2. It’s important to give back to the ecosystem
As a founder who has had a successful exit, I believe it’s my responsibility to give back to the entrepreneurial community. Being an angel allows me to do this. It gives me a seat at the table so I can help and guide a new business. I want to help them think about the potential of their market and the traction they could achieve.
It also allows them to leverage my experience and networks. I’ll often introduce founders of one startup to another because I think they're doing something that the other should be doing. It’s about helping everyone learn and grow.
3. It’s part of my portfolio approach to investing
Angel investing is a really interesting investment category - there's the potential for very high returns but you can also lose all your capital. I see it as part of my portfolio approach to investing.
In terms of my personal asset allocation, I target about 10% of my portfolio in to startups which feels right given the risk profile of the category. You don't want to invest 90% of your investable assets in startups - that's crazy.
I spread my risk across different stages - really early, seed and more mature startups. How much I invest in any particular startup may vary depending on how bullish I am on the founders, the product, the vision, and the traction that they've achieved.
While investing in early stage startups is high risk, it’s about more than just financial returns. They may be a result of the journey but are not an end unto itself. This is a space that’s immensely rewarding, but there’s also plenty of risks for people with the wrong motivations.
Danny Gorog is an Angel Investor.
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