The Forbes 30 Under 30 has featured a number of high-profile fraudsters in recent years.
From FTX – Sam Bankman-Fried, Theranos – Elizabeth Holmes, to Charlie Javice, who snatched $175M from JP Morgan.
It seems scamming investors has become easier thanks to internet hype paired with cheap-accessible money from the past decade.
It’s also easy for the public to crack jokes about big institutional investors for their lack of foresight, as seen with SoftBank’s multi-billion-dollar losing streak from WeWork, FTX, to most recently, IRL.
However, we have to remember that someone, somewhere out there, will have to bear the burden of these sunk costs.
Because investor funds don’t just come out of their butts.
If you follow the trail, you’ll find that their money ultimately comes from pension funds, government budgets, and huge company deposits.
That’s why all of us will be hit by these losses through higher transaction fees, borrowing costs, and other unforeseen macroeconomic mumbo-jumbos.
To avoid these losses, we really have to enhance our existing due diligence processes.
Especially in the current high-interest rate market, where funds are relatively more expensive, we really can’t afford to lose more money in fraudulent companies.
I’ve done some corporate credit risk analysis before, and I believe there’s still a huge room for improvement in the existing tools and systems.
And maybe with better tools, funds will be directed to better projects that are truly sustainable, profitable, and innovative.
