Doing diligence and using it for yourself
I have witnessed this a few times where companies go and pitch investors who are really not interested in investing but looking to do diligence for their other investment. I have seen this from investors and from accelerators and incubators. Then soon after the company is turned down the company finds out that the business that they flagged to the investor or accelerator as a possible conflict goes out and starts doing things that are in their business model. In the incubator they do it themselves if the founders don’t like their terms after multiple open conversations.
This is the type of behavior that nobody talks about. It is almost as bad as the many stories I have heard of inappropriate comments to women from male investors. It is bad business and when I hear about those people I take note. I figure what goes around comes around. I have thought many times of calling those people out on the mat so that other founders can be aware of what might happen when they walk in the door but I have chosen to keep the information in my head for the times that people call me on diligence about the investor/accelerator/incubator.
Honesty is always the best policy. Certainly if an investor is looking into an arena to invest in then talking to as many companies in a space makes sense but to already make an investment and then try and look behind the curtain into another company to use for their own agenda is not ok. It is the same for incubators who then decide they know enough to do it themselves.
Certainly the companies that ended up not with those investors/accelerators or incubators probably dodged a bullet. Not sure I’d want to be in bed with those people. Bottom line is we all have to get up every morning and look at ourselves in the mirror and it never ceases to amaze me how people who do this sort of thing can just soldier on as if this is proper behavior.