3 ms·
Curious why the investors didn’t do any diligence like requiring an audit as a condition for funding. We saw the same thing with Theranos.
by adrr 6y ago
Curious why the investors didn’t do any diligence like requiring an audit as a condition for funding. We saw the same thing with Theranos.
- tossmeout 6y agoStandard for investments in tech startups, no? Although I'd assume less standard for biotech startups like Theranos.
- JumpCrisscross 6y ago> why the investors didn’t do any diligence like requiring an audit This is an unusual ask. Founders forging bank statements simply isn’t common enough to merit it.
- adrr 6y agoAt a previous company, we had it as a requirement for the round. Didn't bother us because our book were clean and our growth wasn't fabricated. Company had a successful exit by an acquisition . At the current startup i am at, we do yearly audits that we share with our investors. We have nothing to hide and our growth is real. If company doesn't want to do an audit, they are hiding something. Founders forging stuff is more common than you think. I've personally seen shady accounting at two startups like fake contracts were nothing of value was exchanged but saw the revenue booked. One of the startups was a vendor to homestore.com were the CEO went to jail cooking the book but we were never investigated being a private vc backed company. Though investors did fire the founders and executive team after they forced an audit. SEC prosecuting these cases is quite rare with privately held companies. This is the second case that i know of.
- deleted 6y ago[deleted]
- tw1912112 6y agoI think this founder particularily has history of exits, atleast on his LinkedIn. They might be just buying the story more than the details?