🕵️‍♂️ Tracking down a $1.2M shadow investment

Tracking down a $1.2 shadow investment

But first, here are this week’s top startup investing links

• 💰 Wefunder notches $10M in investments in November, and makes a bullish hiring move (LINK)

• 🆚 A discussion on why angel investing outperforms VC (LINK)

• 🦥 Calm Fund is bucking most VC firms by investing in startups that are growing ‘calmly’. Their investment thesis is worth a read (LINK)

• 👁️ Well this is a clever way of getting the word out about your fundraising round (LINK)

TRACKING DOWN A $1.2M SHADOW INVESTMENT

Last week I chased down answers…

Something odd happened to one of my portfolio companies (AtomBeam) last week.

They raised a whopping $1.2M in a matter of hours, seemingly out of thin air.

Their campaign had been live for weeks, so it didn't correspond with a new funding round.

And it was twice the total amount that the company had raised during the entire length of its campaign.

Upon digging, I found the culprit.

A 1-hour video by InvestorPlace recommending AtomBeam as an investment. The video was professionally shot and InvestorPlace had posted it as free-to-watch for its visitors.

Something didn't add up to me.

InvestorPlace was really promoting this video - it appeared as a pop-up on their website and they even have a large ad on their homepage directing visitors to it. The language they used was also incredibly sales-y.

When a company is promoting something aggressively, there's usually a financial incentive attached. But the video was free to watch, and they were promoting a company that had no affiliation with them (AtomBeam did not pay for the spot).

So, I watched the video to find out what the catch was.

It was…interesting. It felt like you were watching an infomercial, but to buy into a risky startup.

The first 40 minutes of the video were two men vaguely talking about a colossal opportunity, something that could be life-changing for investors. All this without ever revealing the company they were talking about.

They also cherry-picked startup stats (a $5k investment in X yielded $40M…that kind of thing). It's fine to showcase some wins in the startup investing space - but they did so without ever mentioning once in the hour-long video how risky a space it is.

In fact, they tried to make the case that investing in startups was safer and 'less stressful' than investing in the stock market.

Startup investing is extremely risky and there's no other way to put it.

Annoyingly, you were unable to skip ahead in the video - so I sat through 40 minutes of buildup as they tried to ensnare viewers with generalities around the AI boom, startup investing, and insider access. Finally, we got to the end where they reveal that the company is AtomBeam.

Shortly after, they unveiled the financial incentive for InvestorPlace. While this recommendation was free, they announced a 'Venture Capital Investor' membership where subscribers could receive 1 recommendation report a month.

InvestorPlace just so happened to have a 'deal' available where the membership costs $2,000 a year.

I believe this to be a money grab by InvestorPlace with very little value behind it.

From seeing the AtomBeam recommendation, they spent 40 minutes hyping up the general startup space and potential returns. They only spent about 2 minutes talking about AtomBeam itself - and the research was surface-level at best.

They didn't even talk to AtomBeam's founder in the making of this report, which is table-stakes in conducting due diligence. How can they charge $2,000 for their reports when they can't even be bothered to talk to the founder?

Ironically, I have recommended Atombeam myself - but I've pored over numerous company documents, SEC filings, talked to the founder multiple times, and developed a thesis as to why I believed it to be a compelling investment.

I think it's 100% fine to charge a fee for research that you conduct, but my problems with InvestorPlace are the following:

• Exorbitant pricing when the reports are surface-level deep

• Promising riches and not outlining a single risk involved with startup investing

• Misleading tactics (cherry picking outlier examples, saying startup investing is not risky)

Additionally, the membership was on 'sale' from $5,000 -> $1,999, which is a value trap. Not once did InvestorPlace end the 'sale', meaning that the $1,999 figure was the actual price. It was purely meant to trick investors into believing they were getting a deal. This happens all the time in retail but it's misleading nonetheless.

InvestorPlace has since ended the enrollment for Venture Capital Investors, and it was likely a huge financial success from them. If they drove $1.2M in investment to AtomBeam, I can only imagine how many people they got to buy their membership at $2k a pop.

If anyone did sign up for Venture Capital Investors, please let me know what you think of the experience + reports!