PSA: A New Scam Targeting Founders
- March 11, 2023
It looks like there is a new scam going around targeting startups and small business. These seem to be well funded and target innovators with software and deep tech products that aren't funded yet. They steal the identities of small Investment holding companies or angels and use that to target founders with an ID theft scam of their corporate and personal identities that could potentially ruin them.
We did some research of our own and started by looking at a few crowd funding sites that seem to be publishing more information then needed around startup ideas and came across EquityNet. We tested it out and sure enough, after a few weeks we started getting unsolicited emails from so called "investors" who had found us on EquityNet.
So we started checking them out one by one, first at the domain level on whois.net and getting namecheap.com as a DNS provider for each one, then we ran them through ScamAdvisor. The first "investor" that reached out had this rating on Scam Advisor.
Not so good, in fact just about the worst rating possible, though you could argue 1/100 is technically worse, it seems implausible or broken while 2/100 seems legit and just bad. We kept looking, but didn't see anything on the typical reporting sites relating to them scamming startups. They were all foreign holding companies with small investment portfolios, claiming to be looking into US startups based on the current market trends.
All of these "investors" had similar Scam Advisor ratings but no reports. Based on the registry info for each one of them though, we found similarities that pointed to a very obvious scam. Each scam had a similar profile, they found small investment and holding companies without international web presences and created english language websites and email accounts. This essentially allowed them to start up their own shadow investment firms. They used these shadow companies to steal not only money from founders, by way of fake investor insurance policies, but also to document everything about each startup idea, business entity and founder. Then with identities in hand, as well as the business idea associated with the startup they can steal from the founders accounts, fake there identity as well as pitch or sell the idea to real investors either as their own, or masquerading as the startup whose identity they had stolen. Since discovering this we have had a few others come to us with similar stories looking for advise as well as starting to now report it.
Buildly is and has been focused on helping small companies and startups with innovative ideas get the tedious things out of the way, so teams can focus on building innovative products. Innovative products that might not change the world on their own, but will contribute and be a part of larger diverse solutions. One solution amongst the many needed to solve small parts of these larger problems. So when someone comes in and tries to kill those ideas, tries to steal them, it just difficult to understand how they can justify these tactics.
We are working on some ideas to help protect business and product ideas from those that might steal it before you can start, with a safe and secure place to document and share and track who you have shared with. But there is a larger, maybe more difficult problem to solve, and that is how to fund the right idea for the right founders and help others pivot or rebrand to get more attention on their idea. Diversity movements and green initiatives in investor portfolios and accelerators have made great strides in funding some of the many otherwise overlooked ideas and founders but many are still left struggling with no clear path forward.
We are big on communities here. Not just for your product but your industry and market, where people help each other out, and promote good ideas, we want people to feel safe sharing their idea. The best way to start is connecting founders just starting out with other founders who have been there before as well as investors of all sizes and promoting the good ideas big and small and sharing them safely through vetted platforms and educating them on what to look for in a partner and investor. Not every idea is great or world changing, or should have to be, but they deserve a chance and a review and some advice. Without it they get left behind and desperate and that's when others can swoop in and take advantage.