SaaStr · 2012-08-26 · 5029d

Seed Investment Requirements: Why Individual Angels Need $15-20M in Assets

Jason Lemkin argues that most individuals should not pursue seed-stage investments unless they have substantial liquid capital and deal flow. The article demonstrates through mathematical analysis that seed investing requires a minimum portfolio of $750K across 30 investments, which should represent no more than 2-5% of net worth, necessitating $15-20M in total investable assets for reasonable risk management.

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Metrics in this report

Minimum Investment per Seed Round

25000$

minimum

Individual seed investments

Portfolio Diversification Target

30investments

recommended

Seed-stage portfolio

Professional Fund Management Fee

2%

annual

10-year fund term

Professional Fund Profit Share

20%

carried interest

After hurdle rate

Required Investable Assets for Seed Investing

15000000-20000000$

range

Total liquid assets needed

Seed Investment as Net Worth Percentage

2%

maximum

Individual investor allocation

Total Capital Required for Seed Portfolio

750000$

minimum

30 seed investments at $25K each

VC Firm Typical Seed Investments

25-30investments

range

$200-250M VC fund