4 ms·
What maximum % of your net worth would you allocate to angel investments?
by jmillerinc 16y ago
What maximum % of your net worth would you allocate to angel investments?
- joshu 16y agohttp://en.wikipedia.org/wiki/Kelly_criterion http://en.wikipedia.org/wiki/Kelly_criterion
- jmillerinc 16y agoGreat. Any thoughts on parameter values?
- joshu 16y agoAccording to Fred, 2 in 3 startups return even or fail, and 1 in 3 succeed. Assuming I'm doing as well as he is (which I doubt) and that an exiting startup gets 10x the input, the formula suggests 25% or so. This seems high. Also, startups are not independent bets. Who knows? I've done 34-ish investments. One small exit. Two are doing very well. Two or three dead companies (sometimes, it is hard to tell.)
- timcederman 16y ago34ish and you say you're a junior angel? I guess that makes me a junior associate at best.
- joshu 16y agoI can't or won't negotiate terms, lead a round, syndicate a deal, or sit on a board. So that makes me subordinate to people who do these things; they are therefore my senior.
- danbmil99 16y agoheh, I just browsed Fortune's Formula and read about Kelly math. Excellent -- it's just like playing blackjack -- gotta control your bank. upshot: if he does well, in a couple years his typical investment size will be $20-$50K. Investment size is a proportion of bank.
- joshu 16y agoIt's a good book. Reading it inspired this: http://joshua.schachter.org/2008/09/amateur-economist.html http://joshua.schachter.org/2008/09/amateur-economist.html Curiously, I was a quant before I did delicious.