- Company — HeadSpin, Inc.
- Sector — Developer tools / mobile testing
- Founded / Died — 2015 / company survives; founder-CEO removed 2020, convicted 2023
- Lifespan — Ongoing
- Capital raised — ~$117M (Iconiq Capital, Tiger Global, Dell Technologies Capital); peak valuation $1.16B (2020)
- Peak scale — Actual ARR at the time of the fraud was roughly $10–15M; investors were told approximately $50–100M.
- What it built — A platform for testing mobile applications on real devices across global networks. The product was and is real and useful — an important distinction from the other entries in this section.
- Stated cause of death — The company did not die. Founder Manish Lachwani resigned in May 2020 after an internal investigation; the board recapitalised and reduced the valuation by roughly two-thirds.
- Evidenced cause — Securities and wire fraud, adjudicated. Lachwani inflated revenue by recording unclosed and fabricated contracts and altering invoices; he pleaded guilty and was sentenced in April 2024 to 18 months in prison, with restitution.
- Warning signs visible earlier — The internal review that caught it was triggered by employee concern, not by investor diligence. Revenue recognition at a company with few large enterprise contracts is straightforward to audit and was not audited.
- Money outcome — Investors were partially made whole through a recapitalisation at a much lower valuation. The company continued operating and employees largely kept their jobs — an unusual and instructive outcome.
- Post-mortem quality — None from participants, but the DOJ and SEC filings describe in unusual detail how revenue fraud is executed at a mid-stage startup.
- Transferable lesson — A real product does not prevent founder fraud, and a fraud does not necessarily kill a real product.
- Sources — DOJ sentencing release · SEC litigation release · CFO Dive
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