Beam’s investors aren’t beaming

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Hello reader,

Transparency is important in all kinds of relationships. Honesty between loved ones matters for obvious reasons.

This also applies to business. Consumers want to know exactly what they’re paying for, while for investors, being informed about the risks of any deal is a must before putting money in.

But of course, things are a bit trickier in practice. An entity’s proactivity is another’s imprudence, and it can lead to situations like the one detailed in today’s premium article, in which e-scooter-sharing service provider Beam is accused of fraud in Australia and New Zealand.

This threatens to also affect Beam’s backers, which include 500 Global, Momentum Ventures, and Peak XV Partners. They may now need to prove that they did their due diligence and performed their duties properly with regards to Beam, lest they suffer reputational damage.

Today we look at:

• The fraud allegations surrounding Beam and how they could affect the firm’s investors
• Sakana AI’s US$214 million series A funding round
• Other newsy highlights such as the US$2.25 million seed funding of an Indian startup that combats pharma counterfeiting and Animoca’s possible listing in Hong Kong

Premium summary

The far-reaching effects of (alleged) fraud

Image credit: Timmy Loen

Morality aside, I think fraud, or crime in general, is hard to get away with because it adversely affects more people than you think. Beam’s alleged misadventures hurt not only its clients but also, potentially, consumers and investors.

The more individuals you annoy, the more heat there’ll be, and the less likely the indiscretion will be swept under the rug. It’s just not worth it, in my opinion.

• More than meets the eye: Beam’s contracts with town councils in Australia and New Zealand came with a cap on the number of e-scooters they could deploy. Leaked whistleblower documents, however, allege that the company was circumventing a third-party tracking platform to count the number of units operating in some districts.
• Why? Market watchers say this could have been a quick way to increase supply and boost revenue. For its part, Beam explained in a statement that its “intention was to ensure there [was] an adequate number of usable vehicles available to the public within the limits of the agreed terms with councils.”
• Trouble for investors: These allegations present Beam’s investors with potential reputational risks and issues regarding the discharge of their fiduciary duties.

Read more: Investors dragged as Beam hit with fraud allegations

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