the returns to investors. We also recognise that most angels appreciate qualified deal flow and this is something that HBAP is well positioned to provide.

“Many business angels have been successful entrepreneurs themselves and want the thrill of working with a dynamic team to help build a thriving new business. In HBAP, we take these factors, and many more, into account in our selection and matching processes.”

John Kennedy is a journalist who served as editor of Silicon Republic for 17 years