VCs live by FOMO. Smart founders use that against them

VCs live by FOMO. Smart founders use that against them

Patrick J. McGinnis

Tue, August 18, 2026 at 1:02 PM GMT+3 7 min read

In June 2026, a social crypto startup called Fomo raised $75 million in a round led by Index Ventures. The company's name is apt: It builds virality (and FOMO) by allowing users to follow and copy top traders' moves on the platform.

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The FOMO doesn't stop there. The press release announcing the deal is a master class in FOMO generation. It mentions the "strong participation" of the blue-chip venture capitalist firms Union Square Ventures and Benchmark. It discloses staggering user, trading, and engagement metrics. It ties itself to the mainstreaming of on-chain markets, citing NYSE and Nasdaq's own moves into tokenization as proof it's capturing the zeitgeist. It quotes a top trader's belief that the platform could become "the largest trading app in the world."

If you think about it, that press release is doing a lot. From top to bottom it feels designed to manufacture the one thing that keeps VCs up at night (besides planning their camp at Burning Man): the vivid, specific anxiety that someone else is about to make a ton of money while they watch from the sidelines. The way Fomo engineers FOMO is so meta that it's easy to miss the genius of it, but it works. The company, which according to LinkedIn has just 15 employees, is now valued at a cool $550 million.

The good news is that you don't have to call your startup Fomo to use the fear of missing out to your advantage. Take it from me. Besides having been an early-stage investor for over two decades, I coined the term FOMO back in 2004 while I was a student at Harvard Business School. Since then, I've studied how it drives decision-making and coached executives on how to harness it responsibly.

While FOMO is a fundamental tool in a wide range of business settings, from marketing to negotiations, it is startup founders who most frequently ask me how to integrate it into fundraising processes. Having now advised founders across industries and stages on how to do just that, I have developed five core principles that any founder can use to fill and close a financing round using the fear of missing out.

1. Greed Hooks, Fear Converts

FOMO exists at the confluence of two powerful emotions: love (or as commonly manifested in business settings, greed) and fear. The greed part of the equation comes from the perception there's a better opportunity right in front of you, one that promises more than what you already have. The fear is driven by the anxiety that you'll be watching from the sidelines while somebody else partakes in that opportunity. When you understand how this combination of greed and fear drives decision-making, you can integrate it into your pitch.

Greed is what grabs an investor's attention and gets them to fall in love. You can trigger it by peppering your narrative with strong metrics, validation from credible third parties, and data points or stories that set your idea apart and make it memorable. But for most investors it's not enough to simply love a deal; they must fear losing it so much that they convert from observer to investor. Triggering comparison (your competitor just sent me a term sheet), urgency (we're closing next week), and scarcity (we only have $500,000 left in the round) will spur an investor into action. If that doesn't work, they probably weren't going to invest in the first place.

2. Lead with Greed

The greed part of FOMO starts with the math. The risk-reward dynamics of the entire VC industry incentivize risk-taking. No matter how bad an investment, the most anyone can lose is one times their money, while the upside on a successful deal is essentially uncapped. Unlike in most corners of the finance sector, caution is a character flaw and swinging for the fences is the only way to make a career-defining investment. Given this dynamic, your mission is to convince an investor that your company could be the one that lands them a place on the Midas List, the equivalent of the Michelin Guide for their industry.

That's why each aspect of the narrative should have everyone in the room (or the Zoom) doing the math. By succinctly and compellingly laying out the size of the addressable market, the company's early traction, and how its current trajectory connects to its future scale, the presentation will have investors mentally modeling their return before they worry themselves with unpacking how the product works.

Now that you have their attention, your next objective is to keep it by putting solid scaffolding around the big ideas you've just pitched. Although startups are highly speculative endeavors and there is always going to be an element of "fake it till you make it" in any fundraising pitch, the goal is to make everything you're talking about feel inevitable. You can do this by using the power of social proof, a psychological phenomenon in which people look to or copy the actions of others to validate their own behavior. Social proof is a huge driver of FOMO because it makes everything seem possible by leveraging other people's credibility.

This means backing up each part of the pitch with (social) proof points, in the form of well-known and/or highly desirable investors, credible employees, well-respected advisors, prominent users, or high-profile partners. It's the reason why Fomo used its press release to name check everyone from their investors to Nasdaq to top traders on their platform. They harnessed the credibility of other people and organizations to burnish their own.

4. Not Everyone Gets In: The Velvet Rope Strategy

Now that you've sold the dream, the goal is simple: convert an investor's internal deliberation from "should I do this deal?" to "what do I need to do to avoid being left out!" Even when VCs genuinely like a startup, they are famously prone to ask for more information and drag their feet. They do this because they have the cash, and in turn, the leverage. That's why it's critical for founders to retake control by focusing on the part of the process where they get to flex their muscles: who gets to be on their cap table.

Founders can turn the tables by catering to another basic instinct that haunts VCs: the desire for relevance. In an industry where reputation is currency, being seen as someone who "gets it " is everything. It's not dissimilar to being welcomed behind the velvet rope and into the hottest club in town. If you're not, then you're nothing. Founders who understand this stop pitching, start managing, and strategically signal urgency and scarcity to VCs. Instead of saying "please invest," the message becomes "here's who's circling," "here's why I'm capping the round at $x million," and "here's when I'm closing in two weeks so that I can get back to building."

5. FOMO is a Bridge, Not a Destination

Since FOMO is rooted in the perception that something good is about to happen, it is by its nature inherently unstable. FOMO works only for as long as the narrative regarding future success of a company remains credible enough to survive scrutiny. If real-world considerations like metrics, market sentiment, investor interest, or negative headlines contradict that perception, FOMO can disappear in an instant. Once it's gone, it's nearly impossible to get back. That's why founders must avoid the temptation to misrepresent reality or overpromise.

The temporary buzz of a FOMO sugar high that is built on vibes alone is not worth the loss in credibility that comes when reality fails to meet expectations. Just ask Elizabeth Holmes, Adam Neumann, and Sam Bankman-Fried. All three were masters of generating FOMO (largely unethically), and they cast a wide spell over the VC industry and the media for a time. But in the end, they learned the hard way that while FOMO can help a company raise eyewatering amounts of capital, without the financial and operational rigor to sustain it, everything unravels. FOMO doesn't replace substance. Founders who win long term are the ones who use FOMO to open the door, then use the time it buys to build something so real that it backs up the story they've been telling all along.

This post originally appeared at fastcompany.com
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