You do not need to be rich to invest in startups
Pooling money spreads the risk of failure, while a fund hands the picking to a manager.
Concrete Pastures Podcast · S6 Ep 19 Steven Dossou Action Man— The Upside of Losing MomentumYou do not need to be rich to own a piece of a startup. You just need some spare cash and a founder willing to let you in.
That is how Steven Dossou, a Togo-born entrepreneur turned angel investor, explains it. The phrase high net worth individual gets thrown around a lot in startup investing, but he says it is misleading. A direct investment, the first of three paths, simply means you put your own money straight into one young company in exchange for a share.
The second path is built for safety in numbers. It is called a special purpose vehicle, or SPV, which is a legal pot that lets three or four or five people combine their money. Instead of betting on one startup, the group spreads that pooled cash across a bunch of them. The logic is blunt, because most startups fail within their first five years, and owning slices of several softens the blow if one or two collapse.
The third path is the most hands off. You join a regulated investment fund as a limited partner, meaning you supply money while a manager called the general partner decides where it goes. You give up control over which startups get picked, in exchange for professional management and a shot at the best return.
The tradeoff, then, is simple. Invest directly for control, pool with others to spread risk, or join a fund to let someone else choose.
Questions people ask
How much money does it take to start angel investing?
There is no legal minimum in most countries, and some online platforms allow checks as low as a few hundred or a few thousand dollars. In practice, direct investments in private startups often start around $5,000 to $25,000, while SPVs and funds usually require more. Founders must also agree to take you on, which can matter more than the amount.
Why is startup investing so risky?
Most young companies fail because they run out of cash, cannot find enough paying customers, or get beaten by competitors. Unlike public stocks, private startup shares are hard to sell quickly, so money can be locked up for years. That is why investors often spread bets across many companies.
What is the difference between an SPV and a fund?
An SPV is usually a one-time pool set up to invest in one company or a small handful, with the members knowing in advance where the money goes. A fund is a longer-term, regulated pool that invests in many startups over several years, chosen by the manager. Funds tend to have higher fees, higher minimums, and stricter rules.