VC needs grand slams. You don't.
Originally sent to Play Money subscribers · July 2026
Part of our ongoing Tuesday series on how angel investing returns actually work — the power law, exit sizes, and why base-hit exits still beat public markets.
Want to put your learning into action?
We share one vetted startup deal every week. Always free to lurk and learn.
💎 90% of startup exits happen under $100M. The median is $44M. Neither of those is a unicorn, but a portfolio built off them beats public markets.
So why does every angel think they need to find the next Uber?
-- C2K
The power law is the most quoted idea in angel investing. And everyone gets it wrong.
The power law itself is true. It's how nature works. One outlier dwarfs the rest. What got warped is the number attached to it. VC took a proportionality rule and welded a dollar sign to it.
First it was $1B. Then $10B. Soon it'll be a trillion.
That's not the power law. That's VC math.
VC needs grand slams. You don't.
A fund manager has time to support a dozen startups. They can't return a billion-dollar fund on 12 $50M exits. The bigger the fund, the bigger the outcomes required, and the smaller the universe of companies that can plausibly get there.
Angel math is different. Our winners don't need to be huge. They need early entry valuations that grow by multiples.
The RBI portfolio beats public markets
90% of startup exits happen under $100M. Median exit is around $44M.
A diversified angel portfolio built off these base hits outperforms public markets over 88% of the time, even without a "unicorn" exit.
Get in at a $5M post-money cap. Company sells for $50M. That's 10x on a "small" exit nobody writes headlines about.
That size exit also takes takes far less time which means you have more capital to cycle into the next bet that much sooner. 🤑
One of the most common things we've heard from experienced angels is that they love "money in motion". They want their angel capital circulating to the next founder vs tied up in a late stage deal.
The RBIs live where the big money isn't looking
The same VC math that needs decacorns is what makes the rest of the map so attractive for angels.
CPG. Women's health. Climate. Family tech. These are strong scalable businesses building in active M&A markets, and who disproportionately benefit from the "do more with less" that comes with new technology.
Many are from middle-of-the-country markets where valuations aren't inflated by VC overfunding.
They raise less. They stay lean (unless the unicorn path becomes obvious). When they exit, angels who got in early make multiples.
🌶️ Fun fact: We've been told the ability to raise capital is a sign of success. But the real data says there isn't a correlation between how much a company raises and whether it exits well.
If I was a dorky dad, this is the place I would say "batter up".
Play Money makes angel investing accessible by helping everyday angels build diversified startup portfolios without turning it into a full-time job.
If you want weekly breakdowns like this in your inbox:
Frequently asked questions
The power law is the idea that in a portfolio of startup investments, a small number of outliers drive most of the returns while the majority produce little. It is a real pattern that mirrors how nature distributes outcomes: one big winner dwarfs the rest. Where investors go wrong is attaching a specific dollar figure to it. Venture capital reframed the power law to mean every winner has to be a billion-dollar company, then ten billion, and eventually more. That is not the power law itself; it is a fund-size requirement dressed up as a law of nature. For an angel, the power law simply means a few investments will carry the portfolio, and those winners do not have to be giants to do it.
Related
