If Wolf of Wall Street has taught us anything, it’s that embezzling first gets you a Yacht, then addicted to drugs and finally, arrested. So, embezzling is bad, right? The problem is they are everywhere as further proved by the global economic meltdown. So, how can you get investors for your company while avoiding money embezzlers?
1. Virtually Fake
If your investor approaches you with an offer that is founded on credit, promissory notes or generally money that you’ll get after the fact, be weary. Working with loans or credit and moving around funds is one of the biggest red flags out there because, well, that’s exactly what embezzlers/fraudsters do: they get money from one source, move it around then get another source to pay back the first. Remember that Martin Shkreli? He was the detestable sub-human that bought an affordable medication and then proceeded to increase the price by 5.556%. Yes, that is not 5.55% or even 55.5%, he increased the price from 13.50 to 750 dollars a tablet. Well, he was arrested, not because he was the spawn of Beelzebub and Paris Hilton’s sentient STD’s but because he convinced investors to give him money and then found a different set of investors which he again convinced to give him money so he could pay back the first investors. This is a big no-no.
2. Money Talks
If your investor is all about the money, as in he’s as greedy as Pooh bear would be if he visited a honey factory then you might want to be a bit weary. Sure, everyone wants money, especially if you are looking for investors, but if that is your only motivation then you will quickly fail. This is also true of your investors; sure they like money, but they also invest in your company because they feel passionate about the project. Of course, they expect their money back with a decent return but if that is their only motivation then you might be in trouble.
3. Money Where Your Mouth Ain’t
As the saying goes, “money talks, bullsh*t walks”. The thing is money doesn’t need introductions, awards or accolades. If your investor dedicates more time about talking themselves up, instead of being interested in your product then you might want to tread carefully. As the quote goes, ”show me the money!” not “flap your lips at me”.
Usually, people invest within certain areas that fit their expertise (or they have developed it along the way) and although diversifying your portfolio every now and then is good, it shouldn’t happen very often. Also, you would expect someone that was going to invest a certain amount of money, would have at least a working knowledge of the industry that they are interested in investing in. If your prospective investor has no freaking idea what he/she is getting into or why they are investing the money…run Forest, run and never look back?
Are there any other ways you know how to avoid fraudulent and embezzling investors? Let us know in the comment section below.