I recently talked to a business owner who was in the process of raising capital. To this end, she paid a $20,000 upfront fee to a finder (a person who brokers equity investments and loans).

The result? Nothing. The finder said that a variety of banks were not interested in the deal.

Oh, and that $20,000 fee? Unfortunately, that was non-refundable.

With the credit crunch -- and slowing economy -- entrepreneurs are certainly having trouble raising money. But, there also appears to be a rise in so-called "advance fee schemes" (this is according to a recent piece in the Wall Street Journal, which is a paid publication).

In fact, the FBI is investigating the matter (and also has some helpful resources on its website). Although it could actually be pretty tough to prove fraud. Essentially, there must be evidence that the finder had no intention of raising the capital.

This another of my reports from the inside of an internet start-up. It is very interesting to be involved with something so new and so eventful. Every day it seems some new intrigue pops up. The founders, Howard and Brent, have been excellent to work with. Between them and the key advisory board members, we already have the nucleus of a successful team. Those investors who focus on management as the highest priority have been very pleased.

Yesterday (5/24/07) we had another investor meeting with a small group of people to present the latest progress on CB Stealth, my angel investment. The company has made some major strides in the software platform and raised additional capital since my last report about three weeks ago CB Stealth - our start-up gaining traction. We had hoped to have the Beta site up by now but we have added a few more bells and whistles and we are changing our servers (hardware issues) so it has been delayed until mid-June, or so I have been told.

Interest in CB Stealth from old media companies seems to be accumulating and it seems that, two in particular are anxious to meet with us even before the Beta version goes up. This is all new to me because I have not been involved with any Internet ventures as a principal. If we take on any large investors our valuation will go up and our control over the company will likely go down. One of the key decisions is going to be whether we wait for a higher valuation in six months after we are up and running or we take the cash now which would allow us to ramp up faster.