james_r_keene
|
you really have to make comparisons within the industry first, then it depends on the growth rate of the company and the cash flows, where they are in the business cycle, etc.............
there is no magic number - but sniff around comparable companies within the sector your looking at. that should give you a basis for investment.
all in all, it depends on the sector, and expectations for growth within the sector. |
angelinvestor
 |
Unfortunately, as the other serious answers below have noted, there is no such thing as 'the' ROI that will attract an investor to a business. This is because there are many, many other factors that have to be taken into account first, with the #1 factor being risk.
If Warren Buffet (the well known American billionaire investor) offered me a guaranteed ROI of 1.2 times my investment after a year, I would jump at the opportunity. But if some random person off the street offered me a guaranteed ROI of 50 times my investment after a year, I would likely not touch it with a ten foot pole.
As a very, very rough rule of thumb, serious angel investors who know what they are doing generally look for deals in which there is the potential for an ROI of 20-30 *times* their investment within five to seven years. While this may sound outrageous, the fact is that even with careful picking, the majority of potential business investments fail completely, and therefore the very few that succeed have to hit really big, in order for the investor to end up making money across his or her portfolio.
As a result, by targeting ROIs of 20-30x over 5-7 years, serious angels typically would end up with a net IRR of 20%-40% annually, which would be a very, very nice return. More information about angel investors is available in the good Wikipedia article noted below, as well as from the web sites of the Angel Capital Association (in the US) and the British Business Angel Association (in the UK.)
Good luck with your business! |
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