
Ask HN: Investor went dark after getting startup financial information - ohwhataweb
Our 11 person startup had an expression of interest from quite a reputable VC and we had few months of communication regarding growth, revenues etc.<p>Finally the VC agreed to invest he wanted to do due-diligence by going through the customer&#x27;s list rather than checking our business bank accounts. I was a bit hesitant but wanted the funding to go through, to take my mind off it and focus on the startup.<p>I sent the list of customers, their contact details and the revenues from each of them and the investor just vanished after that.<p>I know PG said that in silicon valley a verbal commitment is as good as a deal. This VC gave us verbal and email commitment and then vanished without the common courtesy of explaining why.<p>There has been no response to my multiple emails or phone calls. The VC is very well known and not a flyby shop.<p>The main issue is that the investor already has a startup in his cohort that is in the same space as us. Few months later my customers started receiving emails from this other startup.<p>I have no idea how to ask this VC , who has infinitely more money and power than our startup, to destroy all of our data and not use it in any way whatsoever.<p>I don&#x27;t want the funding and I don&#x27;t want to burn the bridges but I want to protect our customer data.
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mchannon
Sounds like you got mugged, and you're trying to decide if you got mugged.

The VC obviously got what they wanted, so take the hint. The only recourse you
have at this point is legal- something like tortious interference with
contract if you can prove they poached your customers. You might be able to
put together a fraud case if you can prove the loss.

Lawyer.

Be sure you name names on thefunded.org so this VC can't bamboozle the next
victim as easily.

~~~
ohwhataweb
I would like to believe that I didn't get mugged and someone or something in
the list ticked him off. It would have been nice for him to open up a channel
of conversation as the list is genuine and we have bootstrapped our startup so
far to profits

~~~
throwaway413
You’re lying to yourself. You got mugged. You even said it yourself - your
customers started receiving emails from his other company! The writing is on
the wall.

Do you have hard proof of the email your customer received?

~~~
ganeshkrishnan
Probably. Also remember that if posters space is specific or niche, clients
usually look for other software to help them. The emails from the competitors
are not a smoking gun proof. There is no way to prove or disprove it and only
the investor knows what's up

------
mapster
I think he or she had sufficient time to vet your list so send a firm email
stating to 'destroy the list and do not share. and that you hope to heard from
him/her soon.

if you feel he/she conned you to serve his other master, then name them
publicly.

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arjunvpaul
Unless you have some kinda smoking gun, dont act on this. Move on.

If stealing your customers is as simple finding out who they are and reaching
out to them, then you dont have a sustainable business model.

Focus on building your business. Get back to work.

------
matt_the_bass
That sucks but it is possible your conclusion is not correct. Possibly:

\- Vc was looking at you bc they already have experience in that market. Maybe
they were considering hedging their bets with multiple companies with similar
products but decided not to move forward. Now they are just too busy to get
back to you. Annoying but not nefarious.

\- how did you find your customers? Could the other company have found them
the same way? If your product is better then your customers should stay with
you. If not, maybe your product is lacking somehow.

\- the VC is a D##K and did what you suspect. In that case did you vet the vc
at all? Did you check who were their other companies for possible conflicts of
interest?

With all due respect, an investor saying their interested verbally does not
make for a firm investment.

~~~
2_listerine_pls
Please... it's quite obvious the VC screwed him:

-The VC firm ONLY cared about the startup's CUSTOMER data. Not the FINACIAL data.

-The startups's customers started getting emails afterwards.

-The VC not only stopped contacting the startup afterwards, the VC refused to answer them.

~~~
ohwhataweb
It's quite impossible that the VC downright stole the customer data. There
seems to be a mixup where our customer data got into their system. Not sure
how to ask them to purge our data without seeming like an asshole.

~~~
2_listerine_pls
He doesn't even return your calls and you are worried about coming across like
an asshole? Why would He even care about deleting the data? He will tell you
that it has already been erased.

I guess you could make another "startup" with fake clients and be legally
prepared to screw him. Luckily, He will ask for the same info. If the fake
contacts are contacted by your competitors, you can use it as proof.

------
bartozone
Did you put any kind of NDA in place before sharing confidential information?
If so, you can politely remind him that it's appropriate to destroy the data.
If not ... well, he sounds like a dick.

I understand not wanting to out this investor too, the truth is, he is more
powerful than you and it sucks. The best advice is take it as a lesson, and
focus on your startup. You know not to do business with him, and later when he
wants in on one of your oversubscribed funding rounds, you can politely point
him to earlier conversations when he was not interested. :)

Don't make this into something more than it is. This will not break your
business, but making it a big deal when you don't have the power/resources to
do so could.

~~~
ohwhataweb
>Don't make this into something more than it is. This will not break your
business, but making it a big deal when you don't have the power/resources to
do so could.

This is correct. I totally forgot about them until one of our customer pointed
out an email they received from the other startup and wanted to know if we
shared our customer's contact with third parties.

It's impossible for us know what's the correct answer here. We have to share
customer information for due diligence but does that mean investors are third
parties? What if the investor uses this info for their startups?

> on one of your oversubscribed funding rounds

We are not in the silicon valley or even in North America.

------
mullen
Get a lawyer and talk to them. However, I think the main thing is to work on
their reputation. If this VC gets their name tarnished, less people are going
to work with them. I know if I was looking for a VC and I knew who this person
was, I would not work with them ever.

~~~
ohwhataweb
>Get a lawyer and talk to them.

Ha! We are a startup from a developing country and our budget of $10 per day
of facebook ads is killing us.

~~~
staticautomatic
It is entirely possible that an attorney would take the case on contingency if
it's strong.

~~~
ohwhataweb
Then it all becomes a shit show. Not to mention that we get on the blacklist
for every VC they talk to.

We just want to get on with our startup and we have tons of work left to scale
up.

~~~
hluska
I'm sorry this happened to you, but you have a great attitude. Good luck and
much respect.

------
rajacombinator
Naming and shaming very appropriate here. I see no reason to worry about
blacklisting by other scum bags in this person’s network.

------
cimmanom
Speak with a lawyer. You may or may not have a case that will hold up in
court, but regardless a lawyer will be able to tell you more about what your
options are (including a number of options well short of going to court) and
what leverage you do have, as well as potential repercussions.

------
saluki
If a well know VC is interested in your company and resorted to underhanded
tactics to get your customer list you must be doing something right.

Lesson learned, you will not make that mistake again.

Move on and continue building and innovating.

------
egberts1
Always see your customer database with baits.

~~~
danieltillett
I think you mean seed, but yes. The other thing is only provide a subset of
your customers.

------
gesman
When VC == BS

------
dale14
Tricky. I think a firm dissuasion email might make them budge. Something
stating, for example:

\- The facts \- The fact that your customers started receiving emails from his
startup \- The fact that what he's done is dirty \- And that you're
contemplating a couple of serious actions, while staying vague.

The idea is to make him react and open dialogue, because the thing is, I don't
think you have the resources for an actual legal action, so an off the table
deal might be your best shot.

~~~
ohwhataweb
This is how we can get blacklisted by VCs and they talk to each other which
means we are royally screwed even by other VCs

