Starting a business is like throwing a party — anything can happen. But hope is always the first guest to arrive and the last to leave. Founders are imbued with the condition. Without it they’d never get out of bed.
It’s also my mitigation plea for what follows: how I nearly fell for an investment scam despite being a former journalist who spent years exposing crooks and scoundrels.
First, some background. Last year I raised funds to build YumTuc, the social network of food that rewards users. Millions share food content on social media but get nothing in return. On YumTuc users receive prizes and discounts while restaurants and brands promote their offerings to keen foodies.
The initial seed investment enabled me and my team to build the app. But I needed serious money to develop the tech, market YumTuc and conquer the world. So, as well as pitching to anyone who’d listen (and plenty who wouldn’t), I joined an online angel investors’ network.
After nibbles but no bites, I let my subscription lapse. A week later…
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March 25
An email arrives. Subject: Angel Investment Partnership
“I received details of your investment information from my team. They informed me you are looking for an investment.”
He explains he’s a Thai-based investor and asks for my pitch deck. He signs off with a name distinctive enough to google — obviously the first thing I do. I find images of a respectable-looking Thai businessman. Mr TB.
I send a friendly reply and move on.
March 26
Mr TB tells me he has a background in business and worked for the government before becoming chairman/NED elsewhere. This tallies with what I’ve already found online. He’s attached a CV, which says he attended a UK university — this may account for his good English.
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“My first experience with a start-up was 7 years ago. I invested in a tech start-up that created a solution for hospitality industry.”
Hospitality industry? Tick!
April 1
Yup, I know. But Mr TB is back in my inbox. And do they even have April Fool’s Day in Thailand? (Self-evidently.)
“I would like to make you an offer which will help us navigate the funding structure. It will also form part of next steps which is speaking with you.”
Promising news and good that he wants to speak.
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April 3
An offer I see before me?
“I am proposing to make an investment of £445,000.00 for 20 per cent equity in your company.”
More details follow. And finally: “Closing Condition/Costs.”
“To clear your company of foreign exchange policy process and ensure there isn’t any money laundering and terrorism funding ties between you and the investor, your company will obtain non-Thai funding clearance documents by the administrative court of Thailand.”
It adds that he is obliged to obtain “foreign investment authorization” too.
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This whole section raises an eyebrow. But, after six months on the fundraising circuit, my guard’s fairly low.
I email my chairman, Stuart Rose (former managing director of The Body Shop and chairman of Hamleys) and team, attaching Mr TB’s CV and correspondence.
“We’re past April Fool’s Day but I ‘think’ I have an offer… Am looking for the catch — beyond him a) being a hoaxer or b) the ‘cost for obtaining non-Thai funding clearance documents’ being crazily prohibitive, I can’t see anything at first glance but I might be missing something.”
With the same caveats, the others also think he seems credible. It’s agreed Stuart and I should talk to him.
April 15
The Zoom meeting. I’m well briefed and joined by Stuart. Fifteen minutes pass. “He’s either a con artist or there’s a technical problem,” I say. At which point the line crackles. It’s our man. Except we can’t see him as he’s just on audio.
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He apologises for the delay (“technical issues”) and makes an excuse about not being on video, which we don’t understand. His English is a little robotic but better than my Thai. He asks questions and we explain our vision. It seems to go well from our perspective.
April 16
And from his too. “It was nice speaking with you. This is a good investment and will be great for my portfolio.”
April 17
He offers to sign an NDA in exchange for more information — financial statements and the like. After receiving the signed NDA, I send him the material.
April 27
“We have now concluded as confirmed by my team today. The next step would be to form a term sheet and send to you for your review. Do enjoy the rest of your weekend.”
I certainly do — thinking about how we’ll deploy this cash injection.
April 29
A term sheet arrives. A few potential issues but nothing major — amber flags.
There’s a clause about the clearance documents. On the surface it sounds reasonable. But these documents and the audio-only Zoom have taken unwelcome residence in my mind. I need to dislodge at least one of them, so go back asking for specific details on the former.
April 30
Mr TB says the court will assign the “commercial investment competent personnel”. He adds: “You are charged based on the value of the investment you are seeking. In your case, it might be up to £2,000… I will be paying up to £8,000.”
We finally have a figure. The term sheet isn’t legally binding so I sign and return it.
May 1
It’s at this point — and I know it should have happened sooner — I contact some Thai legal experts. I get one short but direct response: “It is a scam.”
The other says: “This is the first time I have heard about this set-up.”
May 2
I’ve had better night’s sleep, unlike Mr TB, who’s in fine spirits after a public holiday.
“I celebrate you as well for your hard work towards making the world a better place. The court were able to assign Mr P [full name deleted] to handle the clearance process.”
He lists a name and email address. Before replying, I contact Stuart and the team:
“Too good to be true? Almost certainly. Had more nagging doubts so I contacted a few Thai-based British lawyers. One had never heard of the practice. The other’s answer is below. As it happens, I just got another email from Mr TB. I’m gonna ask him for the details of Mr P… I’ll also contact the angel platform and the real Mr TB (via his business website) to let him know his name has been used etc. (Maybe he’ll invest?!)’”
I ask Mr TB to give me further details for Mr P. He says Mr P “will answer any of your questions”.
May 3
Mr P’s not so willing: “Sir, I do not understand your message. Are you making inquiry on how to obtain the non-Thai funding clearance documents or what? I remain at your service!”
May 6
Mr P sends me the information he requires, which includes my driving licence or passport. He’s also calculated an oddly precise cost for his service: £2,355.
I forward his email to one of the lawyers. “I get four cases like this every month,” he says. “It’s heart-breaking for people who think they’re on the verge of investment to find it’s a sophisticated scam.”
First, there are no such regulatory requirements. Second, the real Mr TB would never conduct such business himself. Given his government links, he’s unlikely to do anything outside his professional remit. All his CV information is accessible online.
He suggests I report the incident and offer to send someone to hand over the documents in person.
Mr P comes back fast — and testy: “Sir, why would someone submit documents for you? You can send an NDA like others do and you will make your payment by yourself.”
May 7
And now Mr TB: “I would love to meet you and not someone else please.”
I suggest another Zoom, this time on video. Now he gets testy: ‘“I dislike that we are beginning to discuss trivial matters… I cannot continue when my integrity is being questioned.”
I reply that “handing over my passport/driving licence to someone over email (whom I’ve never met, seen or can link to a specific public organisation) isn’t trivial”, and ask him again why he won’t be seen on Zoom.
Silence.
May 13
Mr TB’s back, saying an incident where someone recorded his video call and tried to blackmail him made him “camera shy”. As excuses go, at least it’s imaginative. He adds: ‘“If there wasn’t a fee, you wouldn’t bother about my identity.”
Not true, I reply, “due diligence works both ways”.
This, as I write, was my last contact with Mr TB and Mr P. I’ve reported them to the angel network and the police but, of course, the chances of finding anyone are negligible. It’s apparently a common problem on angel forums, especially when people bypass the platform to make direct approaches.
I was fortunate not to have handed over more sensitive details or money but still feel foolish for having travelled so far on the Scam Express. I saw the warning signs, but looked straight through them. I hope other founders will detect the flashing lights and avoid stepping aboard completely.
Has the experience vanquished my investment ambitions? Absolutely not. The party’s only just started and our guest of honour will be here a long while yet.
George Thwaites is founder of YumTuc and open to (almost) all investment proposals
