NEVER SHARE WIRING INSTRUCTIONS VIA EMAIL!
I almost forgot to write this one but this is probably the most important lesson! One of our early clients lost $200,000 in his first syndication to wire fraud.
Yes, you read that right - 200k on his first deal.
Another syndicator lost 50k to the same hack.
Here's the thing - emails can be spoofed. And bad actors get better at it day after day.
You've probably seen emails coming from Microsoft or Apple (I see them from "Apple" a lot) and they look exactly like the real thing. The only way I can tell myself sometimes is by checking the domain of the from address...
That's exactly what happened to one of our clients. Someone sent his investor an email with wiring instructions to fund his investment. The money ended up halfway around the world and it never came back.
If you're going to include wiring instructions, here are two ways to do so more securely.
- Include the instructions directly in the subscription agreement.
- To be honest, a lot of investors will miss this and you'll have to remind them after signing "It's on page 94 of the subscription agreement", but that's a lot better than losing $50k+.
- Provide wiring instructions over the phone.
When we were building Investor Deal Room we wanted to help prevent this problem altogether.
That's why as soon as an investor completes his subscription agreements inside the secure portal he is immediately given access the wiring instructions. This also had the added benefit of reducing investor questions during the capital raise and making the investor feel like everything was in order.