Bad apple in EdTech startup exposed as feds crack down

Young startups are facing increased scrutiny in the wake of recent headline grabbing busts like Theranos and FTX. Often veiled behind a good cause, bad actors are pulling at the heart strings and purse strings of investors for their own personal gain. The latest fraudster , AllHere Education founder, 33 year old Joanna Smith-Griffin, allegedly inflated her AI EdTech venture’s valuation and list of backers to attract additional investors.

Like Theranos and other seemingly well intended start ups who claimed to use modern technology to solve a long standing problem, AllHere sought to streamline parent teacher communications and updates in real time, bolstering classroom attendance and engagement in K-12 school systems. The Boston startup appeared to offer a much needed modern update to the antiquated parent teacher conference approach, offering always-on connectivity. An early adopter of AI, AllHere was founded in 2016, before educators' need for increased communication and accountability skyrocketed overnight as COVID’s distance learning swept the nation. 

According to prosecutors Smith-Griffin amplified its allure by claiming AllHere’s current clientele included top school districts such as the New York City Department of Education and Atlanta Public Schools and was backed by investors like Potencia Ventures, Boston Impact Initiative and Spero Ventures. By reporting that AllHere had brought in approximately $3.7 million in revenue in 2020 and had around $2.5 million in liquid assets, she was able to scam investors out of roughly $10 million. In reality, AllHere had scraped by with $11,000 profits, had only $494,000 in cash and the millions collected from investors allegedly lined Smith-Griffin’s personal pockets, funding the purchase of her North Carolina home as well as her wedding.  

On Tuesday, November 19th, the indictment was unsealed in Manhattan publicly revealing the charges Smith-Griffin faces, including aggravated identity theft, securities fraud and wire fraud. She was arrested the same day and faces a possible 40 year prison sentence with securities and wire fraud carrying a maximum of 20 years each. 

As the federal government steps up its investigations against fraudulent startups, exposing more and more nefarious ventures, potential investors should follow suit, avoiding any potential implications in criminal activities and loss of funds by employing upgraded due diligence practices in the pre-investment stage. What appears to be a solid investment in an up and coming technology that serves the greater good of our often neglected government systems, could turn out to be a bad apple, compromising your venture capital, misappropriating your hard won funds, and potentially incriminating your firm in illegal and fraudulent activity.  Partner with Intelligo and supercharge your pre-investment practices to keep up with even the most sophisticated scams at the speed of technology. By combining AI technology with human analysts, we offer modern capabilities to satisfy the most complex regulations on both a national and global level, providing a customizable approach that scales to your unique searches’ needs. Intelligo will help you make sure you’re only dealing with upstanding partners, saving you a costly and potentially criminal trip to the proverbial principal’s office. Schedule a free demo today and say hello to the future of due diligence.