How Do Changes in the Stock Market Affect Angel Investing?
Description
One of the reasons that investors like to put money into startups is that they like the diversification doing so brings to their portfolios. Not to mention that angel investing itself has one of the best rates of returns among asset classes. In fact, some studies peg the internal rate of return (IRR) of angel investing at 27%. That is double the average rate of return of the S&P 500 from 1923 to 2016.
With that kind of return, I wondered if angel investing activity increases during periods of poor stock market performance. After all, you might surmise that when the stock market is in bear territory that investors look to deploy their capital in other areas.
It appears that angel investing actually sees a pull-back, not an increase when the markets are underperforming.
United States
