4 ms·

What kind of net worth should you have before considering angel investing?

JumpCrisscross 8y ago
> What kind of net worth should you have before considering angel investing? Thumb in the air, angel investments should be no more than 2 to 3% of your liquid (sellable, with minimal price disruption, within 90 days) investable assets. (One should also be an accredited investor.) So if you're cutting a $10k cheque, you should have $500k socked away in liquid investments and $1 million in total assets. If you're cutting two $25k cheques, you should be investing out of a portfolio of ~$2 to 3 million.
- mruts 8y ago
  You probably want 10 or 20x of that. Assuming your bets are uncorrelated and all have the same standard deviation, the standard deviation (volatility) of your portfolio is going to be: stddev_portfolio = sqrt(n)*stddev where n = # of investments Personally, I don't think I would be comfortable with the risk unless n > 25 or something around that.
aresant 8y ago
Angel investing is for everybody :) But fits squarely into the "5% of investible assets" category, aka HIGH RISK. Two things about angel investing I wish I'd had a better grip on when I made my first handful: 1 - Very high risk and almost impossible to pick winners out of a pool even for established investors. Wins are extremely concentrated, and most positions lose - aka it's more akin to roulette unless you have a distinct advantage. Most "professionals" - aka established super angels like Calacanis or new entrants like Ryan Hoover via weekend.fund - target 30 - 50 investments per "fund" to mitigate this reality. 2 - Successful angel investments, even when they pay off, are usually illiquid for 5 - 9 years. Secondary markets are still being established and unless you manage to invest in Uber it's unlikely that you'll even have that opportunity.
- nilskidoo 8y ago
  >Angel investing is for everybody So as with the desperation of crowdfunders retweeting themselves every 15 minutes to the same followers across multiple platforms, instead of requiring those who have looted the most from society to pay their share, the burden of actual financial responsibility must fall on the shoulders of the masses.

> What kind of net worth should you have before considering angel investing? Thumb in the air, angel investments should be no more than 2 to 3% of your liquid (sellable, with minimal price disruption, within 90 days) investable assets. (One should also be an accredited investor.) So if you're cutting a $10k cheque, you should have $500k socked away in liquid investments and $1 million in total assets. If you're cutting two $25k cheques, you should be investing out of a portfolio of ~$2 to 3 million.

mruts 8y ago
You probably want 10 or 20x of that. Assuming your bets are uncorrelated and all have the same standard deviation, the standard deviation (volatility) of your portfolio is going to be: stddev_portfolio = sqrt(n)*stddev where n = # of investments Personally, I don't think I would be comfortable with the risk unless n > 25 or something around that.

aresant 8y ago

Angel investing is for everybody :) But fits squarely into the "5% of investible assets" category, aka HIGH RISK. Two things about angel investing I wish I'd had a better grip on when I made my first handful: 1 - Very high risk and almost impossible to pick winners out of a pool even for established investors. Wins are extremely concentrated, and most positions lose - aka it's more akin to roulette unless you have a distinct advantage. Most "professionals" - aka established super angels like Calacanis or new entrants like Ryan Hoover via weekend.fund - target 30 - 50 investments per "fund" to mitigate this reality. 2 - Successful angel investments, even when they pay off, are usually illiquid for 5 - 9 years. Secondary markets are still being established and unless you manage to invest in Uber it's unlikely that you'll even have that opportunity.

nilskidoo 8y ago
>Angel investing is for everybody So as with the desperation of crowdfunders retweeting themselves every 15 minutes to the same followers across multiple platforms, instead of requiring those who have looted the most from society to pay their share, the burden of actual financial responsibility must fall on the shoulders of the masses.