How many star­tups should you in­vest in?

Shares - - TALKING POINT -

Early-stage in­vest­ing has a rep­u­ta­tion for be­ing highly risky, and for good rea­son: the ma­jor­ity of star­tups fail in their first five years. But in­dus­try data shows that in­vest­ing in star­tups can also be highly prof­itable – if you’re smart about it.

Ac­cord­ing to The Al­ter­na­tive In­vest­ment

Re­port by NESTA and In­tel­li­gent Part­ner­ship, an early-stage port­fo­lio should con­tain at least 28 in­vest­ments in or­der to have a 95% chance of se­cur­ing at least one 10x in­vest­ment. But that’s not all you can do to max­imise your chances of bag­ging a suc­cess­ful exit. THE ONLY FREE LUNCH IN FI­NANCE

A broad port­fo­lio of in­vest­ments span­ning dif­fer­ent stages, lev­els of liq­uid­ity, sec­tors, sizes and types has a re­duced chance of con­tain­ing highly cor­re­lated in­vest­ments, where macro fac­tors such as hous­ing mar­ket changes, un­em­ploy­ment or gen­eral mar­ket per­for­mance can af­fect all in­vest­ments in one fell swoop.

By build­ing a port­fo­lio of un­cor­re­lated in­vest­ments across mul­ti­ple sec­tors, you re­duce your chances of a sin­gle sec­tor ex­pe­ri­enc­ing a neg­a­tive change and it bring­ing down your en­tire port­fo­lio; think, for ex­am­ple, of how a shift in oil prices can af­fect a vast num­ber of in­vest­ments within that sec­tor. We com­bined this di­ver­si­fi­ca­tion prin­ci­ple with NESTA’s magic num­ber to bring you a brand new kind of in­vest­ment fund.

FUND TWENTY8®

Fund Twenty8® is the first and only fund to au­to­mat­i­cally build you a di­ver­si­fied port­fo­lio of at least 28 EIS-el­i­gi­ble early-stage in­vest­ments, across a broad range of sec­tors, tar­get­ing a re­turn of over 20% IRR in­clud­ing up to 30% EIS tax re­lief.

• 28+ EIS-el­i­gi­ble in­vest­ments per fund

• Up to 30% EIS tax re­lief

• Un­par­al­leled cross-sec­tor di­ver­si­fi­ca­tion

• Tar­geted IRR of 20%+

Nested within Syn­di­cateRoom, the UK’s pre­mier eq­uity in­vest­ment plat­form, Fund Twenty8®’s al­go­rith­mic ap­proach draws on data from the in­vest­ment de­ci­sions of thou­sands of so­phis­ti­cated and high­net-worth in­vestors to de­ter­mine which com­pa­nies to back. The fund has raised a to­tal of £7.9m from 377 in­vestors to date.

Last year’s Fund Twenty8® built a port­fo­lio of 32 EIS in­vest­ments span­ning 10 sec­tors.

Fund Twenty8® will open for 2 weeks on Tues­day 11th Septem­ber 2018. Get the ul­ti­mate in startup di­ver­si­fi­ca­tion: www.syn­di­cateroom.com/fund-twenty8

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