I feel that it is becoming increasingly possible for angels -- or groups of professions that focus on early stage investments -- to make satisfying returns. I believe we are seeing more and more of this. More groups are emerging which possess the ability to really assess the single most important factor of success – the skills of an entrepreneur .
These groups have the intuition to determine if the entrepreneur or founder has the ability to withstand the roller-coaster of emotion and abuse typical of a start-up. Angels need to assess whether founders will be able to adjust to new situations, attract and hire strong team, have the people skills and relentlessly focus on building the company and create real substantial value . . simply to know if they are winners.
Over the past 20 years, it has become much less expensive to start a company, resulting in thousands and thousands of new companies a year. Technology has created an environment that allows entrepreneurs to grow companies with business models that reach profitability quickly, resulting in ventures that do not required VCs.
Despite the overall constrains, I am very optimistic that with the right structure, angels can have high returns. After all, large companies are always on the prowl, looking for ways to get into new industries, obtain talent, acquire technology and patents, reduce time to market or simply grow revenue. Therefore companies will continue to buy startups with angels receiving high multiples.