Understanding Reasonable Return for an Angel Investor in India

 

Angel investing in India is gaining traction, but it’s important to know what kind of returns you should realistically expect. You're putting your capital into one of the riskiest and most demanding asset classes—early-stage startups. Naturally, you'd expect better returns than what traditional investments like mutual funds, FDs, or even listed equities offer.

So, what’s a “good” return?

Globally, research suggests that a well-constructed and diversified angel portfolio can deliver an annual internal rate of return (IRR) of around 27% or more. That’s impressive compared to public markets, but remember—these numbers don’t come easy.

Understanding the risk

Many people believe that 90% of startups fail. While that's a common myth, more grounded research shows that about 60% of startups fail within 6 years. The good news? Angel investors who conduct proper due diligence and stay involved post-investment can potentially reduce that failure rate to under 50%.

Still, even a 50% failure rate means that some of your investments will return nothing. Which means the successful ones must outperform massively to make up for the losses and deliver strong returns overall.

Let’s say you invest ₹50 lakhs, dividing it equally across 5 startups—₹10 lakhs per startup. Here's how the math might work out to deliver a 3x total return (i.e., ₹1.5 crores total) and an IRR close to 27%, assuming exits happen within ~5 years:

• 2 startups fail completely, return ₹0. But you can claim tax write-offs or set off capital losses worth ₹2 lakhs per startup, totaling ₹4 lakhs in tax benefits.
  
  

• 1 startup gives a 3x return, returning ₹30 lakhs.
  
  

• 1 startup gives a 5x return, returning ₹50 lakhs.
  
  

• 1 startup becomes a big winner with a 15x return, giving ₹1.5 crores.
  
  

In total: ₹4 lakhs (tax benefits) + ₹30 lakhs + ₹50 lakhs + ₹1.5 crores = ₹2.34 crores on a ₹50 lakh investment—a 4.68x gross return. 

Two key things to note

1. Time matters: These numbers only hold if you see these exits within ~5 years. Many Indian startups take 7-10 years to exit, which affects your IRR significantly. The longer it takes, the lower your annual return.
   
   

2. You need a big winner: Without the one 15x exit, your overall return drops dramatically. Angel investing relies heavily on that one "anchor" startup doing the heavy lifting.
   
   

Why this matters in India

Indian angel investors often enter the space with limited exposure to how startup exits actually work. Many early-stage founders also don’t have a clear roadmap to an exit. That’s where you, as an investor, add value—not just by funding the startup, but by guiding the founders to think early about strategic exits, scalability, and long-term goals.

As a curated investment platform, Creddinv simplifies your journey as an angel investor—helping you discover promising startups, conduct better due diligence, and make informed decisions backed by expert insights. From tracking your investments to accessing structured startup portfolios, platforms like Creddinv give you the tools to build a strong and diverse angel portfolio, while also encouraging early-stage founders to be exit-focused and investor-aligned.

Here’s the key takeaway: Angel investing in India can deliver excellent returns, but only if you build a diversified portfolio, support your startups actively, and aim for early, high-multiple exits—with the right guidance.

Disclaimer: The examples, figures, and returns mentioned in this blog are for illustrative purposes only and do not constitute financial / investment advice or a guarantee of performance. Angel investing and private equity investments involve high risk, including the potential loss of capital. Actual returns can vary significantly based on market conditions, startup performance, exit timelines, and individual investment decisions. Creddinv does not assure or promise any specific returns.