The Fine Line Between A Venture Capitalist And A Con Man?
from the ah,-silicon-valley dept
One of the things you learn about Silicon Valley after you've been here for just a little while is that there are some folks around here who are really, really into the technology and innovation aspect of things -- and then there are those who are only around for the money. Sometimes it's not as easy to tell the two apart as you would think, and that's opened up tremendous opportunities for con men. I recently read the novel Con Ed by Matthew Klein, which shows what a fine line there is, at times, between a startup and a confidence scam in Silicon Valley. While it's a bit extreme, if you've worked at a startup in the Valley you'll probably recognize many of the characters in the book. Klein certainly knows about his stuff on the Silicon Valley startup side -- a decade ago he ran his own Silicon Valley startup that employed me, among other folks. While I can highly recommend Con Ed to anyone who enjoys a good con book, you don't even have to dip into the fiction pages to keep up on the latest cons of Silicon Valley.The latest true story appears to be about a "venture capitalist," Moses Joseph, who convinced a bunch of big institutional investors to give him money for his fund... and then used it for a bunch of personal stuff, while lying and forging documents to explain to the investors what he had done with the money. This isn't the first time we've seen such "fake" venture capitalists either. A few years ago, there were a few stories of "fake VCs" that were incredibly successful in separating money from investors who believed they were investing in the next hot thing.
Of course, the guy is claiming that he wasn't a con man at all, but just a real VC who got in over his head. My favorite rationalization, though, is from his lawyer, who claims that it's not like Joseph "took money from little old ladies. He didn't. It was from big institutional investors." As if that makes it okay?
The problem with these stories, unfortunately, is that they make people skeptical of the real VCs and real entrepreneurs who aren't scamming. It would be nice if these stories were confined to fictional accounts, but it seems like that's not going to happen any time soon.
Thank you for reading this Techdirt post. With so many things competing for everyone’s attention these days, we really appreciate you giving us your time. We work hard every day to put quality content out there for our community.
Techdirt is one of the few remaining truly independent media outlets. We do not have a giant corporation behind us, and we rely heavily on our community to support us, in an age when advertisers are increasingly uninterested in sponsoring small, independent sites — especially a site like ours that is unwilling to pull punches in its reporting and analysis.
While other websites have resorted to paywalls, registration requirements, and increasingly annoying/intrusive advertising, we have always kept Techdirt open and available to anyone. But in order to continue doing so, we need your support. We offer a variety of ways for our readers to support us, from direct donations to special subscriptions and cool merchandise — and every little bit helps. Thank you.
–The Techdirt Team
Filed Under: con man, silicon valley, venture capital
Reader Comments
Subscribe: RSS
View by: Time | Thread
has
[ link to this | view in chronology ]
Plucked the Wrong Pigeons
[ link to this | view in chronology ]
How Bout the other side of the apple
[ link to this | view in chronology ]
Not such a bad defense
Actually, that does make it somewhat okay. Institutional investors get paid - very well - for their expertise and their ability to perform due diligence. They are supposed to be informed, do their research, and protect their investors.
If these were not what they pretended to be, if they did not do the job they were paid for, if they just turned around and gave the money to the first guy with a good story, they were con men themselves. It may still be illegal to con con men, but this is a good case of "caveat emptor" and I certainly don't see it as immoral.
[ link to this | view in chronology ]
Re: Not such a bad defense
Setting up a "business" in order to take money from investors and use it in your personal life instead of the business, while lying to the investors about it, is not immoral? Wow! Would you consider having sex with some other woman and then lying to your wife about it immoral? I'm just curious where the line is, if there is one.
[ link to this | view in chronology ]
there is a line?
[ link to this | view in chronology ]
Greed is a con mans fuel
[ link to this | view in chronology ]
Perhaps he did steal from little old ladies
[ link to this | view in chronology ]