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A starter question from the Crowdinform team, to get the conversation going. Share your own experience below.
Picking one promising startup feels easier than building a portfolio. Why do experienced investors spread small amounts across many startups instead?
Startup returns are very uneven: the failure rate can be high even with excellent research, while a small number of successes can make up for many losses. With only one or two companies, the most likely outcome is that none of them is the big success.
For that reason, guides for first-time investors suggest spreading across at least eight to twelve startups, so there is a meaningful chance of holding one that does very well. Spreading across sectors also reduces swings in the portfolio.
Keep the timeline in mind too: most exits take five to ten years, so a startup portfolio is built gradually and is money you can leave untouched for a long time. Capital is at risk: crowdfunding investments are not covered by deposit guarantee schemes, can lose part or all of their value, and may be hard to sell before the end of their term.
Drafted with AI from the sources below and checked by Crowdinform. General information, not investment advice. Capital at risk.
Sources: crowdinform.com/en/articles/startup-investment-explained-gu…
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