One other point to note in this series: “losing money” in angel investing does not necessarily mean losing all the capital you invested in startups.
Of the 10% of investors that lost / are losing money in VentureSouth-related investments, only a very few (less than 1% of investors) lost all their investment. In fact, the aggregate return for those investors is around 0.6x ROI – not great, of course, but far from a total loss. These unfortunate investors have, in total, in fact received back a majority of their invested capital!
An individual angel investment can easily result is a complete loss of capital: when startups fail, there is often no residual value for equity investors like angels, whose claims at a liquidation come after lots of others have received their claims. Angels should only invest money they can afford to lose.
But it’s very much less likely to hit a string of complete “zeros.” A few partial exits, dividends, or a successful investment along the way makes it quite hard to lose all your money. Diversification, again, is critical.