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7/30/2019 The 1st rule in startup investing:: How investors lower risk and boost returns in early stage companiesr
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The 1st Rule in Startup Investing:How investors lower risk & boost returns in early stage companies
Other methods professional investors use tode-risk investing in early stage companies
How to build a portfolio of startups
What kind of returns can you expect with --and without -- diversification?
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Zack Miller, OurCrowdHead of Investor Community
Meet OurCrowds Team
David Stark, OurCrowdInvestment Associate
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Investors now have access to startups
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Theangelscometh
Capital raised in Israel
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Butinvesting in
startups isrisky
business...
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52% of startupinvestmentsreturns
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So, where does riskcome from?
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systemic risk: rising tides float/sinkall boats
industry risk: just bad bets (likenanotech, solar)
geographic risk: emerging marketsare hot...until theyre not.
execution risk: company just doesntpull it off
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thats why returns compensate investorsfor risk
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Angel investing returns
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optimizing investing for given risk
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Harry Markowitz
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Efficient frontier
CAPM Modern Portfolio
Theory
Diversification in finance literature
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Building startupportfolios
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Where to find opportunities: See ourlast webinar, Finding the Next $billionopportunity (Source)
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http://blog.ourcrowd.com/index.php/2013/07/31/webinar-finding-the-next-waze-an-insider-view-of-startup-investing-and-due-diligence/http://blog.ourcrowd.com/index.php/2013/07/31/webinar-finding-the-next-waze-an-insider-view-of-startup-investing-and-due-diligence/http://blog.ourcrowd.com/index.php/2013/07/31/webinar-finding-the-next-waze-an-insider-view-of-startup-investing-and-due-diligence/7/30/2019 The 1st rule in startup investing:: How investors lower risk and boost returns in early stage companiesr
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Parameters:
Number of investments: At least 6
Open questions: does an investor need todiversify across industries, maturity/
experience levels?
Equal weight vs Overweight (RSP vs SPY)
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52% of startup investments
returns
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Interestingly, less than
40% of startup portfoliosreturned
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Other ways to de-risk
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3 things appear to
boost returns1. Time spent in due diligence
1. >20 hours, median returns 5.9x
2. Industry experience
1. Multiples are 2x when investor has industry experience
3. Ongoing participation
1. Investors interacting with portfolio companies a couple times per
month, median returns of 3.7x over 4 years
Source: Kauffman Foundation
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http://sites.kauffman.org/pdf/angel_groups_111207.pdfhttp://sites.kauffman.org/pdf/angel_groups_111207.pdf7/30/2019 The 1st rule in startup investing:: How investors lower risk and boost returns in early stage companiesr
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structuring aninvestment
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rights and protections(anti-dilution rights, preemptive, etc.)
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investing tied to
performance (milestones,tranches)
Milest
one1
Milest
one2$ $
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co-investors
Source: Harvard, Economist
Some data
Co-workers: 60% more likely to invest, but returns -18%
Same ethnicity: 20% more likely to invest, but -25% to IPOinvestment
Based on ability: founder with a degree from top universityadds 9% to likelihood of IPO
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http://www.economist.com/node/21557730http://www.economist.com/node/215577307/30/2019 The 1st rule in startup investing:: How investors lower risk and boost returns in early stage companiesr
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Summary:
angel investors makemoney.
Source: Growthink
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http://www.growthink.com/HistoricalReturnofAngelInvestingAssetClass.pdfhttp://www.growthink.com/HistoricalReturnofAngelInvestingAssetClass.pdf7/30/2019 The 1st rule in startup investing:: How investors lower risk and boost returns in early stage companiesr
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Equity crowdfunding
makes building astartup portfolio easier
than ever
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Value ofcrowdfunding
access to deals previously high minimums
made portfolio building tooexpens i ve , g i v ing ange linvesting a bad rap
new low minimums turnsevery angel investor into aportfolio manager
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OurCrowdsvalue
propositionCombining DIY of angelinvesting with professionalism of
venture capital
One-stop portfolio builder
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Intro to Portfolio RESERVE
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Portfolio RESERVE
Automated portfolio building
1x funding Guaranteed allocation
Opt-out feature
Learn more (click here)
Tuesday, August 20, 13
https://www.ourcrowd.com/Portfolio_Reserve?Source=webinarhttps://www.ourcrowd.com/Portfolio_Reserve?Source=webinar7/30/2019 The 1st rule in startup investing:: How investors lower risk and boost returns in early stage companiesr
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Any questions?
Zack Miller, Head of Investor Community
email: zack@ourcrowd.comVisit OurCrowd.com
http://www.ourcrowd.com/?source=webinarhttp://www.ourcrowd.com/?source=webinarmailto:zack@ourcrowd.commailto:zack@ourcrowd.comRecommended