You receive an email from a investor which has access to capital from the Arabic peninsula (in my case Qatar). They are usually industry agnostic, meaning that they invest in every type of company and industry. When you take the call, they quickly confront you with their fixed but reasonable terms: a subordinated loan with delayed repayment. You are sent the contract. Any objections or changes you make are immediately accepted. Here is the catch: the investment is subject to a personal meeting e.g. in Dubai (reasonable) at a lawyer office where some last due diligence items need to be completed. The catch: the lawyer fee is on you and a sizeable amount expressed in Rials or Emirati Dollars: 10k€. That can then put you out the travel expenses and a lawyer fee without any investment in return. I still get emails from Arab investor, but ignore all of them.

This is a recent one, and still active so beware. You are approached by members of a company (JCA invest, Luxembourg), that claim to manage the wealth of rich individuals. They offer you the sum you seek, let’s say 3M€ but ask to meet. You meet them in a café in Brussels where they will tell you first thing, that their employer is not providing them with enough commission. So they want you to become their accomplice: they will ask 10% more as investment from their wealthy employer with the understanding that you will forward it to them after the deal closes (unbeknownst to him). You agree and receive a letter of intent as well as KYC (know-your-customer) documentation on the wealthy individual (copy of ID, banking statement, proof of residence, police file) all of which are counterfeit. That person does not exist or is not aware of the transaction. You ask to speak to them but due to health concern you speak with their “son”, slated to take over daddy’s business.

In order for you not to dupe them on the commission, (a part of the) commission should be put in escrow in crypto currency. The escrow works as follows: in their presence, you setup a hardware crypto ledger, and wire the funds to the ledger’s address. That ledger (and its seed phrase) is then sealed in your presence and you keep the hardware ledger in your possession until the day of the closing. There you should inconspicuously hand them the sealed escrow. In reality however, during the meeting (with a different person, again in a public location) they swap out the ledger with a decoy and empty your crypto. Ask me how I know!

You are approached by a member from a family office (e.g. UCEA). They are interested in investing. You share your deck and they discuss it in their “investment committee”. They quickly reach the decision to invest. However they will only provide a portion of the required capital (which is usual). For the remaining amount they will reach out to their vast network of other family offices and investors to complete the round. For this they ask you at present to sign a contract with a retainer (30-60k GBP). Sorry friends, but you are no family office you are a fund-raiser. And fund-raisers are a dime a dozen some with much lower retainer. This one is not criminal but still a deception in my opinion.

You are approached by a company operating from Malta. They have made significant money in, let’s say cars, and are now looking to invest. They ask for a meeting. You meet (again not the investor himself but his son) in a 5-star hotel in south of France, you even print out a colour version of your deck to show. Your counterpart does not understand a single thing from your pitch. At the end, they ask if part of their investment can be in cash and off the books. A clear-cut case of money laundering.

One thing all these scams have in common: the people you deal with usually do not understand a single thing from your pitch, do not show any interest in the specifics of your technology/innovation and are not always even knowledgeable about business or finance. You usually do not meet the person or perform several transactions with different people. You never meet them in their offices, always in public or at a third party (e.g. lawyer). These are elements to watch out for.

My key learning from this: any time an investor reached out from their own initiative it was fishy. While it may not always be a scam, it should immediately raise a red flag: it is usually the startup that reaches out to the investor, rarely the other way around.

If you have come across other types of scams, or one of the ones I mentioned, please reach out to me I am interested in hearing your story (code at sam-d.com).