Once in a while, I get a phone call from a startup founder asking for advice on receiving money from an investor. I can understand how exciting it must be to have someone who believes in your idea and wants to invest in your business. My mobile number is all there with a quick Google search. Just type “startup lawyer in Malaysia” and you’ll find it. Depending on how my day goes or when I answer the call, I might oblige and listen more about the situation.
So here’s what happened during the call today.
Me: Hi there, how can I help you?
Founder: I’ve got a solar investment company. I’ve applied for investment from this investor, and the investor has agreed to loan my company USD500,000. Here’s the offer letter I’ve got from the guy. But I won’t get the USD500,000 unless I pay USD400 first to the remittance company to get the money.
The founder later sent me a one-pager attachment on my phone.
The “loan agreement” puts out three details on the loan amount, including the interest rate and the repayment method. Here’s a bit of free advice. If you get a one-page document, you should run as fast as you can.
In my experience as a corporate lawyer, “real” investors love their money and will try their best not to give money unless they know what they’re getting themselves into. I know a venture fund that invests only in pre-seed and seed round like amount between RM10,000 to RM50,000 kind of money, but they will damn get you to sign all the investment paperwork from the subscription to shareholders agreement.
Let’s get this right again.
Nobody in their right mind will give you money for free
Suppose an investor is interested in putting money in your company. In that case, the investor will engage a team of professional advisers like a legal counsel, accountant and auditors to look into your company’s business and other due diligence before even offering you money.
And you’d know why scammers will deliberately put up typos on their scams? Only a fool will fall for messages full of errors and typos. And scammers are looking for that kind of people.
Thankfully, since you’re reading this, I am sure you won’t be one of them.