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Investor Connect Podcast

Investor Connect is for investors interested in learning more about investing in startup and growth stage companies. Experienced investors share their experiences and advice with those who are considering an investment into startups and growth companies. It includes a podcast series of interviews with investors to inform others about the process of funding startups as well as a resource list and a discussion board.  

Topics include sourcing, analyzing, and researching companies. Other topics include valuations, terms Sheets, board of directors, board of advisors, due diligence, syndicates, venture capital, angels, angel networks, family offices, crowdfunding, exits, and more.

Investor Connect is a community program. We welcome your suggestions for speakers and topics which you can send to us through the Contact page. No registration is required to use the resources.  Discussion boards are available to post and answer questions about startups and growth company investing through which registration is required.

Investor Connect is a program under the Texas Open Angel Network which is a 501(c3) non-profit dedicated to the education around startup funding.

Disclaimer: Hall T. Martin is the Director of Investor Connect which is dedicated to the education of investors for early stage funding. All opinions expressed by Hall and podcast guests are solely their own opinions and do not reflect the opinion of Investor Connect. This podcast is for informational purposes only and should not be relied upon as a basis for investment decisions.

Apr 27, 2022

Asset Allocation

Hello, this is Hall T. Martin with the Startup Funding Espresso -- your daily shot of startup funding and investing.

In angel investing, it’s important to set aside funds for startup investments.

In most cases, investors dedicate 5%-15% of their discretionary funds to angel investing.

There are several issues with asset allocation for angel investing compared to publicly-traded stocks, bonds, and mutual funds.

Startup investments are illiquid as there’s no market for reselling.

Transferring stock is greatly limited due to SEC rules.

To achieve a gain, you must hold the stock for up to 7-10 years in most cases.

Many startups fail completely and are tax write-offs.

Determine upfront how much you want to invest based on 5%-15% of your portfolio.

Divide by ten to get the total number of startups you can invest in. 

Divide the investment amount by 2 to get the initial investment per startup, leaving the second half for a follow-on round. 

Here’s an example:

Let’s say I have a portfolio of $3.5M 

15% of $3.5M yields $525K to invest in startups

Dividing $525K by 10 gives me $52K per startup that I can invest in.

Dividing the $52,500 by 2 means I can invest $26K for each startup leaving another $26K for each follow on investment.

Start with 3 investments per year.   

It’s important to be selective.

After a few years and some gains, you can re-invest some of the profits into more startups.  

There are tax laws that make it attractive to roll your gains from one startup investment into another. 

Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.

Let’s go startup something today.

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