Over the last 10 years of my investing experience as a private equity and venture capital investor, I have looked at more that 10,000 investment opportunities across sectors and at different stages of investments. A typical Type-2 error is considered as an investment opportunity, wherein despite having the opportunity to invest, one decided to pass because there was a convincing argument on why one should not invest. An anti-portfolio, on the other hand, is the list of those companies, which proved you wrong on your investment rejection decision.
Some of the firms in my anti-portfolio include HCG Global, LensKart and PolicyBazaar. Except in the case of PolicyBazaar, where the investment opportunity came to me at a very early stage and I could not convince myself on the business model itself, the common reason for rejection for other investments was the expected valuation.
When the investment opportunity in HCG Global came to me, I estimated the valuation to be 25% lower than what the company was asking for at that point in time. Had I taken the extra risk of accepting the offered value, I would have still made at least six times returns in a four-year time frame. Similarly, in the case of LensKart, it came to me when I thought that the valuation ask was at least 60% higher than what it should have been. Had I taken the risk of investing even at the valuation asked, I would have got enormous upside within two years of my investing.
In the case of PolicyBazaar, the company came to me through the IIT Alumni (sponsor of our IvyCapVentures Fund) at a very early stage of the company, in 2011. I ended up arguing more on the business model at that stage than taking bets on the quality of the team. Had I invested at that stage it would have created a multi-bagger in my portfolio.