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>> Investors know that every dollar they put into a company could disappear, it's why startups get capital from investors and not bank loans. The above does no

>> Investors know that every dollar they put into a company could disappear, it's why startups get capital from investors and not bank loans. The above does not excuse fraud. Investors know their investments are risky, but that does not give you permission to deliberately lie or mislead, with an intent to deceive the potential investor. For example, if you tell investors that you anticipate getting $50M in new contracts over the next year, well, assuming you mean it in good faith, that's not fraud even if it doesn't pan out or was delusional to begin with. If you tell an investor you just signed a contract for $50M, in order to get them to invest, and that's a total lie, that's fraud. Whether or not the investor did appropriate due diligence to confirm that fact or not, it's still criminal.

deleted 5y ago
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chihuahua 5y ago
In one sense you are correct, just because investors are knowingly making speculative investments, that doesn't make it OK to defraud them. On the other hand, perhaps the argument was that investors know there's a risk and know they should be skeptical. It would be unreasonable to expect patients requesting a blood test to be suspicious and question the results.
- hn_throwaway_99 5y ago
  > On the other hand, perhaps the argument was that investors know there's a risk and know they should be skeptical. If you've ever dealt with competent VCs, they are very skeptical, which is why they pretty much ignore your forward looking statements and just look at your current data. And the reason they do that is because forward looking statements can be all kinds of BS, but current data is just facts (unless you're lying about them, in which case it's fraud). Of course, they also want to know your vision and drive for the future, but they'll basically ignore statements like "We have 10 big deals I'm the pipeline" and just say "How many signed contracts do you have?"

deleted 5y ago

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chihuahua 5y ago

In one sense you are correct, just because investors are knowingly making speculative investments, that doesn't make it OK to defraud them. On the other hand, perhaps the argument was that investors know there's a risk and know they should be skeptical. It would be unreasonable to expect patients requesting a blood test to be suspicious and question the results.

hn_throwaway_99 5y ago
> On the other hand, perhaps the argument was that investors know there's a risk and know they should be skeptical. If you've ever dealt with competent VCs, they are very skeptical, which is why they pretty much ignore your forward looking statements and just look at your current data. And the reason they do that is because forward looking statements can be all kinds of BS, but current data is just facts (unless you're lying about them, in which case it's fraud). Of course, they also want to know your vision and drive for the future, but they'll basically ignore statements like "We have 10 big deals I'm the pipeline" and just say "How many signed contracts do you have?"