The harsh fundraising climate in Latin America is creating a perfect storm. Founders are under pressure. Venture cycles are slower. There’s more noise, less signal. And where there’s uncertainty, bad actors thrive.
Here’s a quick breakdown of the newer — and increasingly creative — scams founders need to watch for.
Fake Accelerators with “Pay-to-Pitch” Hooks
The promise is tempting: “You’ve been selected to pitch in front of top-tier VCs at our exclusive demo day.”
But before you get there, there’s always a catch — a “small application fee,” a “presentation coaching fee,” or worse, a required “sponsorship” payment to secure your spot.
These operations often have slick branding and recognizable VC logos (often used without permission) on their landing pages. Some even fabricate testimonials from founders who supposedly raised money at previous events.
What to watch for:
- High-pressure timelines to pay or commit
- A lack of transparency around which investors are actually attending
- No meaningful due diligence on your startup before the “invite”
“Convertible Debt” Offers with Built-In Traps
Not all convertible notes are created equal. We’ve seen a rise in what we call “Predatory Convertible Notes.” These are investment offers that look legit — often backed by real contracts and lawyers — but include toxic terms that can cripple your startup later on.
Common red flags:
- Super low valuation caps, combined with high discounts
- Mandatory “liquidity event” timelines
- Triggers that allow the note to convert at unfavorable terms or demand repayment early
These terms often come from so-called family offices or international angel groups that are hard to diligence.
Fake VC Associates Fishing for Dat
In this version, a supposed VC associate reaches out saying they’re doing “preliminary diligence” on behalf of a partner. They ask for your pitch deck, cap table, even financials, projections, and customer lists — claiming it’s a precondition to a real meeting.
Once you send the info? Silence.
We suspect some of these fake profiles are harvesting data for other purposes — whether to resell lists or benchmark your idea for competitive reasons.
How to stay safe:
- Always check the associate’s LinkedIn and firm’s site
- Confirm they’re listed on the team page
- Ask for a quick call before sending sensitive docs
“Grant” and “Prize” Scams with Legalese
This one’s especially insidious. Founders are told they’ve been awarded a non-dilutive grant or prize. Sounds great, until you read the fine print: you need to wire a “processing fee” or pay local taxes upfront to release the funds.
To make things worse, these scammers often send official-looking “letters of award” complete with seals, legal jargon, and even fake lawyer names to co-sign.
Remember:
Real grants don’t charge winners. They deduct fees from disbursements, if at all. And they always allow for tax compliance post-funding.
“Strategic Investors” That Push for IP Access Early
A new twist we’ve seen: corporates or “strategic partners” offer to invest or license your product, but push aggressively to review your code base, algorithms, or confidential tech before anything’s signed.
In some cases, the startup gets ghosted after handing over sensitive data. In others, they discover a similar product launched months later.
So What Can Founders Do?
In this climate, staying skeptical isn’t paranoia — it’s strategy.
The golden rule still applies: If someone wants you to wire money before they wire money, it’s probably a scam.
But even beyond that, founders need to:
- Diligence every potential investor, no matter how shiny the website
- Lean on trusted advisors, lawyers, and accelerators
- Document every step of a deal process
- Avoid rushing — especially if you’re pressured not to bring in your legal team
At PAG Law, we built Grow to help founders avoid exactly these types of traps. Grow gives startups access to vetted investor databases, secure deal tools, and US venture legal support — all designed with Latin founders in mind.
Platforms don’t close rounds. But they can help founders spot the real players — and steer clear of the frauds.
The Bottom Line
Scammers are getting smarter. But so are founders. If something feels off, it probably is. Slow down. Ask questions. Trust your gut.
And when in doubt, don’t go it alone. Reach out to people who’ve been in the trenches. You’d be surprised how often one WhatsApp message can save your startup from a very expensive mistake.