Debunking the idea of investor FOMO, Lunia advised that startups proactively should not look for investors who are writing cheques out of FOMO
“You want it to be meaningful in the scheme of things, with investors who actually feel sad if things go wrong,” he stated
Tiger Global had a median cheque size of $114 Mn in 2021. In May 2022, it wrote its first seed stage cheque for an Indian startup
Inc42’s Fintech Summit 2022 ended last week with a bang and it is not surprising that certain comments from the industry stalwarts are still echoing with us. One of those was India Quotient’s founding partner Anand Lunia’s comment on investor FOMO and Tiger Global – one of the world’s largest VC/PE investors.
When moderator Mukesh Kalra (ET Money founder) picked a question from the audience asking if investor FOMO (fear of missing out) was dying out, Lunia stated that seed investors are different from ‘investor’ investors.
Debunking the idea of investor FOMO, Lunia advised that startups proactively should not look for investors who are writing cheques out of FOMO.
He added, “With all due regards to Tiger [Global], you [an early stage startup] don’t want Tiger Global to be your seed investor. For an investor who is writing one cheque a week, you don’t want the investor to be your seed and only investor on the captable.”
He further specified that getting this big of an investor in the seed stage is not setting up for success, but quite the opposite.
It is noteworthy that Tiger Global is a US-based late-stage investor, and only marked its first seed stage investment in India with the ecommerce enabler Shopflo. In fact, alongside other investors such as TQ Ventures and Better Capital, the complete seed round of Shopflo was only $2.6 Mn.
Tiger Global had a median cheque size of $114 Mn in 2021 when it had backed 187 companies from India alone.
The idea of not wanting Tiger Global as a seed stage investor, as explained by Lunia goes, “You need somebody who has skin in the game, although it’s a ten-year ratio. You want it to be meaningful in the scheme of things, with investors who actually feel sad if things go wrong. You don’t want to be a part of somebody’s experimentation, but their core strategy.”
The explanation is simple – a big investor like Tiger Global will not be able to advise an early-stage startup as much as it is needed.
The early-stage investor previously during the panel discussion titled “Can Indian Fintech Survive The Economic Downturn?” had also stated that an investor can diversify to 40 companies, while the founder has only one company. So, founders have to think of the next 50 years.
Perhaps someway along the 50 years, Tiger Global can be a part of the journey, but as Lunia pointed out, early stage needs are quite different and need a strategic ‘seed’ investor.
