Several years ago, I was chatting with a friend who'd become an investor about an idea I had for a startup. "That sounds like a solid lifestyle startup," they replied, "but most investors I know are only looking for billion-dollar companies." The fundamentals of venture capital explain why investors are on a perpetual unicorn hunt, but "even markets with a seemingly dominant player can support multiple winners," writes Rebecca Szkutak.
IRL told the world it had 20 million monthly active users, but an internal investigation later revealed that 95% of them were fake. According to SoftBank, those "impressive user numbers" encouraged them to invest, hence the fraud lawsuit. Because "younger startups are now increasingly getting caught in the act" when it comes to misleading investors, Rebecca Szkutak asked several VCs about the red flags they look for while assessing a pitch and performing due diligence.