Big misses

Today, I spoke to some executives at a company I had been following for 3 years and did some math on the biggest missed investment opportunity I’ve had to date. It was painful.

Back in 2019, I got introduced to an early employee at a company that was valued at around $500M. He was looking for help with exercising his stock option which is what we do at Secfi so it was a perfect fit.

Problem was his cash need was really low for us at Secfi at $25,000 and we had not yet underwritten the company he was at, nor was the company willing to support us at that time. Nevertheless, the employee was a good person and I wanted to try to help him so I told him I’d look into doing this personally.

I spent a weekend day and night researching the company and industry and immediately fell in love. The company had visionary founders solving a problem in an antiquated unsexy industry. Those types of companies typically work out. I underwrote it to about a $1.5M exit in 5 years.

Unfortunately, I got absolutely slammed with work and just couldn’t get it all together to do the deal. I was going to split it with a coworker and it would’ve taken some administrative to get the entity set-up. Given the time of the year at Secfi, I ended up passing despite loving the investment.

Today, that company is now worth $12B. I ran the numbers today and my unrealized IRR would have been around 130%. If the company exited today at the last valuation, that $25K investment would have been worth almost $700K. Of course, you can’t eat your unrealized gains and lots can happy until this company exits, but it was painful nonetheless.

Any investor is going to have misses. Of course, hindsight is 20/20 and I wish I would’ve done this deal. Some of them are going to be incredibly painful like this one. But it’s an amazing learning lesson for myself. I’ll do better and make sure to get the next one.