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"Why not just build a fund?"
This is a question we frequently encounter at Misfits. Many people we meet either assume we're already a fund or suggest that we should raise one. It's a reasonable question—after all, the traditional venture capital model has been the dominant approach to startup investing for decades.
The venture capital model, while effective in many ways, has inherent limitations that restrict who can participate in startup investing:
All this well-generated value creation that is happening, all the wealth generation that is happening, there are only two sets of people who are benefiting from it. One are angels, which are very few, maybe a few thousand... and there are family offices who are going and doing it through VC funds.
Meanwhile, many people who use and believe in technology products—the very products creating enormous value—are excluded from participating in their growth:
The rest of us who are rich, who can invest, who are believers in technology, are not getting access to it.
This exclusion has become more problematic as technology has transformed our lives. Many of us have been using products like Zomato since they were valued at a few hundred million dollars, but we couldn't invest until they reached a $15 billion valuation at IPO.
We are just extracting every bit of juice from a company before it hits the IPO market.
While financial returns are important, our vision extends beyond them. We're building a community where people can learn about startups, technology, and business building:
If you come to the app, you're investing, it's not just about returns, it's about feeling that you learned something. When you go out there, invest in something else, you learned a thesis, you got something.
Even if you don't invest, the experience should be valuable:
This is how this works. This is what people had to say about it. This is why I did not invest. You should have an opinion.
This learning aspect is particularly powerful because it exposes people to multiple company journeys rather than just one:
As investors, even if it is not that kind of learning, is broader and lighter in that sense. But you are getting exposed to 20 companies' journeys.
These diverse experiences create a richer understanding of business:
Somewhere you see the product-market fit was there, somewhere it was not, somewhere things worked out and gave a good outcome. These learnings are a part of our journey.
By making startup investing more accessible, we aim to strengthen the entire startup ecosystem:
How do we become a much stronger ecosystem among startups? How do we have more people understanding the language of how companies are built?
This broader understanding has cascading benefits:
Tomorrow, some of those will become founders. Tomorrow, some of those will become fund managers themselves. Our job is to put it all together and be synonymous with startups and this asset class in India.
Beyond the market opportunity, there's a personal element to our choice:
It's about what excites you. Even before I came to startups, I was in private equity. I was in a fund, and that was a very natural cycle... over time, you'll grow from a VP to a principal to a partner. And maybe someday you'll move out and start your own fund. That never excited me because it's not a problem statement.
Building something new, tackling unsolved problems—that's what drives us:
What really brings the best out of me is when I'm in an unknown zone. It's completely ambiguous... when it is a known problem, there are people who will out-execute me, will outperform me.
Our model creates several unique advantages over traditional funds:
Unlike funds that raise capital every few years, our model requires us to prove ourselves with every deal:
If you think about what is the right way to invest, what is the right way to raise a fund? It should not be that I've raised money for 10 years and I'm accountable to you after 10 years. I should be accountable to you after every deal.
This creates stronger alignment between the platform and its investors:
If I'm not doing a good job, you will not invest in the next deal. So I'm accountable to you on a deal-by-deal basis.
Our approach gives investors more control over their capital:
You are investing when you want to invest. You're not investing when you don't want to invest.
This flexibility is particularly valuable in a world where circumstances change rapidly:
You might be liquid today, you might not be liquid tomorrow. You might like a sector today, you might not like it tomorrow.
By bringing together investors from different backgrounds and with different expertise, we create a richer ecosystem:
We have people from different walks of life. We have people from different sectors. We have people with different expertise.
This diversity leads to better decision-making and more robust investment theses:
When you have a community of people looking at a deal, you get different perspectives. You get different insights. You get different questions.
While raising a fund might seem like the obvious path for a company in the investment space, we believe that building a community-driven platform offers unique advantages for both investors and the broader startup ecosystem.
By making startup investing more accessible, educational, and flexible, we're not just creating a new investment vehicle—we're helping to build a more vibrant and inclusive startup ecosystem where more people can participate in the value creation happening through technology.
Our approach isn't about rejecting the traditional VC model entirely, but rather about complementing it with a more inclusive, transparent, and community-driven approach that opens up startup investing to a broader audience while creating continuous accountability for those curating investment opportunities.
In the long run, we believe this approach will not only generate strong returns for investors but also foster a deeper understanding of startups and technology across the ecosystem, ultimately leading to more innovation and value creation for everyone involved.
