De-Risking Your Startup By Thinking Like an Investor

Launching your own company is a tough road. It’s paved with frustration, setbacks, and a whole lot of painful moments—and sometimes, it ends in failure. The wins feel incredible, but the lows can make you question everything. I’ve heard countless entrepreneurs talk passionately about their billion-dollar ideas, but when you look at the stats, most startups don’t make it. That got me thinking: is there a better way to go about building a successful company?

Increasing Your Odds of Success

While everyone preaches the importance of focus, it can also create blind spots. When you fall in love with a business idea you believe will change the world, it’s natural to fight like hell to keep it alive. But the market is competitive, and even a successful round of startup funding doesn't guarantee a win. You need a clear plan to reach your end goal, whether that’s a $10 million exit, an IPO, or something else entirely.

Consider the angel investor. They might invest anywhere from $25,000 to $100,000 in a single startup company, hoping that a small fraction of their investments will deliver positive returns. One 2017 study, "The American Angel," noted that average investments ranged from about $32,000 to $44,000. Applying that logic, if you had $100,000 in capital, you could launch ten different startup ideas with a $10,000 budget for each. You could build ten minimum viable products (MVPs), gather real-world feedback, and discover which one actually has legs.

Instead of pouring all your time, effort, and money into one shot, you could spread your capital across several ventures and hedge your bets, just like an investor. This is a smart approach for anyone starting a side business while employed.

Angel Investing vs. Traditional Entrepreneurship

The logic is simple: the more companies you build, the higher the probability that one of them will generate a life-changing return on your time and capital. Where an angel investor diversifies their portfolio to maximize returns, an entrepreneur can apply their talents to multiple business ideas to multiply their own chances of success. It's a bit like having multiple side hustles with the potential to scale.

Angel investors make a lot of small bets to help startups navigate their tough early days. That same "American Angel" study showed that angels with entrepreneurial experience hold an average of twelve companies in their portfolio. Out of all those bets, only a tiny percentage are expected to become massive successes—the study found a positive return on about 11 percent of their investments.

The odds might be similarly low for a traditional entrepreneur, but the angel investor diversifies to minimize loss while the entrepreneur often goes all-in. I see so many founders spend years, or even decades, on a single business that doesn't always work out. By adopting an investor mindset, there's a much better chance they'll eventually hit their goals. Investing money this way is a key lesson for investing for beginners in the startup world.

A New Model: Multiply and Conquer

In business, one big success can pay for all your failures combined. If you build nine unsuccessful companies but your tenth one is a home run, you’ll likely recover everything you lost and more. This is why it’s so important not to get too attached to one idea, at least not until you have real traction with paying customers. This mindset helps turn a side hustle to small business successfully.

One of the most important steps in this process is getting an MVP to market. You need to gather feedback by talking to customers and investors. Sharing your vision is one thing, but showing it with a working prototype is far more powerful. It’s how you find truly scalable side hustles.

Becoming an Agile Entrepreneur

An angel investor looks at every opportunity through the lens of risk. They know a business be a multibillion-dollar company, but they also know it probably won't be. So, they split their capital across a portfolio of projects. In the same way, an "agile entrepreneur" should split their time and energy between several ideas. This is like treating entrepreneurship as a form of investing as a side hustle.

When you remove your emotional attachment to a single project, you start seeing things objectively. If your business startup fails to impress mentors, investors, and—most importantly—customers, it’s okay to close it down. Add the experience to your resume and move on to the next one. Time is your most valuable asset.

Think of your startup ideas like an investor thinks of opportunities. Build a portfolio, aiming for just one of them to succeed. The billionaire media magnate Sumner Redstone is known for saying, "Great success is built on failure, frustration, even catastrophe." Don't be afraid of failure. Instead, plan for it. When you think more like an angel investor, you can mitigate failure just like any other risk.