[einarvollset]

Seeing how there’s a lot of investment/maths inclined nerds on this thread I will (selfishly..) point out the one key point nobody seems to have picked up on yet: she talks about the importance of diversification.

Imho that it is the key differentiator between a well performing and atrocious angel portfolio.

The math is pretty well explained in this piece by Abe Othman of AngelList here: https://angel.co/blog/venture-returns - but the TLDR is: at earliest stage of venture your mean is infinite so making more bets (aka diversifying your portfolio) actually increases the average return. That’s probably why most angel investors do poorly - not enough cash/time/interest (or been told to “focus your portfolio”)

We (here comes the selfish part) apply this to B2B SaaS here: TinySeed.com/thesis

Fundamentally - the problem with replicating the angel investment success that the author has is - not many individual investors were early enough in Facebook to have funds to deploy at a scale where the math starts to work in your favor.

[smabie]

That's not the right way to think about. Diversification reduces volatility by a sqrt factor thus increasing absolute return due to reduced volatility drag and risk-adjusted return through the reduction in volatility.