Optimizing your Angel Returns
Your Angel Style is up to You
The portfolio construction math coming out of the Angel List research applies to investing in “credible” pre-seed and seed-stage tech companies. The definition of credible is loose, but for Play Money, it’s a highly scalable business that has a professional investor already on board.
Consumer Packaged Goods and Food & Beverage also have different return profiles that affect the right way to think about portfolio construction. And this analysis doesn’t apply as directly to those categories.
A diversified portfolio is not everyone’s angel style. Plenty of folks rather make fewer larger bets and contribute capital and their expertise. And if you want to be a VC one day, and are using angel investing to establish an investing track record, you also may want to invest differently. And as always, Innovation on investment terms and exit options can throw everything in the air
On the flip, we are seeing an increasing number of early-stage funds adopt a version of this diversity strategy. Funds like Precursor Ventures, Hustle Fund, and Everywhere Ventures are seasoned and prolific investors who follow a diverse portfolio strategy of 10+ investments per year / 30+ investments per fund.