Big News: FounderDating is joining OneVest to build the largest community for entrepreneurs. Details here
Latest Notifications
You have no recent recommendations.
Name
Title
 
MiniBio
FOLLOW
Title
 Followers
FOLLOW TOPIC

Question goes here

1,300 Followers

  • Name
    Entrepreneur
  • Name
    Entrepreneur
  • Name
    Entrepreneur
  • Name
    Entrepreneur
  • Name
    Entrepreneur
  • Name
    Entrepreneur
  • Name
    Entrepreneur
  • Name
    Entrepreneur

What are the most usual scams from people posing as startup investors?

Pretty sure there are a bunch of scammers looking to take advantage from startups that are in the process of raising funds. I think by posting here some of the usual cases it could be of tremendous help to guide some founders in order to avoid falling into the trap of these bad actors.

7 Replies

Rob Adams
0
0
Rob Adams Advisor
Advisory Board Member at PhotoPad For Business
I don't see many scams that have someone posing as an investor at their core. In the US, you can check if they're a qualified investor and that will remove those that are posing.

The common scams are those that promise some service for a defined portion of the round being raised, not for equity or direct payment. I've seen accountants, lawyers, marketers, and brokers who will offer services based on a given number of points on the round. For instance, a broker will say "I'll intro you to my network, which is yuge!, and tremendous, believe me!, for 8% of the round." Then nowhere in the language of the contract does it say that the round has to come from their introduction. Lawyers will look over your docs or prepare them for a percentage. Accountants will manage the funds or help you redo your cap table etc for a percentage. Marketers will clean up your pitch, advertise, build you Exec summary and so on so they are as pretty as possible ... For a percentage.

I become very skeptical every time I see someone who wants a portion of the cash. This isn't to say that everyone who does this is a scammer. I know a few people including lawyers who do this legitimately. However their fees are only a little higher than reasonable and customary since they are taking on the work with the risk that you won't get funded.

The next set of scams all involve people who want to use your venture to enrich themselves non-monetarily. Things like taking credit for your success, marketing themselves or building their network based on your work. I've seen pitch advisors who just coach you on public speaking, go to every one of your pitches and pass out business cards. They don't really help you all that much but use you as a marketing vehicle. Sometimes these people can come clothed as investors, but it's rare.

There are others, to be sure, but none that I've seen where someone poses as an investor.


Shingai Samudzi
1
0
Shingai Samudzi Entrepreneur
Founder & CEO at ProjectVision
Anything that involves paying to "get access" to potential investors
Irwin Stein
1
1
Irwin Stein Advisor
Very experienced (40 years) corporate,securities and real estate attorney.
Most of the scams go the other way. A lot of entrepreneurs taking money and labor from people knowing that they have nothing to deliver. You should always be suspect of paying for access to investors, as opposed to paying for marketing to investors. I am always skeptical of lawyers who work for stock because they are usually inexperienced.
Martin Omansky
0
1
Martin Omansky Entrepreneur
Independent Venture Capital & Private Equity Professional
Lots of scammers, no doubt, but there are also unlicensed "finders" that *illegally *take compensation for selling securities or introducing issuers to investors. It is now unlawful for issuers to pay such compensation (cash, stock, options, or fees categorized as something else), as well as the older law against unregistered finders receiving compensation. More power to you.
Thomas Duffy
1
1
Thomas Duffy Advisor
Telehealth365
lets try to make some clarity you cannot go out to the general public and offer shares of your company without having the documentation ie:reg D,Reg A ,RegA+
You can go to friends and Family and offer shares you can go to the SBA and get start up financing but that is debt and good luck. You can get payday loans .You can do a crowd funding campaign and offer shirts and but you need a professional to put together the content and bloggers and someone to get your friends and family in the game
David Austin
0
0
David Austin Entrepreneur
Entrepreneur
You should always talk to others who they've previously funded, regardless how confident you are of the investor. Always. They may even be on the up and up, but bad for the company.
Jeffrey D. Allen
0
0
Jeffrey D. Allen Entrepreneur
CEO at Globalcrossroadscapital.com; a US Vet-owned IR/PR firm with 8,419 1st connections
GOOGLE "Seminar Soundbite Seminar - Ways Borrowers BS Funders" And you will find while financial fraud is on the rise it mostly from the borrowers. Like the ones that expect that funding be guaranteed merely for the asking and everyone should be paid on the contingency of what the borrower may or may not be capable of doing. Like meeting funding approval criteria. And yet there are 4 reasons why 95% of the dealflow in the US gets rejected by investors; incoherent, conceptual, deceptive, and no skin in game. You know... the ones who ask for $100M but can't differentiate one type of capital from the other to prove they qualify while not having two nickles to rub together.
Join FounderDating to participate in the discussion
Nothing gets posted to LinkedIn and your information will not be shared.

Just a few more details please.

DO: Start a discussion, share a resource, or ask a question related to entrepreneurship.
DON'T: Post about prohibited topics such as recruiting, cofounder wanted, check out my product
or feedback on the FD site (you can send this to us directly info@founderdating.com).
See the Community Code of Conduct for more details.

Title

Give your question or discussion topic a great title, make it catchy and succinct.

Details

Make sure what you're about to say is specific and relevant - you'll get better responses.

Topics

Tag your discussion so you get more relevant responses.

Question goes here

1,300 Followers

  • Name
    Details
  • Name
    Details
  • Name
    Details
  • Name
    Details
  • Name
    Details
  • Name
    Details
  • Name
    Details
  • Name
    Details
Know someone who should answer this question? Enter their email below
Stay current and follow these discussion topics?