No Oversight: Inside a Boom-Time Start-Up Fraud and Its Unraveling – The New York Times

The absence of controls at HeadSpin is part of an increasingly noticeable pattern at Silicon Valley start-ups that have run into trouble. Over the past decade, investors in tech start-ups were so eager to back hot companies that many often overlooked reckless behavior and gave up key controls like board seats, all in the service of fast growth and disruption. Then when founders took the ethos of “fake it till you make it” too far, their investors were often unaware or helpless.

FTX, the cryptocurrency exchange that collapsed last year, had a three-person board with barely any influence over the company, tracked its finances on QuickBooks and used a small, little-known accounting firm. Theranos, the failed blood-testing company, had no financial audits for six years. The founders of those companies have been convicted of fraud.

Source: No Oversight: Inside a Boom-Time Start-Up Fraud and Its Unraveling – The New York Times