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News that the former founder of HeadSpin isheaded to prisonfor fraud was further grounds that the last boom in the paired worlds of inauguration and venture uppercase lead to more than just a little bit of shammer . Manish Lachwani , founder in dubiousness , is mother prison house time and a massive fine for lying to investor , lies that let his society to raise nine - figures ’ worth of funding .
The companionship hang in , and would likely favour to permit the entire situation disappearance from the public centre . Fair enough , but the story of Lachwani — The New York Times reportsthat Lachwani inflated “ HeadSpin ’s taxation nearly fourfold , making fictitious claims about its customers and make faux invoices to cover it up ” — is not an disjunct case .
Even past the somewhat date frauds atTheranosandRothenberg Ventures , there ’s been a slew to cover lately . From investor complaint aboutBolt ’s fundraising , toBloomTech , Nikola , BinanceandFTX , we ’ve seen a lot of financial shenanigans . Why are we seeing so much fraud and related behavior from nouveau-riche tech companies ?
Pace , in a sense . In a historically abnormal menses of low interest rates , majuscule hungry for yield flooded into the venture capital world . As a result , investors got very engaged with their checkbook and sometimes spend less time on app . Recall that many very young startups are more estimate and potential difference than hard assets and historical hard cash flows , so what counts as diligence for a PE business firm front to buy , say , gas stations , is unlike than doing diligence on a seed - leg inauguration . But Washington poured into later - leg startups too , leading to a lot of cap moving very quickly . misunderstanding were made , or , put another mode , some founders saw the boom metre as a period in which they could flex the rule .
One thing to keep in mind is that as a market reaches its height , you will often see pseudo explode . look at it a top warning . Hit frolic , let ’s let the cat out of the bag about it !
