I wish the anon founder would consider outing the people in question: http://qr.ae/KplIm
And somebody needs to create theFunded 2.0 so we can keep track of the slime.
Questions
What kind of predatory investor asks founders to hand over their algorithms before offering a term sheet?!
7 answers from the community
A· May 21, 2014
Most reasonable people would say "No, thank you" and walk away.
A· May 22, 2014
I think you're confusing handing over with due diligence. The investor may just wanted the startup to prove that they in fact had a proprietary algorithm.
I HAVE worked at a startup that boasted to the press, partners and investors that they had a "big data" algorithm that was in fact bullshit.
D· May 22, 2014
<p>I've actually done that exact thing — and it worked.</p>
A· May 22, 2014
Same here!
A· May 22, 2014
Due diligence happens after a term sheet is signed but before the deal is done- and even then, I wouldn't hand anything over.
You should be able to prove that your algorithm works without handing it over.
A· May 22, 2014
Thats the reason why so many startups get away with bullshit claims.
A· May 22, 2014
Exactly! The post at source clearly states that the investors wanted the algorithm, which is rubbish. All that's required is a demonstration and if the investors still don't believe it, they they should walk away. It's either you trust the team or you don't.