How to spot a fake investor

How to spot a fake investor

Many wealthy people could become investors and business angels, but it's hard work - supporting and helping entrepreneurs, finding deals, finding projects and startups to invest in.

It is common to research and verify project founders, businesses owners that attract investment. But you should also be vigilant when choosing an investor.

When you are not sure if you are facing a real investor, do a little research. Investigate how long the investor has been working, where he (she) lives, what do you know about his (her) company and values, what business projects he (she) has invested in, and how those companies are doing now.

If the investor has a website or LinkedIn page, that's already a good thing. Look at his activity, press releases, articles - anything that shows that your potential investor is active in this area.

Be vigilant, you are most likely facing a fake investor if the following happens:

  • You are contacted by a person whose name is not listed online and does not give any intelligible information;
  • If you are not given contact information, addresses and phone numbers. Try to reach out by video and phone;
  • If the investor offers you to take more money than you asked for;
  • If you feel like the investor isn't particularly interested in your product, he (she) doesn't ask questions and just says, "I'm interested";
  • If the investor says he (she) can't transfer money through the bank;
  • If an investor asks you to pay bank fees up front. If the investor asks you for money, something is wrong.

When you're not sure if your contact person is a real investor or not, feel free to ask questions and learn more to get a handle on the situation.

  • What investment projects do you usually support?
  • How many startups and business projects have you supported in the last year?
  • What is your most successful investment project?
  • Do you invest alone or in a syndicate?

You can ask your potential investor any questions about the investment portfolio. If the answers are ambiguous and vague, there is a very high probability that you are facing a fake investor.

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