Separating Angel Investing Returns from Operating Angel Investing Returns

One of the questions I’ve been asking angel investors lately is “how confident are you that an angel investor can make money investing in tech startups?” Unequivocally, every one says they are confident angel investors can make money. I then probe deeper and ask if their investment returns include money they put into their personal companies, that is investments they made in businesses they operated or invested significant sweat equity. Each one said yes.

Now, being an angel investor doesn’t strictly mean being a true passive investor. What it does mean is that not all angel investor returns are equal. Many angel investors credit the returns generated from their own personal businesses as angel investor returns, which they are, but not in the way everyone thinks about passive investing returns. The next time you’re talking to an angel investor, ask them about their track record and level of success investing with their own personal companies removed from the equation. This provides a clearer picture and often removes outliers.

What else? What are your thoughts on separating angel investing returns from personal operating business angel investing returns?