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What is diversification?


Diversification is following the old adage of “don’t put all your eggs in one basket.” As a hypothetical example, let’s take an investor with $100,000 set aside to invest in startup angel investments. With normal offline minimums, this investor might at best be able to split this $100,000 across 2 or 3 different startups. The odds of any one of those 2 or 3 startups being a winner is relatively low. This investor could instead invest the same $100,000 across as many as 30 different startups with an online VC platform such as FundersClub, due to the low minimums made possible by online VC.

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