How much money do you need to be an angel investor?

This post is by Jason Lemkin from SaaStr

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Q: How much money do you need to be an angel investor?

< p class="Box-sc-9env3-0 Text-jjrgda-0 QTextPara___StyledText-anoo6m-0 kvqEEv">You can dabble, but to do it right, you’d want to have at least $5m+ total to invest in all assets. So that you can do $500k-$1m in your angel investments.


Angel investing is risky, and

  • To do it right, you probably need to do 30–50 deals. Fewer, your odds of hitting the 1 big deal, the 1 unicorn, to make up for the losses goes way, way down.
  • At $25k per deal, then, you need $750k-$1m to do 30–50 deals. Sometimes you can do less per deal, but most Silicon Valley-style start-ups look for $25k+ checks from most angels.
  • You could — easily — lose it all. Losing > 10% of your assets is stressful. Losing 20%+ is downright scary. Too scary. You won’t take the right risks if the downside is too large.
  • If are too worried about losing it all, you won’t invest enough, or in enough. Either not enough per deal, or worse, not in enough deals. Then you may not have enough diversity to hit 1 unicorn.

Sure, you can dabble with less. Take 5% of your cash and put it into whatever, just to learn.

But if you want to make real money from it, having less than $5m overall to invest in all assets, and investing > 10%-20% of that in start-ups, will hold you back from success.

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