Raising capital for a startup is never easy. So I was very excited to find a company that was interested in investing in Meeting Wave, my location-based mobile app that helps people arrange targeted business networking meetings.
I started talking to a seed investment firm in New York that was very bullish on my concept. They proposed that if I invested $6,500, they would take on the lion's share of the funding -- around $23,000 plus any overruns. They also agreed to have a partner company handle all of the software development.
After months of delays, I was told by the seed company that the developers were behind schedule and wouldn't be able to complete the project. The truth was that the company had paid about $1,000 of my money to the developers and pocketed the rest, without ever investing anything themselves.
In the end, I had to arbitrate against both the seed company and their partner company. I was awarded damages that included the amount of my initial investment and the cost of arbitration. I definitely paid a high price, though. I spent a lot of time getting my money back and I am not as trusting.
Luckily, I had a strong legal agreement in place that clearly outlined the expectations of each party, or I may not have been so successful.
Diann Cattani's embezzlement of a small business started off as an innocent mistake and then quickly got out of control.
