Why Angel Investing Misses Big Returns Without Portfolio Diversity
Originally sent to Play Money subscribers · November 2025
Part of our ongoing reflections on angel investing, portfolio construction, and how capital allocation decisions shape both founder outcomes and angel returns.
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When Angel Investing Lacks Diversity, Returns Slip Away
🤔 It's easy to see how a lack of diversity in people writing checks leads to a narrow range of problems being solved and founders funded to solve them.
But it also leads to wealth-building deals slipping through the cracks for other Angels.
Here's what triggered that thought...
A 5x Markup That Never Entered the Angel SPV Portfolio
Since this summer we've had 4 Play Money SPV portfolio companies raise priced rounds. 🎉
We've seen 2x, 3x, and 4x markups.
But the biggest markup went to one that got away.
It's not officially announced yet, so I won't name names, but...
It was a deal from my personal portfolio that we hosted on the site in the beta days.
The team hails from Harvard, Apple, and Rivian, with insanely deep technical chops and market insights purpose-built for the problem they are tackling.
They connected with their dream manufacturing team (through a Play Money connection).
They won $1M in non-dilutive capital from a pitch competition (run by someone from the OG Play Money community).
And in last week's investor update the founder announced a 5x seed-round markup from one of the most fan-worthy “good guy” firms in VC.
😞 The problem?
This company isn't in the Play Money SPV portfolio.
Why Portfolio Diversity Impacts Angel Investing Returns
I get it.
Even though team is the most important thing at the earliest stages, we like to understand what we are investing in.
An emotional connection to the problem matters.
A grasp of the technology and capital trajectory helps.
Having the broadest range of investors around the table serves an important role — and not just in the way you think.
The diversity of lived experience and expertise helps educate and encourage other investors to take the leap and invest alongside them.
Without a diverse pool of investors, founders miss out on capital.
And angels miss out on potential returns.
Angels are our customers, so that doesn't sit well.
The Climate and Deep Tech Gap in Angel Investing
We've seen a similar thing happening with the amazing pipeline of sustainability and climate tech deals we've tapped into.
Mothership Materials is living rent free in our heads.
62% of the community are interested in climate and sustainability deals — especially ones with deep tech “real science” impact.
Mothership Materials has some of the most experienced category investors and science-based grant makers behind them.
It's a deal with the most backing from fellow deep tech founders that we've seen on the platform to date.
But it's not a 6-figure SPV on the site yet.
Bridging the Education Gap for Angel Investors
I am increasingly feeling it's our job to help bridge that gap.
Our education mandate can expand beyond the mechanics of angel investing and (not) financial advice.
We can lean in on the raw curiosity and learning that keeps angel investing exciting long term.
I still have dreams of my "playbook" side project to help investors make sense of the business, technology, and investment landscape for these kinds of deals.
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