Choose Startups For Tech Exposure

In order to have a good chance at success in startup investing, you need to build a substantially large portfolio. In the majority of startup portfolios, most of the gains will come from the top one or two performers. So you need a large basket of opportunities in order to have a good chance at hitting something really big. I’ve made small investments in more than 100 startups since 2014. And I plan to keep adding 10-to-15 more per year. 

Fortunately, proper diversification is doable for many investors today, as the minimum investments on most equity crowdfunding deals is around $100.

Beyond diversification, my general advice to new startup investors is pretty simple:

  • Start slow. You’ll get better over time.
  • Try to mostly pick companies with solid traction (revenue).
  • Don’t invest in a startup just because you love the industry.
  • Pick founders who are charismatic and good communicators.
  • Don’t invest more than 5%-to-10% of your portfolio in startups.
  • Patience is key. It often takes around 10 years for a great exit to happen.

Now is a great time to begin startup investing because the SEC recently bumped the fundraising limit for companies to $5 million. We’re going to see a flood of more mature startups with great traction coming to market over the coming months.

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William K. 1 month ago Member's comment

The startups that I should have bought are Digikey and Articat. They started at a dollara share.