There is a lot of material about the not-so-nice VCs who take advantage of young and inexperienced founders. But the reverse also happens, founders that try to get money out of VCs for projects that have zero chance of every coming to fruit. Or worse still, founders that pretend to have something on the go when they really don’t and are just looking for the cash to make a run for it. The Modular Company, the merry band of friends that I founded and that does technical due diligence has about customers, mostly VC and PE companies. The partners of these companies are bombarded with decks from parties looking for investment and these decks vary greatly in both quality and degree of seriousness.
Every once in a while something pops up that is extraordinary, the deck below is one of those. The deck is included here in its wholeety, nothing has been redacted, the only thing I changed was to reduce the images in size to save a bit on bandwidth and to make the page load faster. The analysis column on the right hand side is mine, the deck itself has an interesting origin, and it seems as though variations on this scam have been around for a while but this is the first sample of such a deck that I got my hands on .
Please note: The deck below is an outright scam, do not believe a word of what you read, do not believe that people mentioned in it exist or are aware of the fact that their name is used in this way (though they may very well be, there is no way for me to be sure). I obtained this deck without NDA and so I’m free to share it with the world as an example of what a scam can look like, even though the author has copyright on the contents, I think the gravity of this Public Service Announcement far outweighs the rightsholders claim. Note that the resources referenced in this post suffer from bitrot in a way that not much else on the web does, and that the players have every incentive to cleanse their reputation so if you read this long after it was posted the chances are that external links and search results referenced here will no longer work. If you want to enlarge a slide just click on it.
t argue with that. An important part of a good scam is apparently that you need to dress is up in such a way that most of it makes sense. That way a casual observer will see a lot of stuff that makes sense, and this feeling of things making sense then sets them up for when things make much less sense. They will interpret that then as feeling that maybe they simply do not understand, rather than that what they read is nonsense. | |||||||
A bit more filler material. Like the previous slide, this one serves to set the reader up. A nice little detail for this slide is that relative to the scale of the Fiat economy the Bitcoin economy is vanishingly small but presented in this way it looks as though it is actually pretty much all of the world economy and the new player on the block. | This is an interesting slide. It makes a number of strong falsifiable claims. Let’s look at them one by one: Bitcoin has outperformed any company in terms of ROI. ROI is typically presented as relative investment returns over time. Say you invest $ . Then after a while you divest and you find that your investment is now worth $ 24. Your ROI is 2017%. Bitcoin outperforming ‘any company’ in terms of ROI is only true if you bought or mined your bitcoins early enough. If you bought your bitcoins just prior to the (crash) you would show a whopping % or more reduction in value. So while true for some people the reverse of this statement is also true for lots of people. Of course, the hype was promoted for years and the crash happened in a very short period of time. Since then Bitcoin has slowly regained some of its value but it is still rading substantially below the peak value of $ , (in December) . The next statement is also interesting: “Cryptocurrencies and stablecoins are adopted by nation states and banks like Goldman Sachs.” Banks ‘like’ Goldman Sachs, but not GS itself, they shelved their crypto plans , but JP Morgan rolled out their own. As for countries adopting cryptocurrencies, yes, there are some that did. But so what? It’s just a name dropping and appeal to authority play. Even if banks and nationstates do adopt crypto currencies it doesn’t really say anything positive or negative about the proposition in front of you. It’s all still part of the setup. The second paragraph is also quite interesting, it is a neat trick that is being played on the reader here. Of course you are smart and already know that cryptocurrencies’ value for the most part is based on speculation and nothing else. So that’s why you should keep on reading, because the writers are transparent about this important fact and so build trust with the reader, and set the reader up to expect a crypto currency that does have a real use case and whose value is not based solely on speculation. | ||||||
VC Buzzword bingo slide 5. I have no idea what the graph has to do with the words, maybe there is some connection here but I haven’t found it yet. I don’t see how direct integration of a coin with a company would combat volatility, nor do I see why other coins would eventually end up extinct because they are not tied to a company or a funding source. It sure sounds good but it is just a bunch of bull. | |||||||
Fortunately, you’re about to be rescued. Now we enter the ‘pay-off’ phase of the exercise. | |||||||
So it’s a payment system. And a currency exchange. Both of these are heavily regulated, especially if you hold balances. It’s also an investment platform. This starts to look like the company is trying to solve too many things at once, each of these would be a formidable challenge (witness ‘Stripe’), and this is even bigger. Of course, an investor might think ‘wow, this will be even bigger than Stripe’ (unlikely, to put it mildly). | And lets throw in a whole investment vehicle a-la Y-Combinator in for good measure, in case you weren’t interested yet. | ) | For my next trick, I’ll need a gullible member from the audience. After all you’ve ready before you’d think we would get to the numbers pages now (these decks follow a predictable pattern). But no, there is even more! Throw in an Uber clone (‘MyChauffeur’) and an influencer platorm (“Chirpley”). Each of these deserve their own little mini deck. If you feel like going through these feel free, or, skip to slide 57, where we get down to brass tacks. | ||||
So , this start-up that is at this point in time no more than a deck and a website wants to raise $ M. | There is no time to waste to get this show on the road, here is how it will be done, but not who will do it, where it will be done, whether they are actually already underway or any other details that might just tire an investor. | ||||||
And there it is, the team page. Job ter Horst, CEO (A Job Terhorst actually exists, no idea if it is the same person or if he is aware his name and / or picture are used in this deck). The COO is cryptically named ‘Sam’. It is fairly normal in decks such as these to refer to people by their full name, in fact I’ve never seen a deck that just gave the first name for a C-level exec, the Escobar look does help either, but you can’t really fault someone for how they look. The Head of Legal is called Richard. Rarely – no, sorry, – never have I seen a start-up that doesn’t even exist yet that had a ‘Head of legal’. You might have some legal company represent you for such things as incorporation, shareholder agreements and so on. But a head of legal for a company with 4 people and nobody else to be head of is a bit strange. Again, this legal eagle has no surname. And finally a man called David Freuden, assuming he exists. In a cheap pun on his name, I’m not sure if he is happy and aware that his image (if it is his image) and name are used in this deck. | |||||||
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