Scott Lenet – High profile documentaries on Netflix, Hulu, and HBO describing alleged fraud at the Fyre Festival and Theranos are raising awareness that “the next big thing” may not always be what it seems. Anyone can be victimized by fraud, including employees, customers, and the general public; but venture capital investors should be in a unique position to spot a con.
Failure and fraud are not the same thing. Venture capitalists expect plenty of failure from honest entrepreneurs who try hard but don’t manage to succeed. Failure is part of the business. But fraud is another story, where an entrepreneur deliberately deceives employees, customers, investors, and other stakeholders. Just this week, Dan Primack of Axios reported on how a Washington, D.C. startup Trustify may have purposefully defrauded investors.
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