The Big Idea: Losses aren’t failure. They are how venture works.
Why it matters: If you misread your first loss, you’ll misbuild your entire investing strategy.
The brief
Angel investing is a power law game. A small number of companies generate the vast majority of returns. Most investments return little or nothing. A few do well. One may return the entire portfolio.
That distribution is not a surprise. It is the structure.
Loss is not something to eliminate. It is something to account for. Once you accept that, loss stops being personal and starts being informative.
What my first loss actually showed me
One of the earliest lessons in my investing journey came from a fintech that, at the time, looked like the outlier.
The company was operating in a hot category. Revenue was growing quickly. New investors were competing to get into the round. The valuation moved fast. At one point, the implied return on my original cheque was heading toward 40x. It looked like it might be my first unicorn.
What failed wasn’t the idea.
It was the foundation.
The business scaled faster than its underlying discipline. Unit economics were fragile. Burn increased as the market tightened. When capital became scarce after the 2022 downturn, the company didn’t have the resilience to adapt quickly enough. It ran out of time and money.
My first loss.
The lesson that actually matters
That experience didn’t teach me to avoid risk. It reinforced how venture works and a few key reminders:
In venture:
Mark-ups are good signals, but they are not exits
Valuation is a good signal, but it doesn’t guarantee an outcome
Losses are expected. It doesn’t make you a bad investor, but there are lessons to be learned often from each one.
In this case, what ultimately mattered was governance. There was no proper board structure in place early enough. No one was holding the long view while the business was accelerating. By the time the environment changed, there was no mechanism to slow decisions down, challenge assumptions, or adjust course in time to save the company.
That insight changed how I think about governance in startups.
Today, I care deeply about how a founder thinks about governance and if it’s treated as a strategic asset early not a formality added later.
Loss is a data point in the model
Every loss sharpens judgment if you let it.
Over time, you begin to see which growth is cosmetic and which is structural. You understand why capital efficiency matters more than speed. You recognise which founders can operate through constraint, not just abundance.
Loss doesn’t disqualify you.
It calibrates you.
And when you build portfolios with that calibration in mind diversified, paced, and disciplined. Loss does its job quietly while you stay exposed to the outlier.
The reframe
Your first loss isn’t a warning sign. It’s confirmation that you’re playing the real game.
If you’re investing in a way that guarantees no losses, you’re almost certainly taking too little risk to ever find the company that makes the portfolio work. Loss creates room for judgment to form and for compounding to do what it does best.
That’s not discouraging. It’s freeing.
If you’re interested in a deeper, practical exploration of topics like this, I’ll be teaching a full-day, in-person Angel Investing Course at Regent’s University, London, on February 27th, 2026. The programme will focus on portfolio design, deal analysis, risk management, and live case studies covering the mechanics of investing well at the early stage.
Takeaway
Don’t ask whether a loss makes you a bad angel.
Ask what it changed in your process.
If nothing changed, you paid tuition and learned nothing.
If something did, the loss did exactly what it was meant to do.
Arāya Signal gives you the clarity, confidence, and calm needed to navigate early-stage investing.
If you found this useful, forward it to a friend who wants to become a more intelligent angel investor.
Warmly,
Rupa Popat
with Team Arāya
