🔥 Dash Investors Burned

Key lessons from the Dash Fraud, how founder personalities shape innovation, and supply chain funding woes                                                                                                                                                                                                                                                                                                                                                                                                                 November 02, 2023 | [Read Online]( [fb]( [tw]( [in]( [email](mailto:?subject=Post%20from%20Failory&body=%F0%9F%94%A5%20Dash%20Investors%20Burned%3A%20Key%20lessons%20from%20the%20Dash%20Fraud%2C%20how%20founder%20personalities%20shape%20innovation%2C%20and%20supply%20chain%20funding%20woes%0A%0Ahttps%3A%2F%2Fnewsletter.failory.com%2Fp%2Fdash-investors-burned) Together With Hey — It's Nico. 90% of startups fail. Learn what they're doing wrong with Failory. Here's what I got today: - 💸 Story: Dash Fraud Is Bad For African Startups - 🔗 Weekly Picks - ⚰️ Failed Startup: Chinese EV Startup Explodes - 💡 Insight: The Six Startup Founders' Personalities - 🚀 Framework: Exponential Leverage - 📉 Declining Trend: Supply Chain Funding Woes This issue is brought to you by [Masterworks](, the fine-art investing platform. 💸 Story: Dash Fraud Is Bad For African Startups Dash, the Ghanaian fintech startup, has closed due to fraud. Dash claimed to have 200,000 users and process over $250M in transaction volume during its [seed round](, but internal investigations later revealed that the numbers were inflated and at least $25M was missing from the company’s account. Not only did Dash’s closure result in financial losses for its investors, but it also led to a loss of trust in the African tech ecosystem. Some takeaways from this failure: - It’s important to do deep due diligence, both qualitative and quantitative, in the early stages of startups. - Strong financial operations and governance structures are necessary in order to prevent fraud and mismanagement. - Local African VCs have to play a vital role in performing due diligence, leveraging their knowledge of the local market and ability to thoroughly examine business operations. Despite the challenges, African tech still garners significant investment interest, with a growing focus on profitability and financial sustainability. [Link to Article →​](​ It's not uncommon for founders to have all of their net worth tied up in their company. Alternative assets are one way to diversify, here’s a message from Masterworks… Billionaires wanted it, but 54,578 everyday investors got it first… and profited When incredibly valuable assets come up for sale, it's typically the wealthiest that end up taking home an amazing investment. But not always… [One platform]( is taking on the billionaires at their own game, fractionalizing prized blue-chip artworks for its investors. In just the last few years, its investors have realized annualized net returns of 17.8%, 21.5%, 35% and more. It's called Masterworks. When Masterworks sells a painting – like the 16 it's already sold – investors reap their portion of the profits. Offerings can sell out in minutes, but [Failory readers can skip the waitlist to join.]( 🔗 Weekly Picks Lessons from a failed B2B startup ([Link](). Performance vs Brand marketing for your startup ([Link](). How did Loom get acquired? ([Link](). State of Health Tech 2023 ([Link](). WeWork will file for bankruptcy next week ([Link](). AI startups are at the mercy of Big Tech ([Link]().  ⚰️ Failed Startup: Chinese EV Startup Explodes Do you want access to our weekly failed startup analysis? Refer Failory to one friend to unlock it. Here’s your referral link:  ⚰️ Failed Startup: Chinese EV Startup Explodes Chinese electric vehicle (EV) startup WM Motor has filed for bankruptcy reorganization, showcasing the challenges faced by EV startups in China. WM Motor faced difficulties in China's competitive EV market despite receiving funding from Baidu and Tencent. WM Motor’s losses amounted to [$1.13B in the three-year period leading up to 2021](. The company had planned to go public with a [Hong Kong IPO](, as well as a backdoor listing via a reverse takeover with Apollo Future Mobility, but neither of these events occurred. The company blamed economic conditions, pandemic challenges, capital difficulties, and fluctuating raw material prices for its downfall. That’s only partially true. These are the four main reasons why they failed: - They relied heavily on investments, having fundraised over 41B Yuan, and lacked a sustainable business model. - They had a lot of competition in the Chinese EV market (Aito, BYD, and Tesla). They had trouble finding its market position. - The company had over 20 instances where it was deemed a “judgment debtor”, owing over 100M Yuan. The freezing of the company's assets and holdings in other companies added to its liquidity problems. - A decreased interest from Chinese consumers led to a decline in its sales. Running a business in China's highly regulated yet competitive economy requires a solid product, efficient operations, and proper support, all of which WM Motor clearly lacked. [Link to Article →​](​ ✉️ Recommended Newsletter: Sponsored Houck's Newsletter Join 83,000+ founders getting tactical advice to build, grow, and raise capital for their startup from an a16z-backed founder [Subscribe]( 💡 Insight: The Six Startup Founders' Personalities A Nature study analyzed data from over 21,000 startups to determine the impact of founders’ personalities on startup success. The research identified six distinct founder personality types collectively known as FOALED. Each type represents a unique combination of personality traits. The FOALED model: - Fighters: Spontaneous, tough, and uncompromising entrepreneurs who approach challenges head-on and are not afraid to push the boundaries. - Operators: Conscientious and agreeable leaders who ensure the smooth operation of their startups. - Accomplishers: Organized, confident, and mild-tempered founders who excel in managing and achieving their startup goals. - Leaders: Adventurous, self-controlled, and assertive founders who thrive on taking risks. - Experts/Engineers: Imaginative and intellectually curious people contributing their technical expertise to shape the startup's path to success. - Developers: Founders who bring innovation to startups with a blend of technical skills and creativity. The study also highlights the importance of personality diversity within founding teams. According to the findings, startups with a mix of founders with varying personality types tend to be more likely to succeed. [Link to Article →](​​​ 🚀 Framework: Exponential Leverage The concept of superlinear returns is an important but often misunderstood phenomenon. While we are often told that “you get out what you put in,” the returns for performance are rarely linear. Superlinear returns can happen in different areas of life, like business, fame, power, military victories, knowledge, and benefiting humanity. This means that the rich tend to get richer. There are two major causes of superlinear returns: - Exponential growth: Something grows at an exponential rate, such as bacterial cultures or startups. - Thresholds: Occur in situations where there is a distinct cutoff point, such as proving a theorem or hitting a target. The steeper the return curve, the more inequality there is with superlinear returns. [Link to Article →](​​ 📰 Classifieds 💡 Struggling to validate your startup idea? [I've created a course]( on how to use pre-sales to validate it. 📈 Struggling to achieve PMF? I've [written an eBook]( about the exact strategies used by Slack, Intercom, and Airbnb to achieve it. 💰 Struggling to raise funding? I've curated lists of [2,100 accelerators and incubators]( and [1,000 VC firms](. 📉 Declining Trend: Supply Chain Funding Woes Investors have significantly reduced their investments in the supply chain management sector, with funding for supply chain startups declining in 2023. According to Crunchbase data, US funding for supply chain startups in 2023 barely surpassed $1 billion, compared to the previous year's total of over $5 billion. The global freight industry is currently experiencing broad pricing declines, with container freight rates and US trucking volumes and revenue decreasing in recent quarters. Some supply chain startups have already faced major struggles, such as Convoy, which recently announced it is shutting down operations due to a "massive freight recession." Other companies, including Flexport, Uber Freight, and Deliverr, have also experienced layoffs or financial challenges. While some sizable supply chain-related deals are still happening, they are not on the same scale as those seen in 2021 and 2022. Investors are becoming more cautious about sinking large amounts of money into supply chain startups, and the funding environment for these companies looks set to remain constrained in the near future. [Link to Article →​]( 👂 How Was Today's Newsletter? - [🔥 Great]( - [😒 Meh]( - [👎 Not Interesting]( 📊 Looking to get in front of +40k startup founders? [Sponsor this newsletter](.​ That's all of this week. Cheers, Nico Thanks to [Masterworks](for sponsoring this issue. Investing involves risk and past performance is not indicative of future returns. 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