Lessons Learned: Investor underestimates young founders and misses billion-dollar opportunity

Immad Akhund is a founder and angel investor. He has already supported over 350 startups. However, he was hesitant to take on the AI ​​startup Scale AI because he underestimated the founders.

Immad Akhund, an active angel investor since 2016, decided not to invest early in Scale AI and learned an important lesson. The AI ​​startup was valued at nearly €12.5 billion ($14 billion) in last year's funding round.

"I saw Scale AI and thought, 'Good idea, but these people are so young ,'" he said in an episode of the "Twenty Minute VC" podcast released Monday. "I think the founders were 19 and 20 or so at the time . I think I could run this company better if I did it myself, and I don't know how they would pull it off," he added. Looking back, the serial entrepreneur says he was "just so wrong."

"These young people have a power that, to be honest, is hard to assess. You have to suspend your belief and say, 'Okay, this person will figure out how to run a big company,'" he said. This misstep was a defining moment for Akhund, who has backed more than 350 startups in their earliest stages, including Rappi, Airtable, Rippling, Decagon, and Etched.

Akhund invests as an angel in "things that seem inevitable in 10 years and can become 10 billion dollar companies," he told Business Insider in May in an article about the most successful seed-stage investors.

Akhund is also the founder and CEO of Mercury, a banking startup that recently raised €268 million ($300 million) in a Series C funding round led by Sequoia at a valuation of €3.1 billion ($3.5 billion).

Akhund said one of the most important lessons in his journey as an investor was learning to curb his ego . As an entrepreneur, he's used to bringing his ideas to the table in discussions with startups, he said.

The founders, especially young ones, often agreed. But "it's not their idea, and it's not even fair to impose an idea on others," he said. He learned that it's important to support founders for their ideas, not your own. "You have to put your ego and your preconceptions aside and really listen," he said. "As an investor, you're there to support the founders on their journey, not to be an important part of it," he added.

Akhund said he prefers serial entrepreneurs to newbies, especially those who have "a certain inferiority complex." "I have a great preference for serial entrepreneurs," he said. "Because they know how difficult it will be, but are willing to try again." That's "so unusual" and signals "that they really want this," he added.

Akhund advises investors to make diversified investments. "Make at least 20 or 30 investments—then you're in the game," he said. "You learn a lot by making additional investments." He adds that investors "need a diversified portfolio to achieve any returns in this space." A representative for Akhund declined to comment further.