The Invisible League Table: Why Some Angels Quietly Beat the Rest, and What Their Motivation Has to Do With It

She'd been in the syndicate longer than I had, and she had no idea she was losing.

We were having coffee, the good kind, in one of those Edinburgh places that charges you for the privilege of sitting down. She’s younger than most of our members, sharp, does something clever in professional services that pays well. She’d written maybe a dozen small cheques over the years into companies the syndicate had brought to her. And somewhere between the flat white and the second cup, she said the thing that made me put my cup down.

“I don’t really do much before I invest. I just sort of go with what the group’s doing. It’s all a bit of a lottery anyway, isn’t it?”

It isn’t a lottery. That’s the whole point. It looks like a lottery, which is precisely why so many intelligent people play it as if it were one. But there is an invisible league table running underneath every angel syndicate in the country, and your position on it is decided long before any company exits. It’s decided by what you do in the weeks before you write the cheque, and, as we’ll see, by what the companies you back had already done before you arrived. And almost nobody can see the table they’re on.

I’m going to call her Kate, because that isn’t her name and she’d rather I didn’t use the real one. Kate is the reason for this piece. She becomes, later on, the happy ending. But first I need to explain the table she couldn’t see, and why the reason she couldn’t see it has everything to do with why other people invest at all.

This is a companion to our earlier article about the roughly £340,000 gap, the one built from Robert Wiltbank and Warren Boeker’s 2007 Kauffman Foundation study, “Returns to Angel Investors in Groups.” If you’ve not read it, the single sentence version is this. Angels who spent 20 or more hours on due diligence before investing saw an average return of 5.9 times their money. Angels who spent fewer than 20 hours saw 1.1 times. Same deals, roughly. Same market. The difference was the homework. We turned that into a worked example and it came to about £340,000 of foregone return on a modest portfolio. People found the number uncomfortable, which is the correct response to it.

This piece asks the question that sits underneath that one. If more diligence so obviously pays, why on earth do most angels do so little of it?

The answer is more interesting than laziness. The answer is that they’re often being perfectly rational, given what they actually want. And what they actually want is frequently not what they’d tell you at a drinks reception.

Five angels, five reasons

Let me introduce some people. They’re invented. I want to be completely clear about that, because the rest of this article leans on them and I’d rather you trusted me than caught me out. The following characters are fiction, composites stitched together from a decade of watching real syndicates and from the academic literature on why angels invest. Any resemblance to a specific person is your imagination doing what imaginations do. The research behind them, though, is real, and I’ll show my working at the end.

Meet four angels, and Kate makes five.

There’s Gordon, who is a management consultant. Gordon invests small, always small, five or ten thousand at a time, into companies that are raising a proper round. Gordon has noticed something that the rest of us pretend not to. A founder who has just taken your cheque, however small, is a founder who might also take your advice, at your day rate, which is considerable. Gordon’s investments are not really investments. They’re the cost of a warm introduction to a paying client. His diligence is light because light diligence is the correct amount of diligence for what Gordon is actually buying, which is access rather than equity.

There’s Marcus, who earns a great deal and hates his tax bill more than he likes anything. Marcus invests because SEIS gives him 50 per cent income tax relief on up to £200,000 a year, because EIS gives him 30 per cent on up to a million, because his capital gains can be sheltered, and because if the whole thing goes to zero he can claim loss relief against income at his marginal rate. Marcus has done the arithmetic and the arithmetic is genuinely lovely. By the time the tax reliefs have done their work, a total loss costs Marcus a fraction of the cheque. So Marcus, quite logically, doesn’t sweat the company. He’s betting on HMRC, and HMRC always pays out.

There’s Priya, who built something and sold it, and now has more money than she expected and a strange hole where the company used to be. Priya invests because she misses it. She wants to sit across a table from a nervous 29-year-old and see herself ten years ago. She gives real time, real contacts, real scar tissue. Her motivation is the one the academics call altruistic, though Priya would find that word embarrassing and would tell you she just likes the founders and wants them to win. She does more work than Gordon and Marcus combined. She hasn’t read Wiltbank. She doesn’t need to, because caring and diligence turn out to look almost identical from the outside.

And there’s Rupert, who is in the syndicate because the right people are in the syndicate. Rupert enjoys saying “one of my companies” at dinner. His diligence consists of finding out who else is in, and following them. Rupert is the purest example of a type the research is too polite to name properly, the investor whose real return is social, measured in standing rather than in sterling.

Then there’s Kate, who genuinely doesn’t know why she’s doing it, which makes her the most promising of the lot. Because Kate is the only one who can still change her mind.

Now here’s the thing the coffee conversation taught me. Every one of these people is behaving sensibly given their goal. If your goal is consulting work, light diligence is efficient. If your goal is tax relief, the company barely matters. If your goal is status, following the crowd is the entire strategy. The trouble is that four of these five people believe, when they check their statements, that they’re playing the returns game. They talk about multiples. They’re quietly disappointed when a company folds. They think they’re investing. They’re doing something else, and the something else has a cost they never see.

Keeping score in different currencies

The research on why angels invest goes back a long way, and it’s remarkably consistent. Mary Kay Sullivan and Alex Miller, writing in 1996, sorted informal investors into three groups by motivation, the economic, the hedonistic and the altruistic. Colin Mason and Richard Harrison, who between them have spent thirty-odd years studying UK angels, found again and again that angels want to “have fun while making money,” and that the fun is not incidental. William Wetzel, the man who coined the term “angel” for investors in the first place back in the late 1970s, noticed early that angels were often retired entrepreneurs chasing something beyond money. More recent work confirms that a large share of angels are driven at least as much by social and personal rewards as by return. One 2023 study of business angels by Falcão and colleagues found that self-esteem, entrepreneurship, emotion and altruism explained more of the perceived value of angel investing than the economic and functional dimensions did.

Read that again. For a lot of angels, the money is not the main thing. And if the money is not the main thing, then spending 40 careful hours protecting the money is, from their point of view, a waste of an evening.

This is why the league table is invisible. Everyone’s keeping score in a different currency, so nobody agrees on who’s winning.

Which brings me to the number Kate needed to hear, the one about the funnel. Because the reason diligence is so expensive, and the reason most angels quietly opt out of it, is that you don’t do diligence on one company. You do it on the pile you reject to find the one you don’t.

One in forty: the diligence arithmetic

David S. Rose, who founded New York Angels and has probably seen more angel deals than almost anyone alive, puts it plainly. Writing for Columbia Business School, he says that “venture capital funds typically review up to 400 opportunities for each early-stage investment, professional angels are generally only able to look at 30 to 40 company presentations before writing a check.” In a Motley Fool interview the same year he said it even more baldly. Angels “typically invest in only two or three percent of the companies that they see, so that’s one out of 40 companies. You’ve got to be really tough.”

One in forty. Sit with that.

The Angel Capital Association’s own guidance, drawn from surveys of member groups, describes the same funnel from the inside. Only about one in four deals that reach pre-screening make it to screening, and only about one in three of those make it to due diligence. Compound that and you’re at roughly one in twelve reaching the diligence stage, before the final cull. In the UK, Angel Academe, one of the more rigorous networks, has reviewed over 5,000 opportunities since 2014 and backed 50-plus companies. That’s a funnel of about one per cent.

So here’s the honest arithmetic Kate had never done. Suppose you want to make three good investments a year, which is a sensible pace for a diversified angel building toward the 20-plus companies the data says you need. At Rose’s one-in-forty, you need to look hard at around 120 companies to find your three. If you’re doing the diligence the returns actually reward, Wiltbank’s 20 hours minimum, and a 2019 study by Forrester and colleagues put the mean at 60.6 hours per deal, then the numbers become absurd for a busy professional very quickly. You cannot do 20 hours of real work on 120 companies. That’s 2,400 hours. That’s more than a full-time job, on top of your actual full-time job.

Kate earns, let’s say for the sake of the sum, £100 an hour when she’s working. Twenty hours of diligence on a single company is £2,000 of her time. If she does it properly across even a fraction of the funnel, the cost of her own attention dwarfs the £5,000 or £10,000 she’s putting into any one deal. This is the trap. For a high-earning professional, doing angel diligence properly, alone, costs more in foregone earnings than the investment is worth. So she doesn’t do it. And because she doesn’t do it, she lives in the 1.1x world, not the 5.9x world, and she never knows, because the gap between those two worlds only reveals itself a decade later, by which time she’s blamed the market, or luck, or the founders, or “it’s all a bit of a lottery.”

The canteen: what a syndicate is for

But look what happens if you don’t do it alone.

This is the entire, unglamorous genius of the syndicate. When twenty angels share a syndicate, they don’t each do 20 hours. They pool it. The work is led by, and entrusted to, the members with the relevant scars, the ones who actually understand SaaS churn or clinical trials or supply chains, and the rest of the group rides on that expertise. Wiltbank found this too, in the UK, in his 2009 NESTA and BBAA study “Siding with the Angels.” The returns came from diligence and from investing inside your area of expertise. A group gives you both. You get the 20-plus hours of coverage without personally paying the opportunity cost on every deal, because the hours are divided and specialised. It’s the difference between everyone in the office cooking their own lunch and a canteen.

This is not a small effect. The UK Business Angels Association reports that 79 per cent of UK angel investments are made as part of a syndicate, and that the median initial cheque is £25,000 with a £7,500 follow-on. In Scotland it’s practically the default. Archangels, the Edinburgh syndicate, does its origination, due diligence, portfolio management and exit work on behalf of its 70-plus members, who invest as individuals but never have to be the expert on everything. In 2024 Archangels led £27.3 million of investment, £13.8 million of it directly from members. Over its life it has turned around £36 million invested into more than £100 million realised, taking, on average, about eight years to get there. That last number matters and I’ll come back to it.

Some canteens will poison you

But I have to stop here and complicate the canteen, because I’ve just made syndicates sound like the answer, and they’re only the answer in the way that restaurants are the answer to hunger. Some of them will poison you.

A syndicate sells you three things: pooled diligence, shared deal flow, and the comfort of a crowd. When it works, one experienced gatekeeper spends forty hours pulling a company apart and twenty members get the benefit of work they’d never have done alone. When it doesn’t work, you get the room and the cut, and not much else.

Because there’s a version of the syndicate that’s really a fee machine. It charges the founder a completion fee when the deal closes, sometimes five figures, billed straight back to the company you’ve just funded, so a slice of your own cheque walks back out of the front door as somebody’s arrangement charge. Think about what that actually is. You’ve weakened the asset in the act of buying it, which is a kind of negative diligence. The same outfit charges you, the member, an annual fee for the pleasure of being on the list, and takes a slice of your profit on exit if there ever is one. Every one of those tolls raises the bar the company has to clear before you see a penny. A five-times winner can quietly come home a four-times winner once the fees have had their turn. Those exact figures are illustrative, but the direction of the erosion is well documented, and founders talk to each other about which groups do it.

Then there are the two problems the fee machine can’t fix, and they compound each other.

The first is deal flow. A syndicate can only invest in what walks through its door, and most doors are local. Run a group in a thin regional market and you’re choosing from a shallow pool, and the standing temptation is to lower the bar rather than admit that nothing worth backing arrived this quarter. Colin Mason, who has spent thirty years studying Scottish angel groups, has a finding here that is quietly devastating. When he and his colleagues studied 21 gatekeepers, most said they consider the exit at the point of investment. When the researchers recorded them actually deciding, most didn’t. They backed companies they liked, and the exit became somebody’s problem for later.

The second is the follow-on trap. When exits don’t come, and mostly they don’t come quickly, a struggling syndicate keeps feeding its existing companies to keep them breathing, and good money chases the money already committed. Wiltbank flagged this in both his studies: deals where the angel followed on returned 1.4 times against 3.6 times where they didn’t, which tells you how often the second cheque is a rescue rather than a reward. Mason found the same mechanism strangling the recycling of angel capital in Scotland. Investors get stuck topping up the walking wounded and never free up cash for anything new.

So here is the correction to everything I said three paragraphs ago. Being in a syndicate is not a rung on any ladder. Being in a good one is. And there’s a related trap that catches even the members of excellent syndicates, and it’s the one that caught Kate. Pooled diligence you never read isn’t diligence. It’s a rumour. Kate sat inside a group that did real work, and she rode it the way Rupert rides the room, by following, which meant the group’s forty hours never actually became hers. The syndicate can gather the evidence for you. It cannot do the believing for you.

You can learn to tell a good syndicate from a bad one, and it takes about five questions. Does the gatekeeper know the sector, or just the room? Is the diligence real work you can read, or a slide that says “diligence”? Who pays the fees, and does the founder get billed on the way in? Does the group follow its winners on purpose, or feed its losers by habit? And when you ask what happened to the last ten investments, does anyone have an answer?

The Angel Pyramid

Now, the picture I promised Kate. We rank the founders in The Startup Race on a rectangular league table, a Premier League at the top and divisions below. For angels the right shape is a pyramid, layered, the same layered pyramid as our own logo, and every layer up means better behaviour and better expected returns. That matters, because the last time I drew this I got it slightly wrong, and the error was instructive. You cannot make “joins a syndicate” a layer, for all the reasons above. The layers have to be made of what you actually do, and of the quality of the structure you do it in. Here it is, from the bottom up, because the bottom is where nearly everyone starts.

The Angel Pyramid (widest at the base, narrowing to a point; climb direction is up):

  • Layer 1, the base, about 60 per cent: the ad-hoc angels. Under 5 hours of diligence, investing on a pitch, a personality, a warm introduction, usually outside their own domain, holding a handful of companies. This is Wiltbank’s 1.1x band, where most cheques return less than the capital. Gordon lives here and Rupert lives here, and neither is failing, exactly, because Gordon’s return is a consulting fee and Rupert’s is a dinner-party anecdote. They’re at equilibrium. It’s everyone else on this layer, the ones who think they’re playing the returns game, who are paying for it.
  • Layer 2, about 20 per cent: the tax-motivated cheque-writers. Marcus’s layer. SEIS and EIS relief is the reason for the deal, the downside is floored by the rebate, and so the diligence never gets done, because protecting the upside was never the point. Outcomes here run slightly ahead of Layer 1 after tax, and that’s the ceiling, because relief truncates losses without improving selection by a single hour.
  • Layer 3, about 12 per cent: the passive syndicate members. Diligence nominally outsourced to a group, sometimes a good group, sometimes a fee machine, and never checked either way. This is where Kate sat for years. If the syndicate is poor, the fees and the thin deal flow eat the difference. If the syndicate is good, the member’s passivity wastes it. Either way, the pooled hours exist on paper and not in the member’s head.
  • Layer 4, about 6 per cent: the active members of high-quality syndicates. Pooled 20-plus hour diligence genuinely done and genuinely read, entrusted to sector-expert gatekeepers with actual exits behind them, membership and admin fees only, no five-figure tolls billed to founders, and real engagement after the cheque. This is the 5.9x band the research describes. It’s where Kate is climbing to, and we’ll follow her there.
  • Layer 5, the apex, about 2 per cent: the elite. Forty-plus hours led personally, in-domain, board seats, portfolios of 15 to 25 companies, and follow-on done selectively into winners rather than reflexively into casualties. Wiltbank’s 7.1x band. Priya’s layer, though she’d never call it that. Tiny, mostly invisible, quietly compounding.
Those population percentages are illustrative, a way of drawing the shape, and I want to be honest that I’ve drawn them rather than measured them. The diligence-hour thresholds and the return bands, though, are from the research, and the shape itself is not invented. It’s the power law, and the power law in angel returns is one of the best-evidenced things in this whole field. The Angel Capital Association puts it plainly: “over half of early-stage investments typically fail to return any capital, with the top 10% usually returning 85-90% of all the cash proceeds. The game is won on ‘grand slam home runs,’ not ‘singles.'” AngelList, analysing 1,808 early-stage investments, found the same power-law shape, with the top 1 per cent of positive investments returning at least 22 times. Tech Coast Angels, across 247 outcomes between 1997 and 2022, made a 25 per cent IRR, and eight companies, 3 per cent of the portfolio, produced 77 per cent of the dollars returned. A few names at the top of the pyramid carry almost everyone.

And the position on the pyramid is not random. It correlates, tightly, with diligence behaviour, which correlates, in turn, with why you’re really there. The Marcuses and Gordons and Ruperts sit where they sit because their motivation points them there. The 2 per cent at the top are, overwhelmingly, the people for whom the return is the point, who therefore do the work, who therefore earn the return. The circle closes.

Two leading indicators, one lagging truth

Here is the problem I kept running into when I tried to explain this to Kate over that coffee. You cannot see the pyramid in real time. Angel returns take eight to ten years to arrive. Archangels’ eight-year average is typical, rather than slow. So by the time the returns table is legible, you’ve spent a decade on the wrong layer and it’s far too late to move. The lagging truth arrives after the game is over.

Unless you measure the leading indicators instead. And there are two of them, which is something I only half understood when I wrote the earlier article.

The first is the one you’d expect: diligence hours, the thing you can watch quarter by quarter, the way we watch revenue weekly in The Startup Race. The second is quieter and, over a decade, probably matters as much. Call it entry evidence: of the cheques you wrote this quarter, what proportion went into companies that had already proven themselves with real, sustained revenue before you arrived? Diligence hours set your ceiling, because they decide whether you find the winner. Entry evidence sets your floor, because it decides how many zeros you’re carrying while you wait. Wiltbank’s data says roughly half of conventional angel investments return less than the capital put in. Most angels don’t lose the decade because they missed the big winner. They lose it because of what the rest of the portfolio quietly did while they were looking for one.

So let me show you the invisible table the only honest way it can be shown, by the two behaviours that predict returns rather than by the returns themselves, which won’t be known for years. Here are our five, over eighteen months. Remember, it’s fiction, and its calendar runs ahead of the real one. But it’s fiction built to match what the data says happens.

Diligence table (average diligence hours per deal, by quarter):

Quarter Priya Gordon Marcus Rupert Kate
Q1 35 4 3 5 2
Q2 38 4 2 6 3
Q3 40 5 3 5 9
Q4 41 4 3 7 18
Q5 42 5 2 6 24
Q6 43 4 3 6 26
Entry evidence table (share of each quarter’s new cheques into companies with a year or more of proven recurring revenue):

Quarter Priya Gordon Marcus Rupert Kate
Q1 25% 0% 10% 0% 0%
Q2 25% 0% 0% 0% 0%
Q3 30% 0% 10% 0% 50%
Q4 30% 0% 0% 0% 100%
Q5 35% 5% 10% 0% 100%
Q6 35% 0% 0% 0% 100%
In Q3 Kate joins The Startup Race syndicate, and both of her columns start to move at once. The hours climb because the structure hands her evidence she can actually read, fifty-two weeks of it, and reading it turns out to be rather compelling. The entry evidence jumps to 100 per cent because every company she now backs has, by definition, a year of verified revenue behind it before her money arrives. Watch the others flatline, because their motivation never changed, so their behaviour never changed. Gordon doesn’t need more hours to win consulting work. Marcus doesn’t need more hours to claim relief. Rupert doesn’t need more hours to feel important. They’re at equilibrium. Kate is moving. And notice the strange thing in the second table: within a year, Kate’s floor is stronger than Priya’s, even though Priya’s ceiling, all those hours and all that scar tissue, remains the best in the group. Priya finds winners by brute diligence and still carries the conventional number of zeros. Kate has outsourced the floor to a structure.

Now telescope forward a decade, past the eight-year exits, and turn the two leading tables into the returns table they were quietly predicting all along.

Priya, apex layer, comes out around 5 to 7 times her invested capital, carried, as everyone is, by one or two companies she’d never have found without her 40 hours, and dragged, as almost everyone is, by the zeros. Kate, who climbed into the fourth layer and stayed there, lands in the 5.9x neighbourhood the research describes, and gets there more smoothly, because her floor was raised before her ceiling was. Gordon has made a modest 1.1x on the equity and a very handsome living on the consulting, so Gordon is delighted, and correctly so, because he was never counting the equity. Marcus has made about 1.1x on paper too, but after tax reliefs he’s ahead, and he was always really playing the tax game, so he’s also content. Rupert has lost money and gained stories, and considers this a reasonable trade, which tells you everything about what Rupert was buying. And the mechanism behind the final ranking is worth naming, because it’s counterintuitive. Gordon and Rupert didn’t lose the returns game by missing the big winner. They lost it by carrying six zeros each while Kate carried one.

The league runs both ways

There’s one more table, and it’s the one that ties all of this together, because it turns out the league runs in both directions.

While investors are quietly ranking each other in hours and multiples, founders are ranking the investors, and they compare notes far more than investors imagine. When Robert Gelb surveyed sixty-one Scottish founders about their investors, the average mark came back at three out of five, and not a single founder gave full marks. They praised approachability and speed. They complained about low valuations, thin help beyond the cheque, and terms they described as outdated. The platform Landscape does the same thing across the UK, letting founders rate investors anonymously the way employees rate employers, and the weakest scores land in the same place every time, on whether the investor was any use after the money arrived. Small samples, self-selected, and I’d treat any individual score with caution. But the direction is consistent, and the consequence is brutal for the fee machines: the best founders, the ones with options, steer toward the investors other founders recommend and away from the groups that bill five figures on the way in. A bad syndicate isn’t relegated by its returns, a decade too late for anyone to notice. It’s relegated by founders declining its money, which happens much faster. Deal flow follows reputation, and the failure floor and the founder scoreboard turn out to be the same mechanism seen from opposite ends. You climb this table by being chosen as much as by choosing.

What Kate did next

So what exactly did she join, back in Q3?

Time to declare my interest plainly, since The Startup Race is our competition and I run it. But the mechanism is the point, not the branding. The old syndicate gave Kate pooled diligence, which was already a leap from doing it alone. The Startup Race goes a step further and moves most of the risky screening to before the investor ever arrives.

Here’s how. In a normal funnel, the angel or the group does the brutal work of examining forty companies to find one, and most of those forty are unproven ideas with a deck and a dream. In The Startup Race, fifty founders spend 52 weeks proving revenue in public, on a weekly league table of verified weekly revenue, drawn straight from their accounting systems. To even qualify, a founder has to be generating £5,000 of annual recurring revenue, which is about £96 a week. As we put it, rather bluntly, on the site: if you can’t convince strangers to pay you that much, you’re not ready to race. So the wishful thinking, the founders who can pitch but can’t sell, gets filtered out at the door, and then again every single week for a year, by the market itself rather than by Kate’s evenings. By the time she looks at the top of that league table, she isn’t looking at forty maybes. She’s looking at a handful of companies that have already survived a year of public, revenue-first natural selection, following the Four Sequential Problems method that has founders solve awareness, then fit, then traction, then scale, in that order. The funnel has been run for her, in daylight, using the one signal that can’t be faked. Real money from real customers. And on fees, the part that would have surprised the younger Kate most: no completion fee is billed to the founder, the model is membership and admin only with no carry or commission, and The Startup Race Ltd puts its own £10,000 into the winner on identical terms. None of Kate’s money walks back out of the door as somebody’s arrangement charge, and none of the founder’s runway does either, which is precisely why the founder scoreboard matters to her returns.

Now, the Race itself starts this summer, and the winner’s investment lands a year after that. So everything from here is the film run forward, the same trick the diligence table just played on you, the next twenty years told as Kate will remember them.

Kate’s first cheque wasn’t written to a pitch deck. It was written to a scoreboard.

She had three ways in, and she used all of them over time. She backed the winner of the £100k Race, the founder who’d topped the Premier League after twelve months of published weekly revenue. She went pro-rata alongside one of the Golden Buzzer investors, borrowing the conviction of someone who’d done the deep work so she didn’t have to repeat it. And when the competition finished, she invested alongside the observing investors, the ones who’d spent a year watching the field before committing a pound.

Notice what she never did. She never sat through a pitch evening.

Then the £1M Race changed her arithmetic entirely. Ten investees of £100k each, plus the wider field of race-proven companies around them, meant she could build the twenty-company portfolio the research recommends in two years rather than the decade it takes a conventional angel collecting deals one dinner at a time. Her Premier League returns, on the model’s own numbers, arrive in eight.

Now run her forward, because she’s 30, and the decades are the whole point. Suppose she invests £50,000 a year for ten years. On paper that’s £500,000 deployed, but SEIS relief at 50 per cent and EIS at 30 per cent mean HMRC hands £20,000 to £25,000 of it back each January, so her real outlay is nearer £300,000. Each yearly vintage compounds at the rate implied by the model’s own worked example, £100,000 becoming £500,000 or more over a decade, which sits comfortably below the multiples Wiltbank recorded for the high-diligence cohort, so it’s a Premier League assumption rather than a fantasy one. By 40 her portfolio’s paper value is around £1.35 million, with the first exits just landing. By 50, all ten vintages matured, she’s realised roughly £2.5 million. Every pound of gain free of capital gains tax, which at today’s rates is about £480,000 the Treasury never collects. The taxman was her co-investor on the way in and her silent partner on the way out.

The usual objection is the power law, and it’s a fair one. Some of her companies will return nothing, and two poor vintages would dent those numbers meaningfully. But this is where the model earns its keep at the bottom of the distribution as well as the top. Wiltbank found roughly half of conventional angel investments return less than the capital put in. Kate’s companies had all banked twelve months of verified weekly revenue before she ever saw them, and our own data from the earlier, smaller races, a small sample, honestly declared as such, shows even the bottom tenth of participants averaging £50,000 in annual revenue, several times the UK startup norm. She isn’t funding experiments. She’s funding businesses that have already survived the period in which most startups quietly die. The model raises her ceiling through diligence and raises her floor through selection, and the floor is the part nobody puts on a poster. And where a company does fail, SEIS loss relief means a failed pound costs an additional-rate taxpayer about 27 and a half pence, so even her zeros aren’t quite zeros.

Will she make it? I can’t tell you that, and I won’t, and you should distrust anyone who does. This is a projection, an illustration of a direction, and it comes with no guarantee attached, because none would be honest. Angel investing is high risk. Most individual angel investments lose money. Wiltbank’s UK data found that 56 per cent of exits failed to return even the capital put in. Capital is genuinely at risk, the returns take the better part of a decade, and the power law means most of Kate’s companies will disappoint her while she waits, quietly, for the ones that don’t.

But I know which layer of the pyramid she’s now standing on, and I know both of her columns are moving. The old way, the following-the-crowd way, the light-touch way that four out of my five characters practise for four out of five perfectly good reasons, keeps most angels on the bottom layers for life, held there by sunk cost and by the comfortable gravity of their own social group. The new way, the one the research has been quietly pointing at since 1996, is available to anyone willing to admit which game they’re actually playing, and then to play it in a structure built for people who have day jobs.

Kate finished her coffee. She asked how to join. That, more or less, is the whole story.

The league table was always there. She just needed someone to show her she was on it. There turned out to be two of them, and she’s climbing both.

A last thing, since Kate’s question will occur to some of you. The next Race runs for 52 weeks with the league table published weekly, and there’s a seat for people who just want to watch: no commitment, no cheque, the same verified revenue Kate saw, live. If you’d like to see the table for yourself before deciding whether you’re on it, take the Race Observer seat at join.thestartuprace.com/observer. And if your next question is whether you’d qualify to invest at all, the the four routes to sophisticated investor certification, including the two considered crowdfunding investments that solve the chicken-and-egg problem of needing to be in the game before you’re allowed in

Appendix: verified sources

Screening funnel ratio. David S. Rose, “Angel Investing: The New Alternative Asset,” Columbia Business School / Chazen Global Insights, 2014. David S. Rose, Motley Fool interview, 7 May 2014 (“one out of 40”). Angel Capital Education Foundation / ACA, “Best Practice Guidance for Angel Groups: Deal Screening,” 2007. Angel Academe (UK), network funnel figures via Tom Britton.

Diligence and returns. Wiltbank & Boeker, “Returns to Angel Investors in Groups,” Kauffman Foundation / ACEF, 2007 (539 angels, 3,097 investments, 1,137 exits; 5.9x for 20-plus hours vs 1.1x under 20; 7.1x for 40-plus; 52 per cent of exits below 1x; 2.6x, 27 per cent IRR, 3.5 years; follow-on 1.4x vs 3.6x without). Wiltbank, “Siding with the Angels,” NESTA/BBAA, 2009 (56 per cent of exits fail to return capital; 2.2x, about 22 per cent IRR). Forrester et al., “Behavioral Finance: Factors Influencing Angel Investor Due Diligence,” 2019 (mean 60.6 hours per deal).

Syndicate quality and fees. Mason, Botelho & Harrison on the transformation of the UK angel market into gatekeeper-led groups (2013 onward); Mason & Botelho, gatekeepers and exit orientation, 2016 (21 Scottish/NI gatekeepers; most claim exit-centric screening, verbal-protocol analysis shows most aren’t). Mason & Harrison on commercial angel network success fees (1997). Founder-side completion fees of five figures: a documented and criticised behaviour pattern, not systematically quantified in public data; presented as a pattern. Barclays Eagle Labs / UKBAA on follow-on prevalence (about 65 per cent of angels follow on). Fee-drag arithmetic (a 5x gross falling toward 4x net): illustrative, direction consistent with independent SPV fee analyses.

Founder-perspective data. Robert Gelb et al., Scottish Founders Survey (founderssurvey.com; 61 Scottish founders; average investor sentiment 3/5; no respondent gave 5/5; praise for approachability and speed; criticism of valuations, help beyond the cheque, and terms). Landscape (landscape.vc), anonymous founder ratings of UK investors; weakest consistent dimension is help beyond money. Both samples small and self-selecting; treated as directional.

Power law. Angel Capital Association (“top 10% of investments typically return 85-90% of all cash proceeds”). AngelList (1,808 investments; top 1 per cent of positive investments at least 22x). Tech Coast Angels 1997-2022 (247 outcomes; 25 per cent IRR; 3 per cent of companies produced 77 per cent of dollars returned).

Motivation taxonomy. Sullivan & Miller, Journal of Business Research, 1996 (economic, hedonistic, altruistic). Mason & Harrison, multiple works 1994-2017 (“have fun while making money”). Wetzel (1983). Falcão, Moreira & Carneiro, 2023 (849 angels, 79 countries; self-esteem, entrepreneurship, emotion and altruism outweigh economic and functional value).

SEIS/EIS, 2025/26. SEIS: 50 per cent income tax relief on up to £200,000 a year; CGT exemption on qualifying disposal after three years; loss relief at the investor’s marginal rate (worst case on £10,000 for an additional-rate taxpayer roughly £2,750, i.e. about 27.5p per pound). EIS: 30 per cent relief on up to £1m (£2m knowledge-intensive). Both schemes extended to 2035. Sources: GOV.UK HS393 and mainstream adviser guidance.

UK and Scotland market. UKBAA / British Business Bank (79 per cent of angel investments syndicated; median initial cheque £25,000, follow-on £7,500). Archangels via Angel Capital Scotland and the Strathclyde Hunter Centre study (£27.3m led in 2024, £13.8m from members; about £36m invested returning over £100m; roughly eight-year average to exit; 70-plus members).

The Startup Race model. thestartuprace.com, thestartuprace.com/investor-memo and race.thestartuprace.com: £5,000 ARR (about £96 a week) qualification; 52-week public revenue league table verified through bank data; Premier League top 10; SEIS Advance Assurance for every racer; membership and admin fees only, no carry or commission, no founder completion fee; £10,000 co-investment by The Startup Race Ltd on identical terms; Golden Buzzer investor mechanic; three investor routes (back the winner, pro-rata alongside Golden Buzzer investors, invest alongside observing investors after the competition); £1M Race enabling 10 x £100k investees; bottom-decile participants in earlier smaller races averaging £50,000 ARR (TSR’s own small-sample data, declared as such in the article).

This article is for information, not investment advice. Angel investing is a high-risk asset class. Your capital is at risk and you could lose all of it. Tax reliefs depend on individual circumstances and may change. Characters are fictional composites; projections are illustrations of direction, not promises. Past research findings are not a promise of future returns.

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