Late stage private market SPV fraud is a much bigger problem than most people realize
I’ve heard one too many stories from friends about SPV fraud
It’s one of the biggest stories in Venture Capital not being told, in part because it’s embarrassing to admit you got scammed
Beyond the usurious fees that have become standard (20 or 30+ percent for mere access). Theres a shocking amount of “ghost shares” being sold by outright fraudsters. In other words: they never had shares to sell to begin with
And the stories I’ve heard have all come from sophisticated, professional investors. Not your typical “dumb money”
If these people are being scammed, I’m certain the problem is 1,000X worse under the surface
I want to blow the lid off this story and drive reform.
I’ve never seen such an influx of bad actors into startup investing in the 13 years I’ve been an investor. It’s “Wolf of Wall Street” bad, or worse.
More to come on this; but I’m lining up meetings in DC to speak with folks in both the House and Senate on the issue. A few already on the books. I’m serious about this.
I’ve never been a big fan of government regulation, but I think it’s needed.
And I’d love to speak about this issue on podcasts, traditional media, etc. If you’ve been personally affected, please DM me. I’ll keep your story in confidence
Finally: this story isn’t just about fraud. It’s about how the average American investor has been systematically cut out of the upside of our most promising technology companies
If you had believed in Apple or Amazon early: you could have just bought shares on the open market
Now you have to deal with some of the scummiest middlemen charging usurious fees, selling shares that might not even exist
These small investors have few advocates. They’re regularly mocked by VCs as dumb money. All while risking their own hard-earned money, no LPs backing them, no management fees to fall back on. 100% skin-in-the-game
They deserve our respect, and a square deal. I’ll always respect someone putting their own money on the line to back something they believe in — no matter how small the check
In many ways they’re taking on more risk than the VCs mocking them. It’s pretty easy to take risks with other people’s money versus your own
They deserve access, like they had back in the 80’s / 90’s / early 2000’s
We turned an open market into a toll road. I’m sure the folks operating the toll booths will not like this post, or the reforms I’m going to try to push.
But my DMs are open to anyone who wants to help eliminate the tolls for the average American investor ❤️🇺🇸