How to Live Like a King as a Startup Con Artist.

So you want to profit from the startup ecosystem but have neither the skills/creativity to be a successful founder nor the capital to be an investor?

Why not just sponge off the ecosystem instead?

Here’s a beginner’s guide…

The startup ecosystem at its most basic should be quite simple to understand. You have good entrepreneurs (and employees) who make money and poor ones who don’t. There are also good investors (who make money) and poor ones (who don’t).

So far so bad, you might be thinking, I’m neither a good entrepreneur nor any kind of investor. But wait — to be successful, good entrepreneurs need to meet good investors!

The problem here is that all entrepreneurs (ie both good and poor) pretend to be good entrepreneurs, just as all investors profess themselves to be good investors. So without knowing each other beforehand, how do good entrepreneurs find good investors? (and how do good investors avoid bad entrepreneurs?)

This is an example of information disparity and is one of the reasons why Y-Combinator is so successful — they can pick out the ‘good entrepreneurs’ and reduce their chance of failure by matching them with a pre-vetted list of ‘good investors’. Indeed it is such a big problem (in entrepreneur-speak, we say problem when we mean business opportunity) that AngelList, a startup founded to make such information transparently available, received $millions in funding to solve it.

Now, you’re going to use this same information disparity as Y-Combinator to profit off the matching of entrepreneurs to investors.

Unlike Y-Combinator, however, you have no prior experience to make you a successful judge of what makes an entrepreneur good, and therefore also no connections to investors (good or bad).

Yet do not panic! The qualities mentioned in the previous paragraph are merely required to be able to connect good entrepreneurs with good investors… Instead, you will cast aside all pretences of helping the startup ecosystem and drive yourself into the information disparity gap as an artificial bottle-neck, matching startups you present as good to investors you told the startups to work with.

Sure, you’ll probably hurt a lot of good entrepreneurs, their employees, and investors… But who cares? There’s money in it for you and the investors probably won’t ever find out. Just make sure to put your conscience on ‘silent mode’ — especially when trying to sleep at night.

Step 1:

Find a way to network yourself into a small startup ecosystem (such as Switzerland), where it is easy to meet the right people relatively quickly.

Step 2:

Gain the trust of investors. It’s best to attempt this when you are a bit older — if you are over 35, investors are less likely to assume you haven’t achieved anything in your life yet. Going to business school will open doors and give you common ground, speeding up the process. Another option is to offer to take over boring and time consuming responsibilities for investors in return for a seat at the table, such as organising meetups and events for different investor groups. Bonus points if this job comes with a title to cement your ‘authority’.

Step 3:

After gaining access to and the trust of investors, you need some startups to match them with. As we noted before however, you won’t have the experience or mental acuity to discern good startups from bad ones. This means that you need to approach a wide array of startups and try to work with as many as possible — the more you have, the less important it becomes if most of them fail.

Step 4:

Now comes the hard part — convincing entrepreneurs to work with you despite your lacking the necessary skill set.

The good news is that there are lots of founders out there who have no connections to investors and would happily pay for a warm introduction. The bad news is that not only do they not have any money to pay you with, but you have to agree a deal with them before they start having any success which might interest an investor enough to render a warm introduction unnecessary.

The second problem is easily solved — use your newly gained title and ‘experience’ to work closely with student entrepreneurs and younger founders. They will have little experience or network in the startup ecosystem, making it easier to convince them that they need your help. As for the first problem, agree to forgo your ‘normal’ exorbitant hourly fee and consent to advise them in return for equity in the company (5–10% sounds about right). Do this for up to 10 startups synchronously and you will own 10% of 10 different startups in return for a total of 10–15 hours spent ‘advising’ (ie: being reminded what the company is called and what they do) each week!

Step 5:

All that is left is to connect your favoured startups with the investors you know. In this case it is vital that you act as a messenger/deal maker between the startup and investors, so that you can offset the very real chance that you presented the investors with a poor startup with a great deal. This is done by using your ‘experience’ to convince the startup founder to take a low-ball deal from your friendly investors, as it is ‘the best they can expect’.

If you have to say that other investors aren’t trustworthy, other experts are stupid and that experienced founders who point out the mistakes in your reasoning don’t know what they’re talking about, then so be it. Do what it takes to deliver your friendly investors a deal which — even if the startup tanks — will leave them fondly remembering you as someone who is on their side. There’s no need for them to find out that this isn’t the case.

Step 6:

Great — you know own equity in multiple startups which have been funded, making it likely that you will see a great ROI (return on investment, where your investment was 20–30hours per startup multiplied by the value of your time, which is likely close to $0/hour).

Not only will this strengthen your reputation, making it easier to close even more similar deals with better startups (who weren’t gullible enough to fall for your spiel the first time round), but you’ll also have cash coming to you down the line soon enough as your startups sell out or close further funding rounds.

In the meantime, you need cash — there are two ways to get this. Firstly, try and force yourself onto as many board seats of your startups as possible. Threaten to walk away and spread the startup’s name in the dirt if they refuse. Of course you don’t want to raise the point that you expect to be reimbursed for your work as a board member until it is too late to reverse the decision.

If that doesn’t work and you are desperate, try as hard as you can to make the startup founders want to get rid of you… Go back on your deal; suddenly demand 30% more equity than you are entitled to; tell the founders you expect them to accept money in bad faith from investors and to then run away with the money after 6 months; expect to be included in every decision-making process yet only have to be available for 1 hour each week; lie about the investors to the founders and the other way round.

A combination of these tactics will have the founders gladly giving you tens of thousands of dollars just to get rid of you.

And there you have it. In 6 easy steps and under 2 years, you too can become a startup vulture, preying on the ecosystem to make a comfortable living. Is it a noble, moral way to make a living? Are you contributing positively to society? Will you be remembered and thought of fondly?

No. But if you’re the kind of person who’s willing to live like this, I doubt that bothers you much anyway.