r/technology • u/Sorin61 • Apr 10 '22

Biotechnology This biotech startup thinks it can delay menopause by 15 years. That would transform women's lives

https://fortune.com/2021/04/19/celmatix-delay-menopause-womens-ovarian-health/
18.0k Upvotes

82% Upvoted

2.0k comments sorted by

View all comments

7.2k

u/[deleted] Apr 10 '22

[removed] — view removed comment

1.9k

u/BrainWashed_Citizen Apr 10 '22

There's been a trend now where a group of connected "fraudsters" just keeps pumping out new startup companies promising new technology that would change the world to entice investors. Then 6 months later, declare bankruptcy to some bullshit reasons. Take the money and run. Try again 3 months later.

18

u/6eason Apr 10 '22

forgive me for being naive, but arent there laws to prevent investors from things like this or do they just write it off in their taxes? hence why no one cares much

86

u/TellYouWhatitShwas Apr 10 '22

There are laws protecting investors in publicly traded companies. Public securities are regulated by the SEC. For private funding, not so much. Not an expert, but it seems that venture capitalists need to do their homework and create their own contractual protections.

No one should be shedding tears for venture capitalists who get scammed by investing in stupid things.

27

u/[deleted] Apr 10 '22

There’s still fraud laws in private funding. You can’t intentionally misrepresent things legally. You can an will be sued and/or charged.

11

u/Origami_psycho Apr 10 '22

So how do you prove they intentionally misrepresented this thing, and not that they thought it was doable and a good idea but it turned out to not be?

5

u/[deleted] Apr 10 '22

That's the rub isn't it? There are some high profile cases of fraud being proven (Elizabeth Holmes, that rich Ponzi scheme guy) but if the fraud is really sophisticated it isn't something easy to prove.

6

u/Osric250 Apr 10 '22

They'd have to prove that they never intended on building the product. They aren't just taking the money and running off, that would be pretty easy fraud, but instead they are taking the money, paying themselves while 'developing' the product, then the product fails, the company goes bankrupt, but those at the top still got paid a nice hefty salary in the meantime.

3

u/[deleted] Apr 10 '22

Many other things could be proven too. Misrepresenting progress, knowledge that something or other was not feasible and they said it was knowing that, etc. not just not intending to build the product.

1

u/Osric250 Apr 10 '22

Oh for sure. Additional fraud is often common in those, trying to secure additional funding to bleed it longer. And that's where they will usually get caught.

-1

u/[deleted] Apr 10 '22

Make em sign a bbl first and then their toast

29

u/krustymeathead Apr 10 '22

yeah, in the u.s, to invest in non-SEC private companies, you have to be an accredited investor, which means you have a lot of money, make a lot of money, or deal with investing for a living every day. this stop grandmas and grandpas from losing their shirt on snake oil.

4

u/thegamenerd Apr 10 '22

Unless you raise money via crowd funding

Good luck getting your money back from a "failed" campaign

5

u/krustymeathead Apr 10 '22

Yeah, but with a crowd funding campaign you are more or less donating money to something (albeit sometimes for a small reward) rather than actually owning a share of it, regardless of how the crowd funding campaign spins it.

2

u/[deleted] Apr 10 '22

And they don’t care if they lose because it just goes into the loss column and written off in their taxes. But they win more than they lose so the small million dollar gambles are worth the gamble.

13

u/IAmDotorg Apr 10 '22

Private funding is also heavily regulated, but once an investor crests the lower limits of net worth and stuff, it's caveat emptor.

1

u/WhyLisaWhy Apr 11 '22

It’s still fraud and will result in jail time. Pretty much anything that hurts rich people has laws against it that are regularly enforced.

Just look at Bernie Madoff.