AngelList analyzes thousands of startup investments to model how timing impacts venture returns, focusing on how growth rates evolve across a company’s lifecycle. The paper argues early-stage investing behaves more like a power law than traditional asset classes, with one controversial takeaway being that broad indexing at seed may outperform selective picking.
Startup Growth And Venture Returns
AngelList
Abe Othman
Research
26 Pages
Key Takeaways
Early Year Value Concentration: Year 1 contributes as much value as years 5–8 combined, highlighting how early compounding dominates long-term venture returns.
Power Law Return Distribution: A small fraction of deals drive outcomes, with top investments generating outsized returns like 1,000x+, while most outcomes cluster near zero.
Indexing Beats Selection: Investors who broadly invest across dozens of seed deals can outperform selective strategies, with modeled returns improving as portfolio size exceeds 50+ investments.
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