The Startup Funding Festival That Never Was
Imagine you’re a startup founder who’s just getting started. You think you have a game-changing idea, but the funding landscape is making it difficult for you to sell it. You're in a desperate situation because you need money. You believe that all you need is a chance to meet with a venture capitalist.
Suddenly, a post from some World Startup Convention arrives on your Instagram feed. The text on it reads, "World's Biggest Funding Festival. Ever," and it has a photograph of Elon Musk. Musk is said to be invited (thereby implying that he may attend it too). And it includes a long list of PE and VC firms that will participate.
You’re intrigued. And then you see the best part? It’s all happening right here in your backyard in India — in Noida.
You quickly visit the website and you’re now more impressed with the numbers. The website boasts that there will be 1,500 VCs, 9,000 angel investors and over 75,000 startups from across the world. It has even got the face of Masayoshi San of Softbank, Gautam Adani, and India’s top ministers plastered on posters. The website’s quite snazzy too. It looks quite legit.
But it seems too good to be true. Your spider-sense is tingling a little.
Then you scroll down further. And your confidence rises. You see videos by Ankur Warikoo, Chetan Bhagat, Praful Billore, and Raj Shamani. They’re all glowing with praise about the event. Selling the proposition that you can get funded in just 3 days during this conference and why it’s important for you to attend.
Done. You don’t need to do any more due diligence. You believe that the influencers would’ve done their checks. They’d have enquired about the people behind the event before endorsing it. You trust them.
So even if the price of admission — ₹8,000 — might seem a tad bit high, the opportunity seems too good to pass. This might be your only chance to hobnob with the VCs. It might give your startup a real chance at success.
You sign up! And then on D-day, nothing is as it was promised.
The Funding Festival that shook the internet.
The ‘Startup funding Festival’ by World Startup Convention held at Noida, India turned out to be a scam where none of the promised investors and keynote speakers turned up, and the startup founders shelled out thousands of rupees for attending the event but left without any investment and filled with agitation.
Several ground reports and tweets from attendees revealed that the young founders, students, and companies that hoped for investment were duped by World Startup Convention, and according to an attendee, the founders were more “eager to speak to the Police than investors.”
The big red flags that people missed
1. Marketing that seemed to good to be true: Attendees like Elon Musk and Sundar Pichai? Advertisements for the event claimed that the likes of Masayoshi Son, SoftBank’s CEO; Gautam Adani, chair of the Adani group; Sundar Pichai, Google’s CEO; and Tesla’s Elon Musk would attend. On its website and social media accounts, the event flashed pictures of Indian ministers, suggesting that they’d be present as well. Not to forget, the event name has "World" in it.
2. Postponed from Jan to March - in hindsight, with a festival of the size it claimed to be, it would be a disaster to postpone it.
3. The team was a group of college students - yes, not the best team you want to hire to organise the world's biggest startup festival, right?
4. Overpromising numbers - 75,000 thousand startups, 1500 VCs and 9000 angels - seems too good to be true, doesn't it?
Why do we keep falling for scams? Has it become so easy to fool Indian founders these days in the name of funding possibilities?
Sadly, a lot of smart entrepreneurs fell for this. The passes for the event were being sold between Rs 2000 – Rs 25000 and apparently, they sold like hot cakes. With pitching events becoming main stream (thanks to Shark Tank), many founders now think anyone can fund their ideas instantly and on the spot.
Also, the glamour associated with the startup funding is a big reason behind this. The purpose of starting up used to be solving real problems with VC money, now the purpose itself has become raising VC money.
What can we take back?
To the students, who participated in the event – Consider this money spent as your tuition fees. Take this learning with a pinch of salt and smile because you got a glimpse of real world so early in your life.
To the founders, who participated in the event – I am sorry that this happened to you. But in this ecosystem, many people are waiting for their turn to scam you. Never believe anything on face value if it sounds “too good to be true.” No one is going to invest their hard-earned money in such a way. The fraud was so obvious that anyone with basic due-diligence skills should have spotted it.
To the influencers who got paid to promote it: It takes years to build a reputation and a few minutes to ruin it. No paid collaboration is bigger than your audience’s trust. Your audience deserves better. It literally takes lesser time to do basic due-diligence then to create an Instagram reel.
Here's a checklist of things Founders and investors need to keep in mind before attending such events -
1. Research the event thoroughly before putting money - who are the organizers, who are the attendees, does the setup look dependable
2. If it seems too good to be true, it probably is. Double check events that look too promising.
3. Be wary of where you put your money.
4. Glitzy promos are just that - glitter. Do not depend on your favorite influencers too much - they get paid for it.
5. Due diligence is a must - whether it's real life, or your portfolio.