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- My investors told me to refund their money and shut down. I said no. Here’s why.
My investors told me to refund their money and shut down. I said no. Here’s why.
Kaeya Majmundar
March 17, 2025
This weekend, I was coaching my high school entrepreneur mentee, Abbie.
She just won $4,500 in a pitch competition. She asked me what to do with it.
I told her:
"First, congrats. I’m proud of you.
Second, read Thinking in Bets.
Third, start practicing it starting with how you spend this $4,500."
Because this isn’t about investing money into your business. It’s about investing in yourself…building the mental scaffolding to make high conviction decisions in high uncertainty.
"I didn’t learn this skill until I turned 30," I told her. "It was really hard at first. Now, at 32, it comes automatically even when I’m emotionally overwhelmed. And if you start now, you’ll be running circles around 30-year-old founders by the time you’re 20."
That conversation made me reflect on the single biggest, highest-stakes bet I’ve ever made:
📩 October 2, 2023. The day I got the shutdown letter from my lead investors.
Dear Kaeya,
In light of the internal and external challenges facing [your company], we feel obliged…to recommend dissolving the company and returning capital to your investors.
This recommendation is based on our careful assessment of the business prospects…and in the wake of the decisions made under your leadership as CEO, including multiple actions taken in defiance of board decisions and recommendations…
It is with great sadness that we write this letter…but we have come to believe the actions described above have irreparably reduced the company’s prospects for success.
🚫 They didn’t just see rookie mistakes. They saw me as fundamentally incompetent.
🚫 They didn’t just quietly step back. They wanted their money back.
🚫 They weren’t just skeptical. They were 100% certain I needed to be stopped.
I Knew How Unprecedented This Was.
A group of pre-seed investors disengaging from an investment they lost conviction in? Expected. Happens 9 times out of 10.
But publicly declaring that their lead investment founder should dissolve their company and refund their money?
Extreme anomaly.
That’s as bad as it gets.
I knew that saying yes quietly and politely would save face.
I said no (and loudly) anyways.
But not out of blatant:
🚫 Defiance
🚫 Recklessness
🚫 Anger
I Made This Non-Consensus Bet Because I Had Cultivated the Skill of Making High Conviction Bets in High Uncertainty.
This was the highest stakes non-consensus bet I’ve ever made.
Because this time, I wasn’t just making a big bet.
I was betting against my own investors’ certainty that I was such an incapable founder that the only plausible path forward was to shut down, return their money, and never raise VC money again.
If I was wrong, I wouldn’t just fail.
I wouldn’t just be another founder who raised VC, built something that didn’t work, and quietly moved on to their next thing. No harm, no foul.
I was risking full blown credibility erasure in the startup ecosystem.
This bet had only two possible outcomes:
🔴 Career suicide.
🟢 Career maker.
No in-between.
And in March 2025, I got my answer.
🟢 This bet turned out to be non-consensus and right.
“You have to be an independent thinker in markets to be successful because the consensus is built into the price. You have to have a view that’s different from the consensus.”
How I Made This “Non-Consensus And Right” Bet
I rejected my investors’ demand to shut down and return capital because:
1️⃣ I saw five seemingly unrelated market forces accelerating at breakneck speed—and I believed they were about to collide in a way that would permanently change influencer marketing. (Using NFX’s Fast Moving Water framework)
2️⃣ I had more than 2 years of capital in the bank—enough to play this bet out to its fullest.
3️⃣ I had extreme founder-market fit. After 5+ years living inside this problem, I felt uniquely suited to solve it. (Using NFX’s Founder-Market Fit framework)
4️⃣ I was at rock bottom, but if there’s one thing I know how to do—it’s push through. (Angela Duckworth’s book on grit was formative for me)
5️⃣ I ran this decision through Jeff Bezos’s regret minimization framework. And I knew that, years from now, I’d regret not taking this bet far more than I’d regret taking it and losing.
The Bet in 2023 vs. What Played Out by 2025
The 5 forces I saw colliding:
What most people saw | What I saw and bet on in 2023 | What played out by 2025 |
|---|---|---|
Influencer marketing was growing, but fraud was a minor issue. | Force #1: The consumer advertising deception crisis was about to explode. I saw the same pattern in ADA lawsuits—when class actions skyrocketed, a company (AccessiBe) emerged at the center of it. The same was about to happen here. | Consumer backlash against influencer fraud reached a tipping point. |
Influencer marketing was still “the wild west” and unregulated. | Force #2: It was hitting its regulatory moment. Fortune 500 brands were getting more professional with legal teams, contracts, and compliance. Regulation was inevitable. | The FTC’s progression from ruling made deceptive influencer endorsements federally illegal, with $43,792 fines per violation. |
AI would change influencer marketing by creating virtual influencers. | Force #3: AI wasn’t just about avatars. It would 100x influencer deception. The real risk was mass-synthetic fake user-generated content flooding the market. | Companies like MakeUGC AI made it possible to generate fake testimonials for $6 in 6 minutes. AI-powered fraud exploded. |
Consumers were annoyed by deceptive ads but wouldn’t take action. | Force #4: Consumers would weaponize legal tech. Startups were already getting threatened with lawsuits by individuals trying to extract money. Companies like DoNotPay were automating legal action. | Consumer lawsuits against deceptive influencer marketing are now accelerating at breakneck speed. Major brands like Shein, Celsius, and others under fire. |
The FTC mostly issued warnings, no real enforcement. | Force #5: The FTC exists to regulate deceptive advertising—and the warning phase was ending. I saw their shift from issuing guidelines (~2016) to increasing lawsuits. It was only a matter of time before they enforced with teeth. | The FTC was prioritizing and significantly ramping up its enforcement. |
Importantly, I Got Lucky
Bets I Made | Where I Got Lucky |
|---|---|
AI would make the cost of producing this company nearly free, giving us near-infinite runway. | 🍀 Companies like MakeUGC AI flooded the market, exposing how influencer deception would spiral out of control. |
My lived experience in influencer compliance would be my edge. | 🍀 I happened to have spent years on the inside, dealing with these exact red tape / regulatory / legal problems in influencer marketing every single day. That meant I wasn’t guessing. I had the blueprint. |
I still had a lot of seed capital left. | 🍀 While I kept our lead investors updated with the growing progress throughout 2024, they still chose to walk away. They forfeited board seats, all of their shares, and capital, leaving everything in my hands. |
SwayID would be solving the right problem at the right time. | 🍀 In October 2024, the FTC made history with the first federal enforcement on influencer marketing—$43,792 per violation. |
The Psychological Battle of Making Non-Consensus Bets
In October 2023, when the shutdown letter from Barclays, BBG Ventures and Anthemis hit my inbox, it felt like a death sentence.
Throughout the following year,
I spiraled.
I got angry.
I lashed out.
I dyed my hair pink.
I embarrassed myself.
I sent messages I shouldn’t have.
I’m not proud of it.
But I also managed to hold my position and execute inside of that void.
And now, 17 months later:
Everything I saw coming is now happening in spades.
The class action influencer marketing lawsuits.
The regulatory crackdown.
The consumer outrage.
Our product as the “Covid vaccine” solution.
I’m proud of it.
So where does that leave me now?
The key remaining question is:
Can we execute fast enough to define and capture this market?
That’s the bet I’m making now.
🤞🏽
Kaeya