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Startup Index Fund

Cameron Nuckols
January 9th, 2020 · 1 min read

Note: After reaching out to Republic.co about this idea, they announced an Autopilot feature that allows you to invest a predefined amount of money per year or month in new and upcoming startups. It’s not an index fund, but it does help mitigate risk by allowing public investors to get behind many startups at once.

I was also referred to AngelList Funds, which is the closest thing I’ve found related to this idea. One issue with AngelList Funds is that an investment minimum of $125k is required to participate in the fund.

Problem

Investing in individual startups is extremely risky. I don’t have sufficient time to do the research necessary to invest in many of them, but startups can provide some of the best returns possible.

Solution

Create an index fund that allows you to invest many startups so you diversify your risk. You don’t need to do as much due diligence and yet can still grab a piece of the pie.

Example

Think of an S&P 500 index fund but for startups. You could start out with mutual funds that cover sectors or that only cover certain startup groups i.e., YCombinator fund, Techstars fund, Republic fund, etc. The goal would be to create one index fund reaching across the entire startup sector.

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