Jamie Johnston was looking to raise a round of investment for his startup Mattr.social when he heard of Jonathan Miller — a supposedly well-respected investor with coveted US connections and a few startup exits in the health and fitness space under his belt.
Miller — whose businesses have gone by the names of Fitness Ventures, Fitpreneur and BTRPOP — was confident he could raise $1.5m for Mattr.social, a dating app for neurodivergent individuals, from his network of investors, a service that would cost Johnston’s company $2.5k up front.
Mattr.social transferred the money to Miller’s account in June 2024. Then, a few months later — after several phone calls, emails and a long list of excuses from Miller — the investor went dark. To this day, Johnston has seen no investment for his startup, and despite several requests from Johnston, no refund either.
He is, unfortunately, not alone. Dozens of other founders say they have also paid money to Miller, and seen nothing in return.
Sifted has made multiple attempts to contact Miller for comment — via email and LinkedIn — but did not receive a reply.
Many other so-called fundraising advisors have duped countless more founders, leading to calls for more regulatory oversight of this ‘Wild West’ corner of the startup investment landscape.
“It’s the wild west, raising investment,” says one UK-based founder.
Fundraising advisors
Sometimes, if a startup is lucky, VCs will come knocking. Other times, they go out looking for capital themselves or, in some cases, companies might look to intermediaries to help them reel in cheques.
Those middle-men and women earn a fee for helping startups raise money by finding investors tailored to them. They help to broker high-stakes, high-value deals, often entirely away from the public eye.
Fundraising advisors are fairly common in the startup ecosystem, especially for early-stage startups that have never raised money before or lack strong investor networks. In Europe, there are established names like Mountside Ventures that have a track record of matchmaking founders with various sources of capital.
But in the largely unregulated area of fundraising advisory, figuring out which advisors are legitimate or not can be difficult.
In today’s tough fundraising environment with capital increasingly hard to come by, fundraising advisors are taking on a bigger role in the ecosystem. But the scarcity of capital is leading to more bad actors, founders warn — and now they’re calling for the UK’s Financial Conduct Authority (FCA) to better regulate the industry.
The case of Jonathan Miller
Johnston is not the only founder to have had a run-in with Miller, who on his website claims to, for example, have advised on the IPO of popular fitness company Peloton in 2019 and assisted with the sale of mobile sport software Endomondo to Under Armour.
Endomondo confirmed to Sifted that Miller did not help the company with its sale; Peloton said it had no “information to share regarding Jonathan Miller’s involvement with Peloton’s IPO” and declined to comment further.
UK-based entrepreneur Max Cotton paid Miller $2.5k to find investors for his fitness startup Vor, and also agreed to pay a total of $7.5k in cash and equity over three months once Miller raised a minimum of $500k for the startup.
Cotton signed a contract with Miller, which Sifted has seen, in January 2023. In it, Miller promised he would return the fee Cotton paid if he couldn’t raise a minimum of $500k for the startup within a six month period. His experience with Miller followed a similar pattern to Johnston’s: Cotton pressed Miller for updates over several months, only to receive slow, vague replies and excuses.
One of the first red flags for Cotton was when, two months after signing the contract, he asked Miller to introduce him to some of the investors in his network. Miller made introductions to several investors, but Cotton says they each responded to him saying they didn’t know who Miller was. Sifted has seen one email in which an investor expresses confusion at the introduction being made and claims he does not know Jonathan Miller.
Miller ultimately failed to find any investment for Cotton, who’s still awaiting a refund from him over two and a half years later.
Other founders Sifted spoke to have similar stories about supposed fundraising advisors.
One founder, who asked not to be named, said that, last year, they paid £50k to a fundraising advisory in exchange for introductions to investors. The advisor organised a pitching session with VCs; but none of those present invested in the startup’s sector, making the session of little value to the founder.
“The investors were just there for the free lunch,” the founder said. The startup sought a refund but was denied.
In another incident, a founder paid the same fundraising advisory £25k to introduce the company to investors. In the meantime, the company agreed to not work with or accept any money from other sources. Sifted understands the advisory didn’t make the promised investor introductions.
Calls for tighter regulation
Simon Drummond, the UK-based founder of Unaeon, a networking app to build friendships and community over shared interests, had several conversations with Jonathan Miller in April 2024 before deciding not to use his services because the contract he sent — as well as the haste with which he was asking Drummond to sign it — raised too many “red flags”.
“You don’t know who to trust. There’s no regulation there. Anyone can say, ‘oh I’ve worked with this or that company, I’m going to help you raise investment’.”
Regulation is needed, Drummond says. “It would be helpful, especially for startup founders, if there would be a regulation where you can see ‘okay this is a regulated person, I can trust this person and then if they do something wrong, there’s a clear kind of recourse — like they do with other parts of the financial industry.”
Sifted analysis of FundraisingAdvisors.app, a website advertising the services of advisors, found that, out of the advisors based in the UK, only two said on their profile that they are regulated, while nine did not, and Sifted could not find any active profiles for them in the FCA’s database.
OpenVC, which runs FundraisingAdvisors.app, told Sifted that it does not require advisors to disclose their regulatory status. “We operate a self-declared model, where each advisor is responsible for describing their own background, services, and compliance posture,” a spokesperson said, adding that the platform works across geographies where regulation varies.
The UK’s FCA, responsible for regulating financial activities, said it could not comment on whether individuals require regulation.
Under the FCA’s rules, firms ‘arranging’ investments require authorisation when they work with businesses in the UK.
“’Arranging’ is broadly defined by UK regulation and can include any arrangement whose purpose or intention is to facilitate investment activity,” explains Chris Ratcliffe, lawyer at Osborne Clarke. “This is likely to capture fundraising advisors who get paid to find investors for their clients unless an exclusion applies.”
Founders take it into their own hands
In the meantime, founders are taking things into their own hands. Regarding the case of Miller, Drummond has set up a LinkedIn group of 26 founders — and counting — from across the world who met with Miller, though only some paid his fees. They’re banding together to take action against Miller: seeking legal support, trying to get his LinkedIn account taken down, and trying to raise awareness via social media to prevent others from falling into the same trap.
Drummond has posted several times on his LinkedIn, including posting a video where he has a video conversation with a man named Brian Pedone, the US-based founder of GoodEngine.AI, who also had a run-in with Miller.
“I’d say between 25 and 30 people have reached out to me just over the past 13 months, some of them saying ‘thank you for posting about it, we were about to give him money, and thankfully, we didn’t.’ Unfortunately several others paid money,” Drummond told Sifted in May this year.
Drummond reported Miller to Action Fraud in the UK and to the Federal Trade Commission in the US in May 2024, but has received no response so far from either organisation. In emails seen by Sifted, Drummond has also appealed several times to LinkedIn to take down Miller’s account, citing other users who have similarly been “scammed” by Miller.
“I found it impossible for any law enforcement agency or LinkedIn to listen to me or the other founders despite our overwhelming evidence,” says Drummond. “No one cares.”
LinkedIn did not comment on the specifics of the case, but did say that: “Using both smart technology and real people we actively look for signs of fraudulent behaviour on our platform, and we’ll take action in line with our policies. We offer free verification features to help members know they’re interacting with real people and companies, as well as an optional safety feature that can identify potentially harmful content, like fraud. If members encounter anything suspicious, we encourage them to report it.”
Johnston — who is part of the LinkedIn group of 26 founders — says some of the members have presented evidence to LinkedIn on multiple occasions in an effort to get the platform to take down Miller’s account, but so far no action has been taken. He has also tried on several occasions to get in touch with Miller’s bank to remove the account the founders transferred money to — but has been unsuccessful so far.
“What we paid is not a ginormous sum of money, but it’s more the principle that founders are very stressed and every penny they raise pre-revenue means the world to them,” says Johnston.
“Right now, there’s 26 founders in one group. Can you imagine how many there are in the world that don’t know about this group?”
Read the orginal article: https://sifted.eu/articles/fundraising-advisors-fca/
