‘I’ve become more focused on betting on founders, rather than threats from incumbents’1 min read . Updated: 15 Oct 2019, 12:00 AM IST
I constantly keep reminding myself that in venture investing, the larger risk is of missing out on a winner since it can more than return your entire portfolio, says Aditya Damani, angel investor and founder, Credit Fair
—Aditya Damani, angel investor and founder, Credit Fair
I came across Meesho in the middle of 2016 when my brother tried using the app to increase the sales of his travel startup, Vista Rooms, by selling on WhatsApp and Facebook. We were very impressed by the product and the customer experience. The addressable market was enormous since India has millions of micro-entrepreneurs, and social platforms would be the new “high street". A few weeks later, we found that Meesho was being backed by Y Combinator (popularly known as YC). Being selected by YC is as prestigious as getting into one of the Indian Institutes of Technology or an Ivy League university. This got us even more interested in the startup.
We reached out to its founders, had a couple of conversations, and our gut suggested we should invest. However, the required investment amount was higher than our usual ticket size and the instrument, a convertible note, wasn’t something we preferred. We were also wary of the fact that Meesho could be disrupted if WhatsApp or Facebook built something similar as they planned to monetize their platforms. Companies such as Zynga had been victims of changes in Facebook’s platform.
After a lot of double guessing, we passed on that round. Meesho has since grown to over two million sellers, raised $215 million in funding, and is approaching the coveted “unicorn" status. Moreover, Facebook itself has invested in the startup. Needless to say, I wish I had given my gut a little more credit and pulled the trigger on the deal. Now, I constantly keep reminding myself that in venture investing, the larger risk is of missing out on a winner since it can more than return your entire portfolio. I have now become a lot more focused on betting on the founders, rather than worrying about competitive threats that might emerge from the incumbents. If the founders are building for a large market, have built an impressive product, and proven their ability to execute, I push myself to get out of my investment comfort zone.