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 $15-20M in total investable assets for reasonable risk management.
Metrics in this report
Minimum Investment per Seed Round
25000$
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