Most people I talk to about investments believe in having a diversified portfolio vs. consolidating all their assets in one company as a way to mitigate their risk. However, these same people go all-in on much more risky small business ideas with no partners.
Entrepreneurs understand the value of shared risk and reward programs.
As an oil and gas investor, many drilling companies, with what they truly believe is a good prospect, reach out to other similar oil companies for fractional investments in the prospect to share the risk and reward. In this way, they achieve much greater diversification with the same amount of invested capital and even get a collective brain trust to review the prospect based on each partner’s experience. If one partner loves the idea but no one else does, it is likely a bad deal.
Do you share risk and reward with business partners when it comes to business?
