Diversification Strategies

7.5 Diversification Strategy

Early-stage returns follow a power-law distribution — a small number of investments produce the majority of returns.

To optimise portfolio performance:

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1. Invest in 10–20 Startups Minimum

The more companies you back, the better your odds of catching a breakout.

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2. Diversify Across Categories

Consider spreading across:

• SaaS

• Fintech

• AI

• Climate & sustainability

• Consumer

• Deep tech

• Marketplace models

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3. Diversify Across Stages

TheAngel currently focuses on:

• Pre-seed

• Seed

But diversity within these stages also matters.

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4. Diversify Across Founders

Look for a mix of:

• Repeat founders

• Operators with industry knowledge

• First-time founders with exceptional insight

Diverse founder backgrounds often lead to diverse opportunities.

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5. Allocate by Risk Tolerance

Risk profile influences allocation:

Conservative Angel

• 70% in companies with traction

• 30% in earlier, high-potential ideas

Balanced Angel

• Even split across stage and sector

Aggressive Angel

• Higher allocation to early, high-growth potential

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7.6 Liquidity Strategy (How to Use Liquidity Windows Effectively)

Liquidity windows allow investors to behave more strategically.

Here’s how to maximise the advantage.

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1. Reinvest After Strong Founder Updates

If a company is delivering:

• Higher revenue

• Strong KPIs

• Clear execution

Its tokens may appreciate in value during trading windows.

Buying early compounds returns.

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2. Reduce Exposure If Red Flags Appear

If a startup underperforms, liquidity windows allow:

• Partial exit

• Full exit

• Rebalancing into stronger performers

This is impossible in traditional angel investing.

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3. Accumulate Tokens at Discount

In some windows, investors may sell early — creating pricing opportunities similar to public markets.

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4. Prepare for Major Milestones

Examples:

• Product launch

• Big partnership

• New revenue channel

• Significant hiring

Token values tend to rise after these inflection points.

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7.7 Understanding Valuation & Token Pricing

Token price is determined by:

1. Startup’s valuation at listing

2. Token supply

3. Quarterly valuation updates

4. Market demand during liquidity windows

Price Can Move Up or Down

Tokens reflect company performance — just like equity.

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7.8 Portfolio Monitoring Dashboard

TheAngel provides a professional investor dashboard including:

Portfolio Snapshot

• Total invested

• Current value

• Unrealised gains/losses

• Cash balance

Token Performance

• Market price

• Historical pricing

• Trading volume

• Valuation change

Investor Insights

• Price momentum

• Holding concentration

• Diversification score

Founder Updates

• Quarterly performance

• Milestones

• Risks

• Commentary

This lets you manage your portfolio with the same insight as venture funds.