To determine acceptable risks and build an investment strategy, we recommend that investors answer the following questions:
How much of your capital are you willing to invest in VC deals?
Investors generally prefer to invest no more than 10-20% of their free capital in VC deals. This amount is enough to increase their total wealth in case of success but is not too much to lose in case of failure.
How many deals should you invest in to diversify your portfolio?
Diversification enables you to increase the likelihood of getting into a deal that will maximize your return and cover losses on unsuccessful deals. Experts often advise including at least 5-10 companies in your investment portfolio.
How much is it reasonable to invest in each company?
To avoid the negative consequences of emotional subjectivity, it is better to invest the same amount of money in each deal. Bear in mind that often the minimum check to participate in a deal is $50,000.