Due Diligence Fail

Intermediate 🚀 Startup / VC

Definition

When a supposedly legitimate startup fails vetting and is exposed as either fraudulent or fundamentally broken, usually discovered after the wire transfer clears.

Example Usage

Theranos was the due diligence fail that made everyone realize VCs actually don't investigate companies, they just ask other VCs if it sounds cool.

Origin

Specific application of due diligence terminology to notable startup failures

Fun Fact

Theranos fooled literally everyone for over a decade despite the core technology being fake, suggesting that investor due diligence is largely theater

Source: Modern startup culture terminology

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