Cross-checking staff credentials: lessons for issuers, portals and investors

In the world of fundraising, especially in Regulation Crowdfunding (Reg CF) offerings, transparency and accuracy are essential. The following is a true and recent story, though names and details have been changed for privacy. It highlights the importance of due diligence for companies, platforms, and investors alike, to avoid potential misunderstandings or misrepresentations during the capital-raising process. Let’s dive into the story and discover the impact of cross-checking staff credentials.

A Company raised funds in a Reg CF offering on “SuperPortal”. Company had a pretty lean team, but listed Freddie Finance as its CFO in its Form C. Freddie made no reference to Company in his LinkedIn profile, which was pretty impressive. When contacted, Freddie said he wasn’t the CFO but had given Company a bit of advice on fundraising in the past.

So you can decide for yourself what issues this raises, and for whom, but let’s look at how to avoid this kind of thing.

Lessons for issuers: If you list someone as part of your team, make sure that person does actually perform that function, and is ok with you saying that’s what they do, and is not going to respond “Nope, they are nothing to do with me,” if anyone checks up.

Lesson for portals: Do some elementary cross-checking on team members. If someone is listed as an officer or director, check they have been appointed as such by the issuer. And if their LinkedIn profile doesn’t show them as such, ask why. Additionally, you (or someone on your behalf) will be running Bad Actor checks on officers and directors, so presumably you will be telling those people directly why you are running a check on them. Right?

Lesson for investors: If you are thinking of investing in a company based on the quality of their team, make sure the team is as advertised. If there’s a discrepancy, use the intermediary’s chat function to ask the company what’s up, and treat a non-response as a red flag.

It’s always good to remember: All parties involved share the responsibility of maintaining accuracy and transparency. Cross-checking staff credentials is an essential step!