How to calculate the return on your startup investment

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Private investment network 1000 Angels, which connects vetted startups with investors, has launched the Startup Return Calculator, aimed at helping investors decide if an investment opportunity is a winner or just over-priced.

The Startup Return Calculator allows investors to answer a few simple questions on factors such as expected revenue growth and percentage stakes, and informs them of the likely return on their investment.

Entrepreneurs can also use the calculator to provide assistance in their fundraising conversations.

Alejandro Cremades, co-founder and executive chairman of Onevest and 1000 Angels, told Disrupt Africa his team used the tool to analyse potential returns for investment opportunities it evaluates for 1000 Angels members.

“It helps us compare different startup investment opportunities on an apples-to-apples basis by both calculating potential IRR and cash on cash return,” he said.

“We have found it very useful and thought other investors and startups might find it useful as well in analysing the risk and return potential of prospective investments.”

1000 Angels believes the calculator will be useful in helping the investor community understand how valuations and dilution from follow on capital requirement can affect the expected return of their investments.

The US-based investment platform Onevest launched 1000 Angels in October of last year, claiming to be the world’s largest international, invitation-only network for angel investors.

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Passionate about the vibrant tech startups scene in Africa, Tom can usually be found sniffing out the continent's most exciting new companies and entrepreneurs, funding rounds and any other developments within the growing ecosystem.

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