No one tracks how many startup founders get scammed every year, but here’s a clue: in 2024, people lost $5.7 billion globally to investment scams — up a billion from the year before.

In the UK alone, fraud losses hit £1.17 billion, and a big chunk came from “investment opportunities” gone wrong.

Early-stage founders and small business owners are prime targets: often racing against their runway, raising for the first time, and eager to say yes when someone finally says they “believe” in them.

So here’s your roadmap — the most common scams (and shady tactics) doing the rounds in 2025, and how to spot them before you become someone’s next cautionary tale.

1️⃣ The “Advance Fee” Fairy Tale

The oldest scam in the book.

“We’re ready to commit £1 million. Just wire £5,000 for compliance checks.”

🚩 Reality: No legitimate investor asks you for money before investing. Ever.

If someone sends an invoice before wiring funds, that’s your cue to disappear.

2️⃣ Pay-to-Pitch Events (aka “Buy Hope”)

You’ll get slick emails:

“Exclusive investor showcase – only £3,000 to pitch!”

Some events are legit. Many exist purely to prey on desperate founders. You pay, you pitch, you drink warm prosecco… and go home empty-handed.

If the only way to access their investors is to pay upfront, question everything.

 

3️⃣ Fake VCs Mining Your Data

Someone on LinkedIn — “analyst at [Insert Fancy Name Capital]” — loves your deck and asks for:

“your full financial model, pipeline, customer list, and revenue breakdown.”

Then they vanish.

Sometimes they’re compiling a “market report” to sell. Sometimes they’re cloning your idea.

Send teaser decks only. Keep your data room closed until you’ve verified who’s asking.

4️⃣ “Advisors” Who Want 30%

They’ll flatter you:

“I can open doors. I just need 30% equity now.”

🚩 Real advisors take 1–5% equity, vested over time, based on performance.

Anyone asking for more up front is looking to own your company before you’ve even started.

5️⃣ The Bait-and-Switch Fund Broker

Starts like this:

“We’re interested in investing.”

Then turns into:

“Actually, we help startups raise money — for a monthly retainer.”

You thought you were pitching for money. Turns out, you’re the client.

Not illegal. Still a waste of time and energy.

6️⃣ Shady Convertible Notes

Not quite a scam, but close.

Look out for notes with 80% discount caps, forced exits, or even personal guarantees.

That’s not investment — that’s a payday loan.

Always have a proper startup lawyer review every document before signing anything.

7️⃣ Fake LP Pressure

A fund says:

“We want to invest, but we just need to show your deal to our LPs first.”

If their fund isn’t actually closed, they can’t invest real money. You’re just being used as bait to help them raise.

8️⃣ “PR & Investor Intros” for a Big Fee

“We’ll get you in Forbes and introduce you to top angels — £8k upfront.”

Sure you will.

Real PR or fundraising firms work on clear deliverables or split fees with success bonuses. If they demand full payment before doing anything — it’s a red flag.

9️⃣ Dodgy Accelerators

They promise connections, take big fees or large equity stakes, and deliver… a PDF certificate.

Always check who’s behind it, speak to past participants, and verify success stories. If they can’t name companies that actually raised or scaled — skip it.

🔟 The Long-Con “Ghost Investor”

This one’s personal.

An “investor” once kept me in talks for months — endless calls, updates, promises of “next week we wire.” Even told me to stop speaking to other funds. Then he vanished.

If someone’s always “almost there” but never sends a term sheet, keep them on the side.

Until the money’s in the bank, it’s fiction.

🛡️ How to Protect Yourself

✅ Do due diligence on them.

Check Crunchbase, AngelList, LinkedIn. Speak to founders they’ve backed. A real investor expects it.

✅ Never pay to raise.

Investors pay you. Any fees should come after they invest, not before.

✅ Stage your data.

Send teaser decks first. Save sensitive data for verified investors only.

✅ Use a proper startup lawyer.

Not your cousin who did your mortgage.

✅ Keep your pipeline open.

Never pause fundraising for one “sure thing.”

✅ Ask your founder community.

You’re not alone — other founders have seen the same scams. Ask around, share names, and check references.

If you want to shortcut that process, we’ve built a private founder community through Rare Founders where members share exactly this — verified investors, trusted partners, and early scam warnings.

Final Thought

If it sounds too good to be true, it probably is.

Fundraising is already tough — don’t make it harder by trusting the wrong people.

Stay sharp, protect your data, and remember: no legitimate investor will ever ask you to pay to get funded.

👉 Want real founder insights (and scam alerts) straight from the community?

Join the Rare Founders Newsletter for weekly advice, verified investor contacts, and upcoming events:

https://startups.rarefounders.com/