The biggest mistake start-up investors can make is falling in love with an idea and investing too much of their portfolio in one single company.
The start-up and its idea can look extremely promising but there is always a risk of a start-up to fail.
A good start-up portfolio consists of at least 10 to 20 quality start-ups. Diversify your portfolio and spread your bets. You have to give yourself a good chance to pick a massive winner. You only need one big success, the torpedo that hits the target, to make you a big profit and your overall portfolio to pay off. Expect only 10-20% of your start-ups to become winners. The rest will most likely fail.
Be comfortable with the situation that most start-ups will fail, no matter how promising they look like and how wonderful the idea is. It is not easy to accept this but this is the reality.
Another mistake inexperienced start-up investor make is that they believe to cash in on an excellent idea very quickly. You have to know that you’ll be holding your investment for many years. These investments are illiquid and you can’t sell them easily.