This post was written by my business partner, Graeme.
I had an interesting experience this week, a story that started a few years ago.
I was working on an investment deal bringing together angel investors to fund a software start-up in our area. As is often the case my small angel group teamed up with investors from other groups and through that process I was introduced to a guy I’ll call Steve (since he has not been convicted yet). Steve was obviously a very bright guy with a big financial background and a very nice guy. He analyzed the deal and decided to pass. Some of his reasons to pass didn’t make sense to me, but in start-up company investing everyone sees things a little differently.
Despite passing on my deal, Steve and I stayed in contact and discussed other investments. I really enjoyed him and was anxious to do some business with him. One day he invited me over to his house to talk about an investment and to socialize a little. He had a very nice house, nice car (Ferrari), nice big view of a lake, by the nice pool on the nice big patio. He presented an idea of taking in investors to building a spec house on the lot next door. He was very open about his objective to control the architecture of what ever got built there so they wouldn’t block his spectacular view. The housing market was still red hot, so the deal sounded good financially, but I passed for a number of reasons related to the style of the development.
Later he presented a plan to invest in a company, really just a product, he was in the process of purchasing through some convoluted circumstances. The business appeared to have some legs and my other investment partner Jim and I were both ready to put some money in. When we asked for the normal paper work, Steve balked. He didn’t have the normal purchase contracts etc. Jim and I both considered that protection for us a deal point and passed. Steve seemed a little hurt, but understood.
Steve and I stayed in contact and his company appeared to be doing pretty well based on his accounts. The last time we talked was probably about a year ago.
Then a few days ago Jim called, “Hey, do you remember Steve? Watch the six o’clock news. He’s in jail, five million dollar bail ”
Well, it turns out that Steve’s projects either were scams from the start or just went the wrong way in a hurry. Rumor has it that Steve moved away very quietly, but the police caught up with him. He is alleged to have swindled $1.7 million from a number of his friends and neighbors. It makes me glad I insisted on the formal paper work.
I feel like I can still hear that bullet whizzing by.