Founder beware: if an investor seems to good to be true it’s a SCAM (I will not promote)

TLDR: The scams are getting more sophisticated. If an overseas “investor” says they want to invest in you and sends you an LOI to meet in a place like Barcelona as long as you can put up some “collateral,” don’t do it. Use common sense. I never thought I’d have to write a post on this because it seemed like common sense. But I’ve had 2 founders i know recently burned and just prevented another from getting on the plane next week. The first two never told me in time to warn them but thankfully the most recent did. Let me break down how it works in general. You’re contacted by an investor’s business development VP or some other title located in some country like Switzerland. You meet by phone (they won’t do video). Often several times. They ask all the right questions. They look at your pitch deck. You get an LOI saying they want to invest a certain amount but are willing to go even higher using a convertible note. But only if you have enough cash to cover interest payments or buy an instrument for insurance or an SPV. The reasons will vary. But the terms seem great. They want you to meet their investor or VP in a place like Barcelona. You’re excited. Everything looks legit. Your research shows the company is real. But for some reason you can’t find any of their past deals. But they are a real company. Oh yeah, and often the name of the person your meeting is omitted. Only their title. But the LOI seems to have a legit signature from the top decision maker. You go. Everything seems great. Then they tell you to put up the collateral first before they start the transfer of funds. Sometimes it’s cash in a bank account. Other times they want it in crypto. What happens from there varies. Fiduciaries step in or other parties get involved that seem legit. Through one step or another you end up losing control of your capital. Furthermore they keep giving you excuses why the money isn’t coming yet. It’s delayed. And of course it never comes and now you can’t get your money back. I’m paraphrasing how it works and shortening it so it seems like common sense reading it. But the lengths they go to seem legit only create more confirmation bias and sunk cost fallacy. It’s hard to see the Forrest through the trees when you’re living it. These founders aren’t dumb. Maybe just too trusting and naive. I’m hoping this at least prevents another founder from making the mistake. To sound like a broken record, It seems like common sense but founders are desperate for capital. I told one founder I felt horrible for them and wished they’d told me about the deal. At least they had a good sense of humor about it and said Barcelona has the best beaches. Edit: ugh. Just read the title and can’t correct it. It should be “too” good to be true. That’s what I get for typing fast while lying on the couch. Sorry. I’ll do better next time.