Key Takeaways
- The Game: Investing in private companies (Startups) in exchange for equity.
- The Math: 90% fail. You need one 100x winner to pay for all the losers.
- Platforms: You no longer need to know a VC. You can use platforms like AngelList or Republic.
Introduction
For decades, only Silion Valley insiders could invest in the next Uber or Airbnb.
Now, regulations have changed. But just because you can invest, should you?
Deep Dive: The Lottery Ticket
How it Works
Angel investing is high-risk, high-reward.
- Public Stocks: You aim for 8-10% returns.
- Angel Investing: You aim for 1,000% returns (or 0%).
The Power Law
Venture Capital follows a "Power Law" distribution.
- Invest in 10 companies.
- 5 will go to zero.
- 3 will return your money.
- 1 will be a "Unicorn" that makes you rich.
- Strategy: You must diversify. Investing in one startup is gambling. Investing in 20 is a portfolio.
How to Start
- Equity Crowdfunding: Sites like Republic or StartEngine allow anyone to invest as little as $100 in vetted startups.
- Syndicates: On AngelList, you can follow a "Lead Investor" (a pro) and back the same deals they back.
Summary
Allocate no more than 5% of your net worth to this. Treat the money as "gone" the moment you send it. If it comes back in 10 years multiplied by 50, throw a party.
