Why It Makes Sense to Avoid Paid Fundraisers: John Garcia...
TheFunded.com Open Letter
Posted by Anonymous on 2009-06-01
Be careful out there. Here's yet another disturbing story about how entrepreneurs are being taken advantage of in the current downturn.
John Garcia would convince companies to pay $15,000 to $50,000 and give him equity for his fundraising services. He recruited lieutenants, like Scott Scheper and Robert Heaton, even getting them to pay him. He operated under different business names, like Angel Strategies and Newport Venture Group.
We need to blacklist more of these people and lock them out of the investment field.
http://ow.ly/apaZ
http://tinyurl.com/cy4whs (video)
Entrepreneurs paid a middleman to help find investors. They say he didn't produce; he faults the economy.
Bruce Camber and Hattie Bryant have filed a civil lawsuit against Angel Strategies co-founder John Garcia and are seeking $86,000 in damages. The Irvine couple say Garcia didn’t get funding and tech support for their business.
Hattie Bryant and Bruce Camber said they were thrilled when John Garcia told them he had made a fortune as an entrepreneur and could help their company make it big too.
Swayed by his sales pitch -- including his claim that he had scores of people lined up to invest in promising companies like theirs -- the Irvine couple said they paid Garcia $50,000 in fees and then waited for the money to roll in.
I have, quite often, tired to help companies raise money.
Rule #1 - if a broker/middleman/consultant charges you one cent up front they are bullshit.
Rule #2 - read Rule #1 over and over again,
You got to see this guy's pitch captured on YouTube! They are the most successful angel group ever. Each angel invested $1M per year each. Not one company they invested in ever failed.
The sad part is that this guy was teaching this junk to entrepreneurship students in Sweden.
Many firms are successful using 'gobetweens' Casting stones at the merchant banker is silly. It is like casting stones at Park Avenue Investment bankers./ Goldman, Merrill, et al. Every single one makes money from up 1. front fees and 2. commissions upon delivery. Same gene pool, with different clothing ---perhaps. Do not be overwhelmed with yourslelf. You want money, pay for it ---- as for 'up front' it depends upon what your company needs as to shaping etc.
Do not be a dream merchant................and please 'understand capital markets' . IF you choose not to, the you are toasted. I am sure of it ---I know. Pay to play. What do you care if Merchant investment banker adds on fees. take Arithmetic 101. :-) toodles tc
You should pay nothing, unless you need work to shape.
Most of these scumbags are careful in their lies - Garcia is brazen. At one point he told me that his angel group invests $200M/year! I saw one of his lieautenants steal a newspaper in a Starbucks, and when he realized I saw him, said "Rich people never pay for anything". All around class act.
Add Mojo Partners LLC to the list.
I think you get what you pay for - nothing unreasonable about paying retainers for help raising $. B U T you need to do your own due diligence on the quality of the people you are retaining. You should be able to sniff out the confidence men/women or rolodex-flippers if you do a good job of investigating their track record, calling their references, etc. As mentioned previously, Goldman bankers make retainer $, but I don't think one would say they are not good at what they do.
This guy wanted $10,000 up front with no guarantees and 10% equity.
http://en.wikipedia.org/wiki/Rod_Unde...
Was recently pitched services by one such firm. Great sales story. Wow. Easy to be swayed by the salesmanship. Asked for references and could not find single confirmation of the sales pitch. The person was surprised that I was diligent about my reference checks. Needless to say, we did not do business with this firm.
I've run into some groups like this. One talked a good talk, we asked for references. Never got them.
Take these folks with a few kg of salt.
If you use finders who are unlicensed for security sales in California, you are automatically giving your investors an unlimited option to rescind for three years.
The videos are a waste of time, but check out http://johnpgarcia.blogspot.com/ for an entertaining analysis of his incredible claims (lies) and how he manages to continue to steal unabated, in a similar fashion as the invention development companies steal $300 million a year.