Angel Fund

Willamette MBA

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A Decade of Success

When the Willamette Angel Fund was started nearly ten years ago, the idea was met with skepticism. Could a group of students successfully integrate themselves into the opaque world of angel investing? Could yearly cohorts of students possibly compete with dedicated seasoned professionals? Ten years in, our research indicates the answer is “yes.”

Each semester, we dig into our portfolio companies to evaluate the fund. Since inception in fall 2009, we invested a total of $630,586 into a whopping 67 companies. 51 of these companies are still active. The rest have either achieved liquidity or failed. We directly invested in ten companies, with the remaining 57 positions coming indirectly through our participation in larger funds, such as Oregon Venture Fund, Angel Oregon, Willamette Angel Conference, and Bend Venture Conference.

The real fun of a portfolio review comes when we compare ourselves to the professionals. There are three seminal studies of angel investing returns, conducted by our own Professor Rob Wiltbank in 2007, 2009, and 2016. These studies, encompassing different economic cycles and geographic regions, show professional angel investors typically see a return multiple of 2.2-2.6 on their initial investment, with an internal rate of return (IRR) of 22-27%. For the non-finance reader: a return multiple of 2.2-2.6 means for every $1.00 invested, an investor received $2.20-2.60 back; and an IRR of 22-27% means the investment grew, on average, at a rate of 22-27% per year.

To achieve these returns, professional investors make dozens of investments each year to diversify risk and maximize what finance people term “the portfolio effect.” In contrast, the Willamette Angel Fund typically makes only one significant direct investment each year, and that one investment is generally only a fraction of the total capital the startup is raising at the time. Even so, our returns are comparable with the professionals. Looking at all 67 investments, and valuing the 51 active firms at “book” (the amount we initially invested with zero growth taken into account), our overall multiple is 1.44 and our IRR is 12%. However, if you consider only realized investments (those either sold or failed), we have a multiple of 2.45 and an IRR of 21% — remarkably on par with the professionals.

Further research into our own portfolio exposed a surprising result. Our direct investments significantly outperform our indirect investments. Our direct investments have a multiple of 1.71 and an IRR of 17% — but our indirect investments have a multiple of 0.85 and a negative IRR. If you exclude the 51 companies still active, our direct investments have a multiple of 2.92 and an IRR of 25%, compared to our indirect investments with a multiple of 0.09 and a negative IRR.

We may be “just students,” but our fund compares with the professionals, and our own direct investments outperform the larger funds we participate with. I’d call that a decade of success.


Nathan Foos

Nathan Foos is an MBA/JD candidate at Willamette University, and is an alumnus of the WU College of Liberal Arts where he studied history, mathematics, and economics. With a strong interest in the provision of capital to growing firms, Nathan has actively engaged in the experiential course offerings at AGSM, including the O’Neill Student Investment Fund and the Willamette Angel Fund. In particular, Nathan enjoys angel investing because he can engage on a personal level with investee companies, obtain real-world insight into a plethora of industries, and learn from the mistakes and successes of hundreds of startups.

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