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:
1. Invest in 10–20 Startups Minimum
The more companies you back, the better your odds of catching a breakout.
2. Diversify Across Categories
Consider spreading across:
SaaS
Fintech
AI
Climate & sustainability
Consumer
Deep tech
Marketplace models
3. Diversify Across Stages
TheAngel currently focuses on:
Pre-seed
Seed
But diversity within these stages also matters.
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.
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
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.
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.
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.
3. Accumulate Tokens at Discount
In some windows, investors may sell early — creating pricing opportunities similar to public markets.
4. Prepare for Major Milestones
Examples:
Product launch
Big partnership
New revenue channel
Significant hiring
Token values tend to rise after these inflection points.
7.7 Understanding Valuation & Token Pricing
Token price is determined by:
Startup’s valuation at listing
Token supply
Quarterly valuation updates
Market demand during liquidity windows
Price Can Move Up or Down
Tokens reflect company performance — just like equity.
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.
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