Pretangel Alert – Beware Fake VCs and Angels
Pretangel… a Wolf in Sheep’s Clothing. Pretangels… they give real angles.. real investors a bad name. Pretangels are the Nigerian Princes of the Startup Investment world. Beware the scammers, shammers, pretangels of entrepreneurship.
When I was an active Angel Investor (which I’m not and haven’t been for 3 years) and I was a member of the Dingman Angels (which I’m not and haven’t been for 3 years), there were a number of “investors” in my group; who never, as in not ever, as in never say never unless you’re talking about these leeches wrote a check to a founder. These guys would often feign investing interest with the bait-and-switch real intent of “advising” for a fee or for company stock. I was ashamed to be associated with these snake-oil salespersons then… and call them out still. They made me feel dirty, or dirtier than I normally feel which is a low bar to slither under (note: every angel group has their pretangels. This is not just a Dingman thing).
When times are bad in the investment community the Pretangels attack! When a founder is desperate for money and there is blood in the water the Pretangels start circling like sharks in a feeding frenzy. So here’s the thing. If you’re raising money… make sure you check the bonafides of all potential investors. Use crunchbase, LinkedIn, angel list and the old googalie machine.
How To Spot A Pretangel
- They will tell you they want to invest in you but you’re not ready yet. Then they spring a proposal on you to help you get ready.
- They don’t have a credible portfolio of prior investments on their website
- They don’t have a credible portfolio of prior investments in Angel List or Crunchbase
- People who invest or have raised money don’t know who the heck they are.
- Nice people like the folks at Cooley or Deloitte say “yes I know them” and not “they are great guys.”
- They are part of the Startup Industrial Complex (charging for pitching (pay to pitch), they teach people how to invest or they help people raise money, or they run an “accelerator” which is just a shared office thing but they don’t invest cash!
- They invested in any company founded by Danny Boice of Trustify.
- Any company that is really just a co-w0rking space, that is losing money and employees are quitting on a daily basis that is run by a guy who started two prior companies and was fired from both by the investors. You know… something like 1776.
When you’re raising money you have entered the vortex of the Startup Industrial Complex. There are more people making money running startup events, selling startup advice, renting accelerator space and writing startup tech rags than people making money running startups. The Startup World is reminiscent of the gold rush were the only people consistently making money were the pick and shovel vendors and the saloon and brothel operators. When a founder enters the startup vortex, they are a con man’s Mark or the prostitutes John.
Real Investors… verified
There are plenty of reputable investors out there. Here’s a list of institutional investors who I trust:
- Blue Ventures
- Columbia Capital
- Core Capital
- Edison Ventures
- New Atlantic
- New Enterprise Associates
- Private Access Network (PAN)
- Swan Legend
- Telecommunications Development Fund
Dormant – Zombies
- Crystal Tech Fund
- The Fort/Fortify Ventures
- Novak Biddle
Potential Pretangels that people have placed on my radar lately: They may provide value, they may invest cash, yet do yourself a favor and do your due diligence with these folks.
- Verified Fake – 3SI Venture Capital, A Complete Phony Scam! Stay Away! Danger– One listed portfolio company whose founder and CEO, Jason Feimster coincidentally shares the same name as the main partner in this bogus fund (See this post and see all the red flags).
- Update February 4, 2018: Since I’ve written this post I’ve received two notices from two separate entrepreneurs that 3SI is not a legitimate investment firm. One of those notices can be found in the comment below.) Update February 12, 2018: Yet another update regarding 3SI, “saw your post on fake VCs while I was doing diligence on 3Si. Jason Feimster, the Managing Partner, told me they’re interested in investing in my company. By the time we had that call, I came across a bunch of red flags. Once I started pushing him to tell me what their previous investments were, he was a little flustered and named some random industries. No calls or replies to emails since. Oh, and the calls were routed through some conference call service. Another red flag. As an entrepreneur, I know how tough things can get when you’re cash-strapped and have to run or build a business. And encouraging words from someone who has close to a 100 million dollar fund listed on Crunchbase can start to feel very reinforcing. Enough to have a blind eye to the red flags. Another down vote for your post from me, I hope people find your post after speaking with them.”
- Update February 17, 2018: One person had several comments on this thread (see my responses to the now deleted posts below). I don’t know why the commenter, deleted his comments but I would guess that he was threatened by 3SI Ventures. Here are the deleted comments with the identity of the commentator removed:
- 2/12/2018: I was recently going to do business with them. They sent over a board of directors agreement, services agreement, etc. I haven’t had a response to my email/phone call in two weeks. Very disappointing to hear this feedback, was told they would raise 75k – 150k for my business, back on January 19th, and was hoping this was all in motion.”
- 2/13/2018: “That’s extremely unfortunate. My business model is very strong based here in the DC area, and we were really counting on them to come through to help us expand. I’m a father of 5, and proud husband. I’ve never felt more discouraged, so hard to find investors, should’ve known this was too good to be true. What do they gain by getting my hopes up, and not following through on their end of the deal?”
- 2/13/2018: “Glen, should I be concerned since I signed docs? They sent me a board agreement, service agreement, that has them receiving 12.5 percent equity.”
- Update March 9, 2018: I received 3 more tips that include false claims, bait, and switch, and plagiarism. In addition, I have been informed 3si is under investigation by regulatory authorities.
- Update March 15, 2018: Confirmation and proof that Jason Feimster of 3Si is a plagiarist which means he’s a thief and a liar. See these posts, Jason Feimster Plagiarist and AlleyWatch Author Jason Feimster
- Update April 3, 2018 – See all the 3Si Blog Posts
- Update July 2018 – Web Site Is Gone
- Verified Fake!!! Angel Kings (Ross Blankenship) Danger, Complete Trash. Stay Away!– The smoothie kings of angel investing. Ranked 3 years in a row (by whom?) as the number 1 investing firm even though they list no portfolio companies, no prior investments, no exits except one spectacular failure… Study Hall…which was founded by the founder of Angel Kings so doesn’t really qualify as an investment. Study Hall is not anyone’s definition of a success story.
- Update February 2, 2018: I received a phone call regarding Angel Kings, sole proprietor. They contracted with him to help them raise money and it became quickly evident that he had no contacts in the industry, no clue how to raise money. When dealing with someone like Ross, make him prove all his baseless claims. To my knowledge, he has never raised significant capital and there is no company in which Ross was a founder or Senior Executive that had any profitable exit. Make him prove it. And if he brings up Studyhall… remember to laugh.
- Update March 15, 2018 – It was reported to me that after a company terminated services with Self-proclaimed, “Angel King,” Ross Blankenship started interfering with employees.
- Update February 7, 2019 – See this post
- Sabotage Institute (Verified Shady) – The specific feedback I received was that Sabotage portrays themselves as making much more substantial investments than they actually make. The tell tall tails. As an entity, there are no investments listed on Angel List, no listing of any partners or firm on Crunchbase. One of the partners Andy Powers is a legitimate angel investor with cash investments in local companies Contactually and LifeFuels. There are whispers of something called a Sabotage Foundry, I don’t know what that is but maybe the website explains it better.
- (Updated4/3/2017 8PM. Since publishing this an entrepreneur, Navroop Mitter called me to let me know that they have dealt with Sabotage and he believes the company writes big checks. That’s one downvote and one upvote. They did write Navroop a check.. I wonder if it was stolen money?)
- (Updated 4/5/2017 8AM. Another down vote from an entrepreneur regarding Sabotage. This person states, they claim they are a $100 million fund, they are not. They claim they invest up to $2 million dollars, they do not. They invest $25K and don’t follow-on with big money. If you’re keeping score that’s 2 down votes and 1 upvote.)
- (I’ve gotten a few new no votes and some people, and based on my assessment of the folks that came forward, I’m going with the no votes. The first commenter had a vested interest in defending the indefensible).
- (Updated 7/19/2018 – Andy Powers a Sabotage partner was found guilty of defrauding investors, misstating revenues and creating fraudulent valuation documents. He did not show up for court. He has been fined over $10 million and is reportedly hiding from authorities. See this article)
- (Updated 7/25 2018 – Tim Lee a Partner in Sabotage states, it is unfair to list the Sabotage Institute as an Angel or Venture Investor. The individuals do not make occasional individual Angel Investments but Sabotage is a “Startup Studio.” As a studio, they organically gestate and test internally developed product ideas and then build teams to take those products to market.)
- (Updated 9/17-2018 – Sabotage website is down, Partner Andy Powers has been found guilty of securities fraud by the Commonwealth of Virginia and Tim Lee is now erasing any evidence that he was a partner in the company.)
- (Update 2/20 22020 – Andy Powers founder of sabotage was found guilty of 6 counts of fraud)
- Verified No Longer Investing – Stardust Venture Partners – Hasn’t made an investment since 2013 and some people believe that their main partner Glen Hellman should rot in hell. Glen and Stardust are not making new investments so if they tell you they are they are lying…again. Lastly don’t forget that Peter Corbett says “Glen should go f#$k himself,” which would be such a great thing if I could actually do that.
- Wasabi Ventures – Have not been able to verify if they are even a thing. But beware when a company calls themselves “a venture capital, incubator, and consulting firm,” they are usually more of a consulting firm than a venture firm.
These above-mentioned organizations may or may not be legitimate investors. This post isn’t an indictment (avoiding any legal liability here), I’m only saying that they are on my radar as suspicious. Before you waste time or energy working with them, do your homework. Talk to a founder with whom they’ve invested and then verify this is a legitimate founder and company, not their brother or sister.
If you get a call from these VCs… drop everything and take it!
- John Backus – New Atlantic Venture Partners
- Randy Domolky – PAN
- Mark Levine – Core Capital
- Michael Leurdijk – In-Q-Tel
- Bobby Ocampo – Moved to San Diego – Blueprint Equity
- Don Rainey – Grotech
Real check writing Angel Groups (These groups are legitimate, yet a small number of members don’t write checks and are looking for consulting gigs):
- Baltimore Angels
- Dingman Angels
- New Dominion Angels
When founders need money to keep their baby on life support they become desperate. They develop happy ears. The first person who says to them that they have a pretty baby gives them hope and hope for a desperate founder is a dangerous emotion. Seller BEWARE!
Information regarding good and bad investors makes an ecosystem stronger. If you have info to share, send me a note. I’ll check it out, verify it before posting and will keep the source totally anonymous. To send a note link here.