Should You Invest in a Startup Fund
Choose broad or narrow investing to meet your goals
Today, we’ll talk about investing in a fund and choosing between a narrow or broad investment thesis.
When does a fund make more sense than direct investments?
A fund works best when you are not familiar with a sector or geography and don’t have the time to research and learn more about it.
Also if access to the deals is time consuming or difficult, then the fund may be a better approach.
If the funding requirements are greater than your resources, then you may want to invest through a fund. For example, some sectors require several millions of dollars to participate in a deal so it’s a good strategy to pool your funds with others to participate.
Finally, funds provide diversification that can be more difficult to achieve with direct investments.
Should you take a narrow investment thesis or a broad one?
Start with your investment goal and then ask if a narrow or broad thesis is the best way to accomplish it. In some cases, it makes more sense to become a specialist say in fin-tech payment or medical device companies.
On the other hand, if you want to invest in startups in your local area to support the community then a broad investment thesis is better.
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Copyright (c) 2020, Hall Martin and investorconnect.org. All rights reserved.
Hall T Martin is the director of Investor Connect, which is a 501(c)(3) nonprofit 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 for the basis of investment decisions.