General information only. This post is the author’s personal commentary on portfolio construction and is not financial product advice or a recommendation. It does not take into account your objectives, financial situation, or needs. Before acting on anything here, consider whether it’s appropriate for you and consult a licensed financial adviser. MooCoo Ventures operates under AFSL 503221 (CAR No. 001314295).

The first thing most people learn about angel investing in Australia is that the cheques are big. Twenty-five thousand. Fifty thousand. Sometimes a hundred. That number gets quoted often as the price of entry, and it’s the reason a lot of people who could be excellent angels never actually start.

The maths is honest about this: start with how much money you need, divide it into buckets, apply a sensible allocation to angel investing, then spread across the 24-deal portfolio that Roll the Die showed is required for proper diversification. The cheque sizes that fall out are surprisingly small. For most newly minted sophisticated investors, the right number is closer to $1,000–$10,000 than $50,000. The $25k–$100k expectation is a quirk of Australian corporate law more than it is a reflection of what good portfolio construction truly requires.

The 100-year sum

Years ago, Kerr Nielsen told me how to work out how much money I needed to retire. Kerr is unlikely to have been the ultimate source, but he’s the one who told me, and I haven’t heard many other people mention it in the decades since. It’s a back-of-envelope formula, the kind a mathematician immediately appreciates for being honest about what it is.

Subtract your age from 100. Multiply by your annual living expenses. Call it the 100-year sum.

The logic is faintly actuarial. You might live to 100. You invest the money in assets that grow with inflation and spend the inflation-indexed amount each year. You die at 100 with nothing left. A 50-year-old who needs $100,000 a year to live needs $5 million. A 60-year-old who needs $150,000 a year needs $6 million. You can do the sum in your head.

A few adjustments are essential before the number is useful.

The first is tax. You live off post-tax income, so the “annual living expenses” in the formula is the post-tax number. If you spend $100,000 a year, you need a $5 million lump sum that generates roughly $100,000 a year of post-tax spending power, not $100,000 of pre-tax income. The distinction matters and it’s easy to fudge.

The second is the spouse. The formula in its raw form is a single-person calculation. Most people running it have a partner whose life expectancy is on its own schedule and whose living expenses overlap with theirs but aren’t identical. If you and your spouse are similar ages, the practical adjustment is to use the younger person’s age in the formula as they may need the money to last longer. Then size annual living expenses for the household, not the individual. The base case becomes a joint 100-year sum.

The third is kids. Private school fees alone can run $30,000–$40,000 a year per child for the better part of a decade. University adds another bite. None of this is in the base formula and all of it must be layered on top.

The fourth, and this is the one most relevant to the kind of person reading a post like this, is that no one in a senior executive, banking, legal, consulting, or founder role retires at 50 in real life. You think about the 100-year sum partway through your career, when you’ve started earning enough to ask the question seriously, but you keep earning for another 15 or 20 years. That ongoing income reduces the lump sum you need to have on hand at any given moment. The formula in its raw form treats you as if you stopped earning the day you ran the calculation. In reality, the senior partner, the IB managing director, the post-exit founder consulting on their old company’s board, all keep earning for a long time. The honest version of the formula nets ongoing income against future spending, which lowers the required sum, sometimes substantially. If both spouses work, both incomes count.

The fifth is inheritance. Most senior professionals in their 50s have parents in their 80s. Anything that flows down from the older generation also nets against the 100-year sum. It’s capital that arrives on a schedule you don’t control, but it arrives. It’s worth being honest with yourself about whether it’s likely and roughly how much.

The beauty of the back-of-envelope approach is that it doesn’t really matter what assets you hold, so long as they roughly track inflation. Even the family house gets sold eventually; most people end up in aged care one way or another. None of this is financial planning advice, and a financial planner will do a more sophisticated job. But the number you get is usually in the same ballpark as what the planner will eventually tell you, which is the whole point.

Most people turn their mind to retirement in their 40s and 50s. It’s the point at which the mortgage is under control, the finish line on raising kids is visible, and there’s enough surplus income to ask the question seriously. It is also the point at which angel investing comes onto the radar. The people who suddenly have surplus capital to think about might be the senior executive, the IB partner, the lawyer at the top of their firm, or the founder who has just sold their company. They are also the people who meet the sophisticated investor threshold. The 100-year sum and the first angel cheque tend to arrive in the same conversation.

Three buckets

I think about wealth in three buckets.

The first bucket is the 100-year sum, adjusted as above. This is the amount needed to fund your own life and your spouse’s. This is the bucket that needs the most planning, because everything else depends on it being adequate. Most Australians spend their entire working life filling it.

The second bucket is for the kids. Not trust-fund-baby money; most parents I know don’t want to raise trust-fund babies, and the kids will mostly work and run their own version of the 100-year sum. But most parents do want to help with the big-ticket items: health if there are issues, education through private school and university, and housing, be it a deposit, or in some cases a house. You can run a similar back-of-envelope calculation for what that bucket needs to hold.

The third bucket is what’s left. The options are diverse: philanthropy, legacy projects, the expensive hobby, the fun. This is the bucket where angel investing competes, quite literally, with the race horses.

Different buckets imply different risk appetites. There’s a well-worn rule of thumb that the fixed-income percentage of your portfolio should equal your age. A 50-year-old holds 50% fixed income, 50% growth. A 70-year-old holds 70% fixed income. Angel investing sits inside the growth bucket, and inside growth, it’s the most risky slice. In bucket one, a sensible allocation to angel investing is around 1%, tops. In bucket two, the allocation can be higher (though still single digits) because the time horizon is longer and the consequences of a poor outcome are less existential. In bucket three, being the fun bucket, you can do whatever you like.

A diversified angel portfolio can return 20–30% IRR, performing meaningfully ahead of public equity markets over a long horizon. It’s a genuinely attractive option, but there’s a catch: illiquidity. Angel investments take 7–10 years to mature, with no secondary market to speak of. That illiquidity is exactly why angel investing belongs in buckets 2 and 3 rather than bucket 1. The kids’ bucket and the fun bucket can carry a long horizon and an illiquid asset because the money isn’t needed on a schedule. Bucket 1 generally can’t.

The 100-year sum is also calibrated to the tail. Life expectancy in Australia is closer to 85 than 100. On the median, you’ll spend somewhat less than the bucket holds, and the residue will tip into bucket 2 anyway; passed to the kids, or used for the things that bucket 3 is meant for. The bucket boundaries aren’t watertight. Bucket 1 is sized conservatively because the consequences of running short are severe, but the conservatism means most people end up effectively funding part of bucket 2 from bucket 1 by default. That makes the allocation maths in buckets 2 and 3 more important than it first appears.

The 100-year sum and the bucket framework are simple enough that they can, and should, be re-run when circumstances change. This could be a liquidity event, a new child, a divorce, a health diagnosis, a sharp move in asset prices, a change in living expenses, or an inheritance arriving earlier or later than expected. Any of these is a reason to re-do the sum. The whole point of a back-of-envelope calculation is that it takes five minutes. It’s a tool for keeping track of where you are, not a one-off exercise.

What this means in dollars

To invest in angel deals in Australia you need to be a sophisticated investor, which broadly means $2.5 million in net assets. Roughly 16% of Australians qualify, mostly because they own a house in one of the major capital cities. The top 1% of Australian wealth sits at around $8 million. Most people who are eligible to be angels are still working primarily on bucket one.

Take that 50-year-old senior professional with $100,000 a year of post-tax living expenses. They need $5 million in bucket one. A 1% allocation to angel investing gives them $50,000 of capital to deploy.

But there’s a subtlety. The 1% rule of thumb can be applied two ways. One per cent of all bucket-one assets is $50,000. One per cent of just the growth slice — which for a 50-year-old following the age-equals-fixed-income rule is half the bucket, or $2.5 million — is $25,000. Since angel investing is itself a growth asset, the second interpretation is the more honest one. Either way, the number is somewhere between $25,000 and $50,000.

In Roll the Die, I worked through the portfolio-construction maths: you need at least 25 investments, deployed over about 7 years, to have a 90%+ chance of overall success. Divide $25,000–$50,000 across 24 deals and you get cheque sizes of $1,000–$2,000.

That’s a small cheque. It surprises people the first time they see it written down. It surprised me.

Move up the wealth distribution. Someone with $10 million might have $5 million in bucket one and $5 million in bucket two. A 5% allocation in bucket two, which is more aggressive because the bucket can carry it, is $250,000. Across 24 deals, that’s about a $10,000 cheque. Still smaller than most people imagine angel investing requires.

It’s only when you have serious wealth into bucket three, beyond the family’s needs, that cheques can comfortably scale to $25,000–$50,000 and beyond. And at that point you’re often deploying alongside the syndicate at the racetrack, which puts the whole exercise in its proper perspective.

What if you decide you want to allocate more to angel investing than the rules of thumb suggest? The right answer is still not bigger cheques. Increasing the allocation increases your exposure to the variance of any single deal, and the way you manage that is by making more investments, not larger ones. More deals, same small cheques. The cheque size is set by the diversification maths; the allocation determines the number of deals, not the size of each one. Even bucket three should be a diversified portfolio. Angel investing in bucket three is meant to be fun, and writing off a $250,000 single investment isn’t fun for anyone, however wealthy they are.

This isn’t a hypothesis. It’s roughly what most Brisbane Angels members actually do. Cheques of $5,000–$10,000 are the dominant range, not because the members are being timid, but because the arithmetic of buckets, allocations, and 24-deal portfolios produces those numbers when you work them honestly.

The 50-shareholder problem

So why the persistent expectation that angel cheques should be $25,000–$100,000?

A wrinkle in the Australian system explains most of it. Australian private companies are capped at 50 non-employee shareholders before they’re forced to become public companies, with all the regulatory cost that entails. That cap was a real constraint. If a startup wanted to raise $1 million and was limited to 50 shareholders, the maths forced cheque sizes up to $25,000, $50,000, even $100,000, just to fit the round into the cap table.

For most angels, those cheque sizes were always uncomfortably large relative to what the bucket arithmetic suggested. Either you wrote fewer cheques than the diversification maths required, or you over-allocated to angel investing relative to a sensible bucket-one percentage. Neither was great. The folklore that angel investing requires big cheques is a residue of a constraint, not a reflection of how the maths wants to be solved.

Syndicate structures fix this. A syndicate appears as a single line on the cap table while pooling many smaller cheques behind it. The 50-shareholder constraint stops fighting the portfolio-construction maths.

Why MooCoo is built the way it is

Once you’ve worked through the arithmetic, the operational problem becomes obvious. A $1,000 or $2,000 cheque, written 24 times over 7 years, into curated deals, with all the documentation, share registry, follow-on rights, and tax administration that goes with each one equals a lot of friction for a small allocation. Most individual angels can’t make the maths work in practice, even when they understand it on paper.

Angelmatic is the infrastructure MooCoo built around this problem: curated deal flow, the cadence of roughly 10 new investments per year that the portfolio maths requires, and the operational plumbing (subscription, settlement, share registry, reporting) behind it. That plumbing is what lets an investment as small as $1,000 to $2,000 be written, as part of a $10,000 or $20,000 Angelmatic program, without the per-deal admin overwhelming the economics.

The cheque size is a decision based in straightforward maths. First, applying the 100-year sum. Then, you adjust it honestly for tax, the spouse, kids, ongoing income, and inheritance. Divide the result into buckets and apply a sensible allocation to angel investing. Finally, divide across a properly diversified portfolio over the right deployment window. The infrastructure has to match the maths, not the other way round.

Kerr Nielsen’s pearl was about how much you need to retire. The same back-of-envelope thinking, applied honestly across the buckets, tells you something else: angel investing, done properly, asks for less of your capital than your intuition suggests. The right response isn’t to write bigger cheques. It’s to find a way to write the small ones efficiently.

Richard Moore is co-founder of MooCoo Ventures, an angel syndicate that co-invests alongside Brisbane Angels, one of Australia’s most active angel groups. He has made over ninety personal angel investments since 2013.

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