Lachwani faked it but didn't make it
Manish Lachwani, former CEO of app testing firm HeadSpin, has been sentenced to 18 months in prison and will pay a fine of $1 million.Today's sentencing should send a message to other entrepreneurs who may be tempted to ... 'fake it until they make it'
"This defendant admitted he lied about his company’s revenue and customers to attract funding from investors, including many in Silicon Valley," said US Attorney Ismail Ramsey inFriday."Today's sentencing should send a message to other entrepreneurs who may be tempted to cross the line into fraud and to 'fake it until they make it.'"Lachwani co-founded HeadSpin in 2015 and served as its CEO until May 2020.
"Lachwani inflated HeadSpin’s ARR by falsely increasing the values of several existing customer deals of all sizes, ranging from big deals with Silicon Valley heavyweights to low dollar-value deals with smaller players, and relying on uncommitted amounts from non-binding agreements with other customers," the complaint stated."He entered the fabricated amounts into the company’s detailed ARR-tracking Spreadsheet that he alone controlled.
HeadSpin subsequently revised its valuation from $1.1 billion to $300 million, and returned 70 percent of investor funds from the firm's B and C funding rounds in an effort to address its founder's misdeeds. The biz raised more than $100 million from investors between April 2017 and April 2020.any wrongdoing – HeadSpin's remediation efforts included a senior leadership refresh, an expanded board, and the implementation of actual financial controls..
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