> ... one big hit can represent a 1000x return on your investment.
Sounds great! There's only one problem: your $1,000 investment in Next Big Thing Inc. is not going to be worth $1 million. The data is very clear: most individual angel investments lose money, and overall, the type of returns angel investors see on their overall portfolios all but rules out the idea that there are 1000 baggers out there.[1]
In short, it sounds like you're looking to hit a Major League home run with a tee ball bat. If you're searching for massive returns, you need to look at markets in which you can make much more highly leveraged bets. Many of these, like CDS, are inaccessible unless you have tens of millions of dollars to play with, and that's at an absolute minimum.
By the way, regarding public markets: if you had invested in the right equities over the past five years, you could have produced better returns than most angel investors without taking on anywhere near the risk. Obviously, picking the right equities to invest in is easier in hindsight, but so is picking the right early-stage startups to invest in.
Sounds great! There's only one problem: your $1,000 investment in Next Big Thing Inc. is not going to be worth $1 million. The data is very clear: most individual angel investments lose money, and overall, the type of returns angel investors see on their overall portfolios all but rules out the idea that there are 1000 baggers out there.[1]
In short, it sounds like you're looking to hit a Major League home run with a tee ball bat. If you're searching for massive returns, you need to look at markets in which you can make much more highly leveraged bets. Many of these, like CDS, are inaccessible unless you have tens of millions of dollars to play with, and that's at an absolute minimum.
By the way, regarding public markets: if you had invested in the right equities over the past five years, you could have produced better returns than most angel investors without taking on anywhere near the risk. Obviously, picking the right equities to invest in is easier in hindsight, but so is picking the right early-stage startups to invest in.
[1] http://techcrunch.com/2012/10/13/angel-investors-make-2-5x-r...