Doug Scott, loud mouth Geordie entrepreneur living in the Midlands.

Invest in loads of Startups – Simple Maths

Invest in loads of Startups – Simple Maths

As someone who has invested in loads and loads of startups I thought I would explain my model and even show some maths and graphs that I have from others.

As I am lazy I decided to look round and I found this articles that uses factual data:

https://possibleinsight.com/2013/04/25/visualizing-angel-diversification/

This graph is great.

aipprscmstratcdfbysize

Simple interpretation:

  • all the returns will come from a small % of the companies you invest in
  • the more companies you invest in the more chance you have of investing in a company that has huge returns
  • the returns from the big winners will be huge

It does not matter at what stage you invest in you are looking for big relative returns to the stage you invested at.

Look at this for VC returns:

http://cdixon.org/2015/06/07/the-babe-ruth-effect-in-venture-capital

Doug

 

 

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