“What’s your ratio of good investments to bad investments?” a friend asked me recently. It was a darn good question — so I dug into my secret spreadsheet to find out.
Most startup investments don’t work out. But how many losses does it take to find a winner?
Let’s dig into my portfolio of 25 investments and find out!
Portfolio Overview
Of those 25 investments, 15 were made at least one year ago. For this analysis, I’m only going to look at these companies.
If I just made an investment, it’s hard to say how it’s doing. I might not have even received a single update yet.
Success Stories
So, of 15 investments made at least 1 year ago, here are the success stories:
- $10M ARR SaaS co
- $6M marketplace
- $4M SaaS co
- $3M SaaS co
- $3M marketplace
Those companies grew significantly from the pre-seed/seed rounds I invested in. And they did it with little or no burn.
So far, I would call these companies highly successful.
The Struggling Startups
The other 10, well, they’re still figuring it out. Here’s how they break down:
- Still operating: 7
- Acquired or shares sold in secondary: 3
- Shut down: 0
But Wait, It Gets Even Better…
At first, my portfolio looks like 5 successes and 10 struggling startups. But because of some small acquisitions and one share sale, I got my money back on 3 of the struggling companies!
I have redeployed that money into new startups. Those may be the successes of the future.
Considering the money I got back, the success to struggling ratio is 5:7…or nearly 1:1. That’s a result I’m delighted with.
What Does the Future Hold?
So, are those 7 struggling startups doomed?
Hardly! Some of them will figure it out in time.
Notion went sideways for years. Many investors probably lost faith.
Then, they figured out their market. Now, it’s a $10 billion company.
By the same token, some of my successful companies will probably fail. Just because a company can get to a few million in revenue doesn’t mean it can become a unicorn.
Fortunately, we don’t need 5 successes to make a great portfolio. All we need is one.
Wrap-Up
Looking at this portfolio, I’m amazed how well the companies have done. This is a testament to the intense work of the founders and teams.
And whether a founder I’ve backed is struggling or crushing it, it’s an honor to be here to support them.
What questions do you have about angel investing? Drop them in the comments!
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