Essay · Capital
Every position is a high-risk, high-reward bet. Here is how to keep score honestly · Juan Vegarra · December 2026
The most dishonest number in early-stage investing is the one everybody leads with: the multiple on the winner. I have a 22x in my portfolio, and if I only ever showed you that, I would be lying to you the way a fisherman lies, by never mentioning the days the line came back empty. My first angel check ever was a total loss, and it deserved to be. Between that check and the good ones sits the only thing worth teaching about this work: how to keep score when every position is, by design, a high-risk and high-reward bet.
Start from the premise, because most people skip it and then act surprised. Angel investing is not a place you go to be right most of the time. It is a place you go to be wrong most of the time, cheaply, in exchange for the rare chance to be right at a scale that pays for all the wrong. If that arrangement makes you uncomfortable, the honest move is not to soften it with a better spreadsheet. It is to not play. Everything below assumes you have made peace with the arrangement.
The hardest discipline in judging your own record is refusing to grade a decision by how it happened to turn out. A good decision can lose. A bad decision can win. If you let the outcome decide which of your choices were smart, you will learn exactly the wrong lessons, congratulating yourself for the lucky win and flogging yourself for the unlucky loss, and you will carry both false lessons into the next check.
So I grade the decision, not the result. Did I do the work the checklist demanded, or did I let a friendship, an enthusiasm, or a good story do the work for me? My first loss failed that test completely: I backed a friend because backing him felt comfortable, and comfort is not diligence. The loss was not bad luck. It was a bad decision that happened to also lose, which is the only kind of loss you should actually regret. The losses that come from good decisions are just the cost of admission, and you pay them without shame.
A portfolio has to be judged on three separate clocks, and collapsing them into a single number is how people fool themselves. The first is the decision scorecard: on each bet, did I follow my own discipline? This is the only one fully in your control, and it is the one that predicts the future. The second is the outcome scorecard: what actually returned, honestly stated, losses and all. This one is real but backward-looking, and heavily taxed by luck. The third is the one almost nobody keeps: the learning scorecard. What did each loss buy me that I still use? My first dead check bought the entire checklist I have used on every deal since. Priced that way, it may be the best money I ever spent.
Failure is not a loss. In a portfolio of asymmetric bets, losses are structural; a book with no losses is a book that was not taking real swings, which is its own kind of failure, the quiet one. Real failure is narrower and more useful to name. It is a loss that came from skipping your own process. It is the winner you passed on for a reason you cannot defend. It is the same mistake twice, which means the first loss taught you nothing and was therefore truly wasted. And it is the deal you could not get inside, where you were a passenger the whole way down and never had the chance to help or to see the trouble while it was small.
By that definition, some of my losses are not failures at all, and one or two of my passes are. I let genuine winners go because they would not give me a seat at the table, close enough to actually help, and I carry those without regret, because the discipline that made me pass is the same discipline that made my best bets win. You cannot keep the discipline only on the deals where it is convenient.
There is one more scorecard that only reveals itself over time, and it is the truest: did you survive to keep playing? The cycle comes for everyone. It came for me twice in three years, once from Wall Street when the internet bubble took nearly a third of my net worth, and once from the far side of the world. The investors who compound are not the ones who caught the most upside in the good years. They are the ones who were still standing, with capital and judgment intact, when the good years came back. Raise when you can, not when you must. Keep enough to survive the year you did not forecast. A brilliant record that ends in a forced sale at the bottom is not a brilliant record.
This is why I distrust anyone who shows you only wins. It is not that they are lying about the wins, usually. It is that a track record with the losses edited out tells you nothing about the two things that actually matter: whether their process is sound, and whether they can survive being wrong. Show me your losses and how you think about them, and I will know more about you as an investor in ten minutes than your winners could tell me in an hour.
Keep three scorecards: the decisions you made, the outcomes you got, and the lessons the losses bought. Grade yourself on the first, stay honest about the second, and never waste the third. The multiple on the winner is the number everyone shows. The loss column is the number that tells the truth.
Juan Vegarra is the author of An Outsider's Playbook (forthcoming). More from the Notebook · Continue the conversation on LinkedIn
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