Investment crowdfunding platform SeedInvest is now making it super simple to create a highly diversified portfolio of early stage investments. In an email to site users, CEO and cofounder Ryan Feit explained the new feature;
“We are excited to announce the launch of SeedInvest Automated Investing. We created Automated Investing to make it easier for you to shift a small portion of your overall portfolio into startups”
Feit pointed to data reflecting the fact that early stage investing has the potential to deliver outsized returns but that many people make mistakes by not diversifying appropriately. Just like big VCs or professional Angel investors – portfolio diversification is key. Feit explained;
“Over the last 30 years, early-stage venture capital returned 22.65% compared to 9.93% for the S&P 500 and 6.57% for the Barclay’s Bond Index.”
All investing entails risk. That’s how it works. Young companies represent some of the riskiest investments available but risk can be mitigated by being highly selective and spreading out your holdings across a wide swath of companies. SeedInvest also pointed to their high degree of vetting for offers listed on their platform;
“When it comes to early stage investing, it’s critical that you go through a platform that puts you first. The vast majority of platforms out there behave like Craigslist and will simply accept any company that applies. The problem with that approach is that investing in startups is extremely different than buying a used couch … since inception we have looked at over 7,500 prospective companies and historically have only listed approximately 1% of those prospects.“
A recent study shows that 10% of startup investments have historically account for 85% of overall returns. SeedInvest wants to help make certain your portfolio benefits from this phenomena. They know that driving returns for investors means they will come back. So it is in their interests to help investors be successful in the long run.