Angel Investing: It’s Like Playing High-Stakes Poker, but Better
What is Angel Investing?
In a nutshell, it's the high-stakes game of putting cash into early-stage startups, hoping to discover the next unicorn (a startup valued at over a billion dollars). It's like playing high-stakes poker, but better! You're betting on founders and their world-changing ideas.
Angel investing carries the potential for massive returns that don’t exist in other asset classes. When you invest in a startup early, you get in on the ground floor. If the company takes off, then your modest investment could multiply exponentially. Imagine being an early investor in companies like Uber, Airbnb, or Google – that's the dream!
But not every startup is a winner. Most fail. That's why it's crucial to diversify your portfolio and invest in multiple companies.
We created a Google sheet model to help you consider:
- How much money to allocate for investing in startups
- How many investments would increase your chances of outlier success
- Potential returns based on different scenarios
How it works:
- Plug in your net worth
- Decide what percent of net worth you want to invest (10% is a good starting point)
- Decide how many investments you want to make (we typically recommend a minimum of 25 investments)
- Input the “term,” i.e., the year the investment will be realized (venture investments are usually modeled on a 10-year plan)
- Scenario Multipliers will show how the number of investments will be distributed by 0x, 10x, 100x, and 1000x cash on cash returns
- Scenario Returns will show the performance of the portfolio based on the distribution in Scenario Multipliers
Try out the model at: launch.co/model
If you’re interested in learning more, we put together a 4-hour live workshop called Angel University 1.0 hosted by Jason Calacanis and me. Angel University 1.0 provides the basics of angel investing.
In addition, we’ve developed a 3-hour live workshop called Angel University 2.0, which Jason and I also host. In this class, we provide a deep dive into the attributes we examine when deciding which companies we invest in.
For dates, more information, and registration, visit angel.university. All proceeds are donated to charity.