🚨 $10M Investment Scam Uncovered

Welcome to this week’s edition of CROWDSCALE - we’re stepping into the arena to protect investors from what I suspect to be fraud. In today’s issue:

• 🚨 Scam Alert! A StartEngine startup is making some unrealistic claims

• 🔌 Powerless: Why wireless power startups are more prone to scams

• 🚩 A Sea of Red: 9 of the red flags I came across

POTENTIAL SCAM ON STARTENGINE

In startup investing, there's 3 things that I try to do.

1. Make money

2. Have fun

3. Don't fall for scams

That third one is super important, especially when it comes to startups. And I may have just uncovered one on the largest equity crowdfunding platform out there.

This startup has raised over $10M from everyday investors, and is collecting more every single day.

Unfortunately, it's my opinion that investors will never see their money ever again.

Wigl is raising funds on StartEngine at an eye-popping $147M valuation.

They're promising game-changing tech - the ability to transmit energy through the air to charge devices. It's similar to how wifi transmits network connectivity, except they would be transmitting power instead.

I didn't set out to write a hit piece on Wigl - I knew very little about them but decided to take a closer look after seeing their impressive fundraising figures.

But after kicking the tires and researching the company & underlying tech extensively, I came to the conclusion that this startup will almost certainly fail and teeters into fraud with some of their claims.

FAULTY CLAIMS DON’T ADD UP

Being able to transmit power through the air would transform society, and that dream is part of the reason Wigl is able to fundraise so effectively. They’re promising the ability to use your cellphone without interruption, home devices no longer needing power cords, and electric vehicles driving nonstop without needing to refuel.

Now there's just one problem with this promising vision - the tech already exists. In fact, it's been around for decades.

However, it's currently not possible to transmit a meaningful amount of power, even at close distances. Wigl’s marketing & fundraising page promise the ability to charge far more than that.

A phone requires 2-6 watts of power for charging - Wigl's method of energy transfer can provide a maximum of a few milliwatts. These are 1/1000th of a watt, leaving them well short of being able to charge even a small cellphone battery.

Now, the hope is that Wigl has actively been researching a new method to overcome this shortcoming - but that's not the case. Wigl doesn't even have their own technology, they've been using 'commercially available off the shelf products' for their demos.

As this YouTuber has pointed out, they've been using hardware from a company called Energous in their demos.

Now Energous is actually a publicly-traded company, so we can get a sense for the value in this space.

Energous has lost 99%+ of its value in the last 5 years and are currently valued at just over $10M.

Let's keep in mind that Wigl doesn't have its own tech, they're using Energous products. And Wigl believes that they command a valuation of $147M. That's 15x higher than Energous’ whole market cap!

It gets worse.

The company reported revenues of $60,000. This stems solely from one company, and that company just so happens to be owned by Wigl’s Chief Operating Officer.

Even if you count this as legitimate revenue, they are raising at a nonsensical 2,443x revenue. For comparison, Apple is valued at around 7x revenue.

The math aint mathin on this one folks.

SCAMMY SECTOR RIPE WITH FRAUD

In my research, I came to realize that wireless power transfer is an overall scammy sector. 

Many (including Wigl and Energous) have claimed transformative tech that will affect every piece of hardware imaginable. None have come close to realizing that vision, but many have raised millions on the faulty promise.

Most notable of this snake oil segment is a company called uBeam (now known as Sonic Energy).

In the 2010's, uBeam raised over $55M from some of the most highly regarded VC firms. It never delivered a working product and quickly became a dumpster fire, lighting all $55M on fire.

The company went through 6 CEOs in just a few years, disgruntled employees publicly spoke out, and the company eventually flared out.

Some sectors tend to attract more bad actors than others, and the wireless power transmission sector appears to be a naughty one. I think for the following reasons, it’s an ideal topic to scam investors:

• Clear vision: IF the tech worked, it would be a game-changer. People instantly see the value.

• Confusing Tech: The average person has no way of detecting the lies in the technology as it's a bit technical.

• Exaggerated Claims: The tech technically works, just not the way they're marketing it. You can transmit ultra-low wattage at short distances, and so it's easy to bolster that fact into a grander vision for the future.

9 STRIKES AND YER’ OUT

Here's a checklist of the red flags I found, feel free to use this in the future:

1. A quick Google Search of 'Wigl' revealed quite a few queries of people detailing how the startup is making fraudulent promises

2. Patents are surprisingly easy to come by, and a patent doesn't validate the usability of the tech. The fact that they were using 'commercially available off the shelf' hardware is a huge red flag. That's exactly what Theranos was doing before they blew up.

3. The valuation for the amount of actual traction they had is a complete joke.

4. In their SEC filing, Wigl claimed the following: "WiGL’s #1 product is its name."

   …they said the quiet part out loud 

5. 

6. Of the 3 members in the C-Suite, all are making over $100,000. None of them work full-time on Wigl. This is their sketchy side hustle that they devote no time to.

7. Their only revenue comes from a company that is owned by the COO.

8. They conducted a 'successful test' in 2020, and then…nothing. How is there not a single advancement in their rollout three years following a ‘successful’ test?

9. Numerous 3rd parties and bloggers have pointed out that the underlying tech is impossible at this point in time, due to the low wattage that can be transferred using Wigl's method.

That’s it for today - thanks for reading and stay safe out there!