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- Startup angel investment scam you need to know about. Urgent.
Startup angel investment scam you need to know about. Urgent.
Plus: I want to highlight your startup in our newsletter!
Aron Meystedt
July 06, 2023
2 minute read to avoid a disaster 😐️
Today:
🦹♂️ There’s a startup investor scam out there that targets new entrepreneurs.
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🧑🤝🧑 I’d love to show off what you’re working on to our 150,000+ budding entrepreneurs!
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🤖 Cool prompts for ValidatorAI.com to help you get started today — even if you have no ideas!
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➡️ There is a scam going around on social media you need to know about. It targets young and first-time entrepreneurs who don’t understand exactly how venture investing works.
🏃 If you see a message like this one below on social media, RUN AWAY as fast as you can. I’ll explain why.
Hello!
I am a startup investor based in [wherever].
We are looking to invest in a few startups and have a good sized fund we operate out of. If you are working on anything interesting, please DM me.
We are looking to put $1 million into several startups.
Thank you!
[some random dude]
Or it can look as simple as this one I found, in a startup group on Facebook. This took me 2 minutes to find. These are all over social media. ⬇️
🚫 Here is the problem, simply:
Legit VCs have plenty of deal flow.
They’d never go on social media to get open submissions from 100s of people.
VCs get their deal flow via introductions by other startup founders and investors.
💰️ This is how the scam works:
The investor asks to learn more about your company.
They tell you the board loves what you’re working on and has authorized to put (for example) $500,000 into your startup.
You celebrate because your dreams are about to come true.
Then they come up with some small fee that you need to pay to make it happen. Usually a legal fee, a doc fee etc. It all sounds reasonable when they explain it.
You think, I’m paying $2000 to free up $500,000. That works!
You pay and they either:
A: Disappear
B: Keep you on the hook and bleed you dry with more fees — as they dangle their seed investment in front of you.
This scam very common. NO ONE is talking about it. And there are countless victims.
❌ Red flags:
They do very little diligence on your startup. They don’t ask questions, interview you, ask about the founders, your traction etc.
ANY investor will put you through meetings and interviews. They’ll CHALLENGE everything you are doing. And, in the end, there’s a 99% chance they won’t fund you.
You can’t find their portfolio online or who they have invested in - you always want to interview other founders who investors backed.
The whole process is super fast. Too easy. But you don’t realize this isn’t normal.
Everyone wants to think good fortune has come to them. Trust me, this is a scam. If you have seen this, or if you have engaged with someone like this, run away. If you have questions about an investor that contacted you, reply to this email and talk with me. 🖐️
💌 I want to hear about your startup!
👉️ Reply to this message and let me know what you are working on.
Tell me what stage you are in, who you are, and what your vision is!
I will pick a few of you to highlight to our 150,000+ entrepreneur community. It’s free PR and maybe you’ll find some people excited about what you’re working on.
💡 Finally, try this prompt at ValidatorAI.com if you have no idea where to start!
🤖 I want to start an online business, but I have no ideas. How do I use my knowledge to get started with my own startup?
🏎️ Or try this one if you are struggling to get moving:
🤖 How do people come up with startup ideas? I’m stuck and want to start something.
Remember you can Download and Save your personalized advice with this button that shows up at the end of the AI conversation:
Take care!
Aron
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