VC-backed startups commit more fraud, and researchers think they know why

A new report from Imperial College London and France’s Emlyon Business School maps how VC-backed founders commit securities fraud and how investors can contribute to the incentives. Published online in June, the study builds a database of tech founders and companies hit by SEC and DOJ civil and criminal prosecutions between 2000 and 2023. It cites recent convictions including Frank’s Charlie Javice, Kalder’s Gökçe Güven, Terraform Labs’ Do Kwon, and GameOn’s Alexander and Valerie Lau Beckman. Researchers also point to a University of Toronto review of 654 U.S. cases from 2000-2023, finding venture-backed firms are more likely to face charges. The report describes “façading” in stages: surface, reinforced, and deep.