I had never heard of the company before but really interesting how there was no due diligence by the financiers/VCs before they wired in the money. Is this generally the norm?<p>Also surprising that a company that became a unicorn at its last financing round didn't have a CFO and that the CEO <i>'maintained control over operations, sales, and record-keeping, including invoicing, and he was the final decision maker on what revenue was booked and included in the company’s financial records.'</i><p>Googled the person, apparently he co-founded a company previously that was acquired by Google and he claims to have previously served as the CTO of Zynga and holds 60 technology patents - so perhaps the stellar credentials were a check in the column against auditing financials.<p>Other tidbits:<p><pre><code> - Founded in 2015:
- Series A: $11 mil (at inception)
- Convertible Notes: $24.7 mil (Apr '17 to May '18)
- Series B: $20 mil (Sep/Oct 2018) | valuation: ~$500 mil
- Series C: $60 mil (Nov '19 to Jan '20) | valuation: ~$1.1 bil
</code></pre>
While raising Series C round, overstated ARR by about $51 to $55 million in investor presentations. And after audit (in May 2020), valuation dropped to about $300 million.
Tech people generally love to under invest in accounting and legal services early in a start up, but cases like this show why investors should consider audits to be valuable even in early stage.
Naïve question: Aren't yearly audits the norm? In Sweden, you need audited reports as soon as you have 3 employees. And no, not to protect investors, but to protect the state's pocket. But as a nice side-effect, investors can trust the books too.
It amazes me how many people willingly defraud investors in the hopes that when the fbi knocks on their door they will find they were acting in good faith. You must wonder if these people believe in their own lies, but it’s so easily proved in District Court: did your business need your down payment on your house and a new Tesla? White collar criminals are by far the dumbest people on earth.