At SmilePass we’re in the process of raising a late seed round to speed up IP development and implement our go-to-market plan. Given the size and stage of the round, we’re largely targeting angel investors and have registered on a few angel network sites as part of our plan. Subsequent to these listings, we’ve had some good discussions however we’ve also come across some very dodgy feeling potential investors.

The first thing I noticed was immediacy. Typically, unless you’re really fortunate (and perhaps are spending more money to boost your rankings), it’s going to take a week or two to get some responses. Not for us. I was approached the day after our listing by 2 separate individuals both supposedly acting on behalf of their wealthy clients. Their LinkedIn profiles looked OK although the photo’s were designed to stimulate envy – think of marble, race horses and Ferrari’s! Both spoke poor English, claimed to be based in France and wanted to meet me immediately, despite the fact they had not seen any detailed deck or discussed any detail of the business with me! Interestingly, they wanted to meet in Paris and not London. By this stage my antennae were tingling and I decided to ask them both for their passport details. That’s the point at which the discussions came to a crunching halt.

I then had an approach from a supposed diamond dealer and property mogul based in Belgium who had seen our listing on one of the angel networks. He could speak English and was very willing to loan the business a sum equating to the entire round with no security and a very small equity allocation. Again, he wanted to meet me immediately in Belgium and asked virtually no questions about the business. We are not interested in debt funding, so did not pursue this avenue.

We were then approached by an outfit in Singapore who were keen to invest more than we are looking for. Strangely enough, they wanted to meet me immediately in Spain and did not seem massively interested in the details of SmilePass and its potential. These prospective investors willingly provided us with a scan of their CEO’s passport which we then validated using our SmileSafe solution. The passport was found to be fake. I asked them if they had an explanation and unsurprisingly have not had a response.

I imagine we’re not alone in this experience. It’s clear that criminals are trying to invest in start-ups in order to launder money in the UK. They are probably banking on the fact that those start-ups who are struggling to raise legitimate investment may resort to using their cash in desperation. Not only are these scammers providing illegally gained money, but they are all going to be passive investors so are unlikely to make any meaningful contribution.

So, don’t get greedy. Secondly, if you need to validate the ID of a possible investor and prevent a potential fraud – give us a call and SmilePass will help you to do that remotely and securely.