Disclosures

  • SeedInvest’s due diligence process is no guarantee of success or future results. All investors should carefully review each investment opportunity and cancel their subscription within the allotted time-frame if they do not feel comfortable making any specific investment based on their own DD. Learn more about due diligence on the SeedInvest Blog (https://www.seedinvest.com/blog/angel-investing/how-to-assess-an-investment) and our vetting process in our FAQs (https://intercom.help/seedinvest/en/).

  • SeedInvest’s selection criteria does not suggest higher quality investment opportunities nor does it imply that investors will generate positive returns in investment opportunities on SeedInvest. Learn more about due diligence on the SeedInvest Blog (https://www.seedinvest.com/blog/angel-investing/how-to-assess-an-investment) and our vetting process in our FAQs (https://intercom.help/seedinvest/en/).

  • Diversification is only across multiple early-stage investment opportunities within the asset class. There is no guarantee that this program will lead to a well-balanced portfolio of companies across industry types or stages across the asset class. In addition, enrolling in this program will not lead to diversification across your entire investment portfolio. In order to achieve diversification, we do not recommend you allocate more than 10% of your entire investment portfolio to alternative assets.

  • Testimonials may not be representative of the experience of others and are no guarantee of future performance or success. No individuals were compensated in exchange for their testimonials.

Planning Your Startup Portfolio

 

Having access to startup investment opportunities online is a completely new development for most people. Investors, now more then ever, are able to forge their own startup investment portfolios with the help of online platforms.

Setting An Investment Strategy

You may be attracted to a particular industry because you can see the potential for growth or to particular companies based on their management team, technology, or track record. Whatever your motivations or investment criteria, it’s worth establishing your goals in advance so that you can make strategic investment decisions. Some criteria that venture investors typically consider when they invest are:

  • Stage of company
  • Market sector
  • Geography
  • Business models
  • Investment size
  • Number of investments

Accounting for Risk in your Investment Strategy

Startup investments are some of the riskiest investments that an investor can make. When investing, it is important to keep in mind that the majority of startups fail and those that do provide a return to their investors may take five to seven years (or more) to do so. Therefore, investors who would like to invest in startups should take the following precautions:

  • Asset allocation: Do not allocate more than 5-10% of your overall portfolio into alternative assets, including startup investment opportunities.
  • Diversification: Build a diversified portfolio of a minimum of 10-15 startup investments.
  • Investment horizon: Do not invest any capital which you are not comfortable having locked up for at least 5-7 years.
  • General risk factors: Investors should also bear in mind the general risks inherent in the asset class: https://www.seedinvest.com/general-risk-factors

Planning To Add Strategic Value

Investing in startups is also a great opportunity for investors who want to contribute more than just money. One of the underappreciated benefits of equity crowdfunding is the ability for companies to attract value-add investors who may have otherwise been difficult to connect with. Many seasoned angel investors, in fact, will not consider an investment unless there’s something extra that they can bring to the table – whether it be sharing their experience and expertise or opening up their network of contacts.

On SeedInvest

On SeedInvest we collect current portfolio information and asset allocation to help investors think through what asset allocation and investment strategy is most appropriate for them. We are available to chat on the phone or through online chat to help investors.

 

This post was written by seedinvestedu on October 17, 2016

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