My story as a startup founder with fake investors (their names and website included)
The Introduction
First of all: it’s really hard for me to do this, earlier this day I was planning how much cash I’ll burn month over month. and how much equity pool I will give to my early employees, but now I am writing an article about fake investors and investment scam.
I’ll make sure I include everything I know about those scam investors: their website, the emails I’ve got, the numbers, the logos, the names, etc.
Because we all know how hard this journey is, so for that one reason we should (As founders and entrepreneurs) stick together and help each other’s out no matter what.
The Story
As a startup founder, you are always looking for investors, after all: getting an investment is the first step to making your unicorn kick-off, right?
I am the founder and CEO of Artbeak.com, it’s the World’s first freelance marketplace dedicated to just advertising animation, making the process much easier and faster for each the client, and the artist.
One day, I read an article here on medium, talking about the best early users platform you can apply to, to get your startup listed and efficiently receive some high-quality traffic, so: I did.
I applied for betalist.com and some other websites, and surprisingly, after a month or so, betalist.com did list my startup on its website, and its Twitter account, and also many other websites smaller than betalist.com
What matter is that we received over 30 sign-ups on our expensive premium B2B product, so things were looking amazing, we got excited, it’s the first time for us to get users, and then, we got really happy! when two investors out of nowhere emailed us, claiming they are interested in our startup, and want to invest their money into it.
So, we started emailing back and forth with those “investors”, and one of them, the first one, was telling us he’s a part of a VC firm located in Singapore, once I heard Singapore, I was excited, I mean, after all, I loved Singapore from my first month as an entrepreneur, so we give them all they want: they asked for everything, our pitch deck, founders details, exit strategy, even business plan! I mean, who asks for a traditional business plan these days?
We answered almost 25 detailed questions about every aspect of our startup, they have really sold it to us almost in a perfect way in the beginning.
From the first email I got from them, I started looking around, I looked up their website, I searched for their names in LinkedIn, but no profiles have been found, and their website is looking more like a template, not a real website, but I just completely ignored those signs in the beginning, and told myself that I am just overthinking this: why would anyone bother to do all this if it wasn’t real? like, what’s his benefit from all of this?
Here’s their website: https://rectroninvestments.com
A couple of days went through, and we got their official approval, along with a term sheet, and before that, we received a call from them. I asked an honest question: why does your camera turn off? and he told me that it was just broken, and he will show his face later, so I believed him.
Once we received the term sheet, we got happy! our first term sheet as a startup with great potential, people must love our startup, that’s what I told myself when I received those two investors’ emails.
We read the term sheet carefully, everything was clear and set up in the right way, and even better, we agreed that we will get 150,000.00USD for 20% on equity finance, but the term was clear, that they only want 10% for the same amount of money, what an amazing investor!
“If it seems too good to be true, assume it is”.@DC Palter
But once we talked a little more on skype (yes I was also shocked to learn that a modern investor is still using skype) we read this term:
And it’s basically mean that us(the startup founders) have to pay for something called ISB insurance, what’s that? I don’t know, I looked up all the internet, nobody seems to know what an ISB insurance is, Except maybe a shady article I hardly found it.
I kept talking to the same person, I told him we are in an early stage, we are almost out of cash, how can we pay for anything? and he replied that we need to do that insurance, or they can’t “proceed” the deal. oh, have I told you? they are also using a lot of fancy words, and their English is maybe better than mine. so they did a lot of effort to make everything flow naturally, they even have titles in place, first I got approached by someone called “Dr.Tan Yu” and after that the talking continued with their “CTO: Gilbert Deming”, and I am sorry if those names turned out to be real names for other people, because they probably stole it from somewhere and used it.
I laid down on my bed and kept thinking. I wanted it to be true, I even cried, I have done a lot to get to this point, I have worked like crazy for years. but unfortunately, I knew from the beginning that there was something wrong with these guys, but I just didn’t want to believe it, as entrepreneurs are believers, and dreamers, we live making risks and gambling on everything to make our dreams a reality, so I wanted the deal to be real more than anything.
So, I Googled some keywords like “will investors ask for insurance”, and fortunately I came across a question on Quora, someone was asking if it’s normal for investors to ask for “insurance protection” and like what I feared the most: all the people answering the question were clearly telling that it’s probably a scam.
“No Real Investor will Ever Ask You for Money Upfront For Any Reason”. I mean, after all, the investor is a person who will pour a lot of money into your startup, not take money from it.
Quora Question:
https://www.quora.com/Is-it-normal-for-an-investor-to-ask-for-an-Investment-Protection-Insurance-deposit-before-the-deal
We, as entrepreneurs, live to solve problems, to push this human race forward to the next chapter, maybe we won’t all turn out to be like Steve Jobs, or Bill Gates, or Larry Page, but what we know for sure is: we want to solve problems, we live to solve problems, and want to make our dreams come to reality, even if that costed us everything we love, because passion my friends, is not a trend, it’s not a one time journey or a speed race, it’s an Obsession, it’s a marathon, and it’s surly: a lifestyle, a story that never ends.
So for that reason, I won’t allow any other founder to get into this trap, that’s why I needed to post this, even though I am really running out of time and have not written an English article ever in my life
Note: if you want to see all the emails and the questions they send us, you can contact me at bara@artbeak.com
The End
Just always remember that you can do it. you can make your startup happen, and the world needs you my friend as they need every passionate, hardworking, founder. so gather your courage, ignore the crowd, and think, work, plan, and play the long term game, and you will efficiently make it.
Thank you For Reading.
My account on LinkedIn: https://www.linkedin.com/in/bara-artpeek
Our website: www.artbeak.com
