Was This Startup Astrotwig Just Scammed by an Investor?

The Nigerian-based social streaming platform, Astrotwig, has reportedly been scammed out of $20,000 by an individual posing as an angel investor. This incident has cast a shadow over the fledgling startup, which sought to blend music streaming with social networking, creating a unique space for music lovers.

Astrotwig’s journey into the quagmire began when it engaged with Mr. Simon Tiwari, who expressed an interest in investing a convertible loan of $1 million into the startup’s pre-seed round. The founders, buoyed by the prospect of securing substantial funding, embarked on what they believed was a due diligence process, culminating in an agreement to transfer the investment via Bitcoin, citing Nigeria’s fluctuating foreign exchange rates as a rationale for this method.

The scam unfolded when Tiwari requested a $20,000 test transaction in Bitcoin, purportedly as collateral to facilitate the transfer of the $1 million loan. The Astrotwig team, eager to secure the investment, complied, resulting in a significant loss. The realization that they had been scammed came too late, leaving the startup in a precarious financial position.

The Aftermath and Astrotwig’s Response

Following the scam, Samuel Adeleke, the CEO at the time, stepped down, taking responsibility for the oversight. Astrotwig has since launched a crowdfunding campaign in an attempt to recoup some of the lost funds, raising about ₦345,000 ($227) to date. The company has also filed an official police report in hopes of bringing the perpetrator to justice.

Astrotwig, which had over a thousand users registered on its waitlist and had launched a Beta version of its app in July 2023, now faces the daunting task of rebuilding its reputation and securing the necessary funding to continue its operations. This incident serves as a cautionary tale for startups about the risks of engaging with potential investors without thorough vetting.

A Cautionary Tale for Startups

The Astrotwig got scammed in such an unexpected way that it underscores the vulnerability of startups to fraudulent schemes, especially in the early stages of seeking investment. It highlights the importance of conducting comprehensive due diligence and the need for startups to be cautious and skeptical when engaging with potential investors. As Astrotwig works to overcome this setback, the startup community must take heed and learn from this unfortunate event, ensuring that enthusiasm for growth and success does not overshadow the critical need for vigilance and security in investment dealings.