---
title: "Never Lie — Especially When Raising Money"
section: "Fundraising"
sectionId: "fundraising"
date: "2026-05"
---

This should not need to be said. But it does, because the consequences are severe enough to warrant being explicit.

## Why this matters more during fundraising

When you raise money from investors, you are selling securities. That means you are operating under securities law. Misrepresenting facts to investors — whether by stating something false or by knowingly omitting material information — is **securities fraud**.

This is not a civil matter or a reputational risk. It is a federal crime.

## What counts as lying

The obvious case is stating something you know to be false: fabricating revenue numbers, inflating user counts, inventing customer relationships.

The less obvious case — and the one founders sometimes rationalise — is **selective omission**: technically saying nothing false while withholding information that would change an investor's decision. This is still lying. Courts and regulators treat it as such.

Manufactured urgency ("we have a term sheet" when you don't) falls into the same category.

## The practical rule

Be 100% truthful at all times during the fundraising process. If a number is uncertain, say so. If a metric looks bad, address it directly — investors respect honesty about challenges far more than they respect spin.

A founder caught lying loses the deal, often the relationship, and sometimes far more. A founder who owns their weaknesses clearly and explains how they're working on them is far more credible than one who only ever has good news.

Never, ever, ever lie.