Look at the whole portfolio, not just each company

Reviewing positions one at a time hides concentration by sector, stage, vintage and business model. A periodic portfolio-level view shows exposures no single company report reveals.

11 min read · Level 5

The point

Private portfolios are built one attractive opportunity at a time, and attractive opportunities cluster - in the same sectors, from the same networks, in the same busy years. I think that is why portfolio-level review matters more in private investing than in public: you cannot rebalance, so noticing a concentration early is the only chance you have to do anything about it.

What is it?

Private portfolios accumulate one decision at a time, which is how concentration appears without anyone choosing it.

A portfolio-level review groups positions along several dimensions:

Dimension Question Sector how much is in one industry Stage how much is pre-revenue versus established Vintage how much was invested in a single year Business model how many depend on the same customer type or channel Geography how much is in one market or currency Capital intensity how many will need many more rounds

An example grouping of 12 angel positions totalling 300,000:

Sector Positions Capital Share Business software 7 185,000 62% Consumer 3 70,000 23% Health 2 45,000 15%

Vintage year Positions Capital Share Year 1 2 40,000 13% Year 2 7 190,000 63% Year 3 3 70,000 23%

Sixty-two per cent in one sector and sixty-three per cent from one year are both concentrations that no individual company update would reveal. The vintage concentration matters because entry prices and conditions in a single year affect all positions made in it.

Why does an investor care?

Because risk lives at the portfolio level. Twelve companies that all sell software to small businesses through the same channel are far less diversified than twelve positions suggest.

Vintage concentration is particularly easy to miss. An investor who deploys heavily in one active year has made a bet on that year's valuations as much as on those companies.

Educational, not personalised financial advice. Nothing in the Investor Academy is a recommendation to buy, sell or hold anything — what is right for you depends on your own circumstances and the rules where you live.

Example

An investor's review after three years. Their sector concentration was known and deliberate - it matched their thesis and expertise. The findings that surprised them were elsewhere:

Finding Response 63% of capital deployed in a single year spread future commitments across years 9 of 12 companies sell to the same customer type accepted, but noted as a correlated exposure 5 companies are capital intensive reserved more follow-on capital 2 positions are 40% of capital between them no new capital into either

None required selling anything, which is usually impossible with private positions. All four changed how future capital would be deployed.

The common mistake

Reviewing only individual companies, so that sector, vintage and model concentration accumulate without ever being examined.

How it works

Step 1: List every position with capital invested

Include all private holdings, whether direct, syndicate or fund.

Step 2: Group by several dimensions

Sector, stage, vintage year, business model, geography and capital intensity.

Step 3: Compute shares of capital, not counts

Two large positions matter more than five small ones.

Step 4: Decide which concentrations are deliberate

Thesis-driven concentration is a choice; accidental concentration is a finding.

Step 5: Act through future capital

Since private positions cannot usually be sold, adjust where new capital goes.

When to use this

Annually, and before making a large new commitment.

When not to use it

Do not treat every concentration as a problem. Concentration that follows deliberately from your thesis and expertise is often the point of investing directly at all.

How investors actually did it

A recurring pattern: vintage concentration in strong markets

Angel investors and small funds frequently deploy more capital in years when activity is high and opportunities abundant, which coincides with higher valuations. Industry data on venture fund vintages has shown meaningful differences in returns between vintage years.

Pace deployment across years deliberately, since the year you invest is itself a significant decision.

Do this now

Group your private positions by vintage year and compute each year's share of capital
Identify your two largest positions as a share of total capital

Create a free account to read the rest and apply it to your own investing.

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