Entrepreneurs… Beware!

In Startup Learnings by Sébastien FluryLeave a Comment

As an entrepreneur, you’re experiencing a lot of cool things.. and some strange things. I’m currently raising my first financing round for my own startup, Coteries.

As everything in life, what is paying is to be proactive. You are contacting  investors to present them your investment opportunity. Sometimes, you have people contacting you (after a press coverage or so – yes, it happens even in Switzerland!).

But I’ve also experienced some really, really strange things 2 weeks ago. I got a call from a guy desiring to invest at least CHF 500k in my startup. He was calling from Israel. Coming to Amsterdam or even Milano soon, so we could meet. OK, sounds great. But such a cold call is quite surprising! I’m a first-time entrepreneur, but I’m not naive. I’m not blinded by money. I know how it works. So I asked a few questions:

How did you get my mobile number?

Answer: “I’ve found it on Startupticker or Genilem, which I used to work with in the past”. And later in the discussion “I’ve found it on Startupmonitor”

Yes, these are names that exist on the Swiss startup scene. But Startupticker is a news portal, not a directory (OK, if you search well, you’ll find my number in one document there). Genilem? I used to be active for them, so I’ve checked with them (=> “never heard about this guy”). Startup Monitor? Checked, my number is nowhere there.

Why do you mix everything if you’re serious? Red flag.

In which industry are you investing?

Answer: “In every kind of industry”

Strange, investors do have an investing strategy. Red flag.

What do you think of my startup, do you know what we do?

Answer: “I don’t know what you do. Please tell me”

Red flag!

Where do you want to meet, we could meet once in Lausanne?

Answer: “I’ll be in Milano soon. Don’t worry, I can pay your travel expenses”

Red flag! 2 years ago, CTI Invest reported a case where pseudo-investors invited startup entrepreneurs in Milano (I don’t have anything against Milano, but it’s not a problem for a serious investor to fly to Zürich or Geneva) and paid them the travel expenses. They could have received money for their startup, but had to go back to Switzerland with a suitcase full of money. And only half of the amount should have been converted in shares. RED FLAG, money laundering!

I was quite doubtful but follow-up with a quick email (with the website address of my startup), just for the experiment (so I can share the story here!). Surprisingly, the guy called me again one week later. I asked him again what was his feeling about my startup:

Answer: “It’s something that has to with mobile phone, right?”

RED FLAG again! So you want to invest in my startup but are not capable of understanding anything of what we do? It’s true, it has “to do with mobile phones”, but people who want to invest cannot be that unserious. And I’ve also checked online, you almost cannot find anything related to him. What in 2014 is quite surprising.


In the same time, I was cold contacted  on LinkedIn by a guy managing an Arab investment fund. Seems already more serious (they are plenty official initiatives to attract startups in Arab peninsula). As always, I’ve asked the person to remember me where we’ve met or how I can help him. Most people never answer these simple questions, but this one answered me with some commercial text (enhancing they have a fund in which to invest with a guaranteed ROI). Strange way of contacting an entrepreneur. I’ve answered him that I’m raising money, not investing! He came back with some texts that do not really relate to startups. But they want to consider investing in mine. Strange. And he told me to contact his investment officer. I answered, asking them if they know what we are doing (you can easily find it online). The guy asked me my business plan! I’ve sent my website address. Answer: “we are ready to partner with you. Let’s plan a conference call”. OK, but in what kind of startups did you already invest? Answer: “I can’t tell you here, I’ll tell you during the call”. RED FLAG! I don’t know any investor (and I know quite a few) who is not ready to tell where he has invested.

So, entrepreneurs, don’t be naive and beware! It could be damaging, but mostly, it will make you lose a precious time (here, I’ve only spent one hour for these both experiments, that I’m happy to share here) in building your startup!

Ask simple questions to pseudo-investors who cold contact you:

  1. How they’ve discovered you and how they get your phone number. If they’ve read about you in a newspaper or blog or have been advised by someone of the industry (ask names!), it’s OK!
  2. What do they think of your startup (and if they know what you’re doing). If they don’t know, strange.
  3. Make your homework. Check online if you find something about them. If you have shared contacts (LinkedIn), and if yes, ask your contacts if they really know them. If you don’t find anything online in 2014… surprising, no? BUT, be also careful with this: there are guys active in family offices or investment banking who have no web presence. 
  4. In which startups do they have invested. If they don’t want to tell you anything, it’s strange. Serious investors know that you’ll also check their credibility and reputation.

Let me know (in the comment section) if you’ve experimented similar things. And don’t hesitate to share this post as widely as possible. Entrepreneurs’ time is scarce. Building a startup is hard work. You’d better don’t be disturbed by this kind of hustlers!