My strategy is to double down on potential winners
It isn’t always possible to identify which business will give you a big return at an early stage. Angels often invest because they like the entrepreneur or the other investors and it’s a space about which they feel passionate.
Looking at my angel investing experience so far, I've invested in about 20 companies. More than 10 of them have either been through fire sales or gone out of business. Just two companies have realised 95% my returns. When I realised that those companies may be successful I put more capital in. This supported their growth and also increased my potential return.
Everyone has a very different approach to angel investing. I have some friends who invest a lot in a few companies and are actively involved. My approach has been to invest in a broader group of companies to spread my risk and then invest more further down the track when I can see proof of potential.
Melissa Widner is a General Partner at NAB Ventures and Angel Investor.
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