This is a follow-up to my post A simulation of angel investing. Several readers commented on Hacker News that my first stab at a simulation was misleading because it showed negative average returns for low deal sizes, when in fact expected returns should be not only positive but constant regardless of deal size. They are ...
In angel investing, it’s the extreme distribution of payoffs that keeps things interesting. If anything, it resembles buying a deep out-of-the-money call option, but with nonlinearity. If you win big you might find yourself in on the ground floor of the next Google or Facebook. That’s incredibly unlikely, but still possible. More likely, you’ll end ...
For decades, experienced angel investors have intuitively used the following rules of thumb for investing in seed and startup companies: * Home runs provide all the return on investment. In a typical angel investor’s portfolio of ten investments in seed/startup companies, half the companies perish with no return to investors, and an additional three or ...
