Angel Investment Risk-Adjusted Return Calculator
Expected return after accounting for failure rates.
Calculate risk-adjusted expected return on angel investment accounting for failure probability. Enter success probability to see expected value.
What this tool does
Enter investment, success probability, successful multiple, and loss on failure. The tool shows expected value.
Enter Values
Formula Used
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Disclaimer
Results are estimates for educational purposes only. They do not constitute financial advice. Consult a qualified professional before making financial decisions.
10,000 angel investment, 20% success chance returning 10× (100,000), 80% failure (total loss): expected value 20,000. 2× on invested capital expected. Angel investing needs portfolio of 10-20 deals to smooth outcome — single bets are coin flips with 80% loss rate.
Quick example
With investment of 10,000 and success probability of 20% (plus success multiple of 10 and loss on failure of 100%), the result is 20,000.00. Change any figure and watch the output shift — it's often more useful to see the pattern than to memorise the formula.
Which inputs matter most
You enter Investment, Success Probability, Success Multiple, and Loss on Failure. The rate and the time horizon usually dominate — compounding means a small change in either reshapes the final figure more than a similar shift in contribution size. Test this by doubling one input at a time.
What's happening under the hood
Probability-weighted expected value. The formula is listed in full below. If the number looks off, you can retrace the calculation by hand — that's the point of showing the working.
Why investors run this
Most people's intuition for compounding is wrong — not because the math is hard, but because linear thinking doesn't account for curves. Running numbers through a calculator like this one is the cheapest way to recalibrate that intuition before making an irreversible decision about contribution rate, asset mix, or retirement age.
What this doesn't capture
Steady-rate math ignores real-world volatility. Actual returns are lumpy; sequence-of-returns risk matters most in drawdown; fees and taxes drag on compound growth; and behaviour changes in drawdowns can reduce outcomes below the projection. Treat the number as one scenario, not a forecast.
Angel risk-return produces an expected value based on the inputs provided.
Inputs
This example uses typical values for illustration. Adjust the inputs above to match a specific situation and see how the result changes.
Sources & Methodology
Methodology
Probability-weighted expected value.
References
Frequently Asked Questions
Realistic success rate?
Why portfolio approach?
Illiquid?
Tax incentives?
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