Ten years ago I was sitting in my office and an email popped in my inbox: Seeking Entrepreneurs for TV Show. Excited, I promptly replied to the inquiry and said I’d love to be on the TV show and share all about our growing startup. The “producer” immediately called me and spent five minutes getting me all chummed up before dropping a classic line: oh, also, there’s a $10,000 fee for you to be on our show for our costs and the PR from the show will pay for itself immediately. Boom. I was blissfully ignorant as to what was going on and finally the “ask” made it abundantly clear that this was a scam. I promptly said “no”, hung up, and cringed as the same scummy phone calls and emails came my way over the years. As expected, entrepreneurs aren’t immune to other people preying on their passion and ignorance.
Here are some of the more common scams targeting entrepreneurs:
- Pay to be on a TV / Radio Show – Be on an obscure TV or radio show that no one has ever heard of for an exorbitant amount of money
- Pay to Pitch Investors – Pay thousands of dollars for the opportunity to pitch an angel group (happens more often than people realize)
- Offer of Help and then Get a Bill – Many people say they’ll help an entrepreneur, but make sure and clarify the type of relationship before moving forward otherwise you could end up like me paying a lawyer to edit my business plan
- Service Providers or Advisors Seeking a Large Equity Stake – I’ve met entrepreneurs that have given up 10-20% of their company to a single service provider or advisor only to realize later that they were had. Only do large equity grants based on performance and not time (e.g. standard advisor shares of .25% is fine based on time but something more substantial should be based on results).
Entrepreneurs are easy targets, especially if caught on a low part of the emotional roller coaster. Watch out for scams targeting entrepreneurs.
What else? What are some other scams that target entrepreneurs?