Each investor has a range for the number of investments that they’re looking to make each year.
Some years, there seem to be a lot of opportunities so you invest a lot.
Other years just aren’t as fertile. When this is the case, it can be tempting to push yourself to make investments. For example, if you target an average of four investments a year, you’re entering the fourth quarter, and you haven’t made a single investment, you can feel quite a bit of pressure to invest.
In times like this, it’s important to look back at the successful investments you made and how you felt when you were making these investments. For each of the successful investments I made, I felt amazed at the time of the investment. There was something about the founder, what the company was doing, the market’s reaction to the product, or a combination of these factors which left me amazed.
There are also investments that you make in a state of amazement which don’t work out. Just because you feel amazed at the time of the investment doesn’t mean that it’s going to succeed. In fact, I’d put the chance of an early stage investment producing a big success (which I define as generating a greater than 5-fold return) given that you’re amazed at the time of the investment at less than one third.
But if you’re not amazed when making an investment, the chance of the company being a big success drops dramatically. Although non-zero, it’s probably pretty close.
So if you’re experiencing a dry spell, don’t force it. Just let yourself be amazed.
Also published on Medium.