92. The Economics of Angel Investing Angel Investing 101

How to create an angel investment portfolio for maximum returns.

Learn what drives the returns for your angel investments.

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In episode, I delve into the economics of angel investing, emphasizing the need for a significant number of investments to increase the chances of success. Research shows that most angel investments result in losses or minimal returns, but a small percentage can yield substantial profits. To improve the likelihood of hitting those winners, you should make at least 20 angel investments. Diversification across different sectors is also crucial to mitigate risks associated with market fluctuations and sector-specific downturns.

I then discuss the importance of planning an investment budget. Startups typically prefer pre-seed investments of at least $25,000 to avoid numerous small investments on their cap table. For investors with smaller check sizes, you might explore options like crowdfunding or syndicates. Syndicates involve a lead investor selecting an investment, while crowdfunding platforms allow for lower minimum investment requirements, enabling diversification through multiple smaller investments.