Some time ago, I made a LinkedIn post about a big VC scam that went viral. Sadly, there are countless ways for founders to get scammed today. I published a deep-dive on my OpenVC blog (check out the full research) and I’m happy to share a summary of the 13 most common cases with The Top Voices community.
So, here we go.
Scam #1 – The Bait-and-Switch
An "investor" reaches out, you hop on a call — then, mid-conversation, they start selling their fundraising services. Some FAs do invest, which is fine. But if someone systematically tricks founders into meetings just to sell their services — run.
Scam #2 – The Pay-to-Play
An investor seems interested and ready to move forward. But before anything happens, they ask for “due diligence” or “appraisal” fees — pay first, then maybe you’ll get funding. In reality, you’re just paying for a chance, and if nothing comes through, too bad.
Scam #3 – The Pay-to-Pitch
A founder gets invited to pitch in front of investors — but first, they have to pay. If a startup is worth investing in, investors should want to hear the pitch, not charge for it. Worse, some investors unknowingly join these paid panels.
Scam #4 – The VC on Payroll
An investor agrees to fund your startup — but only if you put them on payroll. Johnny Angel invests $40K, but you must pay him $2K/month as an "advisor," meaning he gets his money back while still holding equity. Real investors advise for free; if someone demands a salary, think twice.
Scam #5 – The "Heads I Win, Tails You Lose"
An investor hands over a term sheet: “If your startup fails, you personally reimburse me.” In reality, this isn’t an investment — it’s a disguised loan. A real VC deal doesn’t work like that.
Scam #6 – The "We Know Him"
A founder meets a fundraising advisor who says, “We know this top investor personally, they’ve done deals with us before.” In reality, they might’ve had one brief call or just stalked their LinkedIn. If someone claims to know every VC you need, be skeptical.
Scam #7 – The "Let's Do Equity Instead"
It’s a psychological trick. You start talking to an advisor — they seem legit and well-connected. But their fee is $5,000/month. Just as you’re about to walk away, they offer to take 4% equity instead. Even if they bring no value, they still keep their share.
Scam #8 – The "Use This App to Apply"
A "VC" reaches out on LinkedIn, claiming they’re looking to invest. But instead of a normal process, they ask founders to submit their deck or book a meeting through a specific app. In reality, it's just a lead generation scam, and the investor isn’t real.
Scam #9 – The Drag-and-Drop
An investor keeps you hooked for months, maybe even sends a term sheet. Confident in their commitment, you stop chasing other investors. Then, at the last moment, they change the terms — valuation is too high, funding will come in tranches. Now, you’re stuck.
Scam #10 – The Spearfishing
An investor reaches out, asks for a pitch, and gets access to your data room. Then — silence. They never planned to invest; they just wanted intel for a competitor or free market research. It’s rare, but it happens.
Scam #11 – "All Accelerators Are Scams" (?)
Not all accelerators are scams, but some operate more like service providers — if they don’t invest cash, you’re just buying a program. Others offer non-competitive deals, but for many founders, it's their only option. And while some provide real value, others overpromise and underdeliver.
Scam #12 – The Crazy Good Deal
A VC offers more money than you need at a higher valuation — sounds perfect. But an inflated valuation makes your next round much harder. And hidden clauses like 3x liquidation preferences ensure they get their returns first, leaving you with less. And an inflated valuation makes your next round much harder.
Scam #13 – The Dirty Sheets
A founder gets a term sheet and doesn’t spot any issues. But you can sneak anything into a term sheet, and if both sides sign, it’s fair game. Pay attention or get someone who will.
Scam #14 – The Lethal Vesting
A VC brings in an external CEO to fix a struggling portfolio startup, promising 10% equity after a $2M raise. The new CEO gets to work immediately. Turns out the VC didn't have any new investors lined up for meetings—first red flag. But the CEO pushes through and secures two external term sheets. Then, right before closing, the VC decides to invest the $2M themselves and fires the CEO. Absolutely fatal and unfortunately legal.
None of these stories are hypothetical — every scam on this list comes from real cases I’ve come across in my own practice and the broader startup ecosystem. Unfortunately, these tactics are more common than they should be. How to avoid them is covered in detail in the original article on the OpenVC blog.