A white paper by Nigel Koh and Abraham Othman of Angellist, "How Portfolio Size Affects Early-Stage Venture Returns" (April 2020) analyses the relationship between portfolio size and performance for seed-stage VC investment.
The results suggest that investors who treat early-stage venture capital as an asset class, and invest systematically into it, tend to do much better than investors who select only a few deals.
The report shows that a typical investor with a 100 startup portfolio outperforms the typical investor with 1 investment by ~ 9% a year.
The results are also consistent with recent theoretical models that suggest the returns from early-stage venture investing follow an α < 2 power law.
