It should go without saying: don’t lie when raising capital. And yet in the last few months I’ve been party to a handful of incidents that suggest otherwise. Without naming names, I’ve seen three lies:

1. Lying at Demo Day. I know Demo Days for accelerators are meant to be big shows and you’ve gotta find a way to stand out against everyone else that’s pitching. (Although I think the Demo Day model itself has to change, which is a topic for another discussion.) But you can’t lie about customers you have, partners you’ve closed or use logos in your deck unless they’re legit. Vanity metrics tend to rule at Demo Days (unfortunately), and you’re pressured to show any type of traction you can, but if you get into specifics (around specific customers, etc.) it better be real.
2. Lying about advisors. Don’t tell people someone is advising you officially after going out for coffee with them. That’s not cool. Someone is an official advisor only after they’ve agreed to it. That doesn’t mean you’re compensating them, but the relationship better be explicitly defined and agreed to.
3. Lying about committed investors. Don’t try and game social proof by name-dropping investors that have committed to your financing round if they haven’t actually committed. Someone expressing interest or talking to you a couple times about investing hasn’t committed; again, it has to be explicit and clear.

These are all similar lies, and they’re going to get you into a shitload of trouble. People talk. Investors talk to each other all the time. Reputation matters, and it can disintegrate in an instant. The world is small and networks (of investors, advisors, entrepreneurs, etc.) are vast. It’s so easy to see a logo on a pitch deck and find someone at the company to talk to. The minute you find out they’re not really a customer but only tested the software (and didn’t buy), it’s over. If you tell me that so-and-so is committed, it’s not hard for me to reach out to that person and find out (even if I don’t know the person directly.)

I get it. Raising money is about selling something bigger than what you have now. There has to be a big vision (and a great team, unfair advantage, traction, etc.) You’ve gotta get up in front of people, over and over and over again, pitch them on what you believe to be true (even if it’s super early stage and nowhere near realized), and get rejected constantly. That’s hard to do. It’s humbling. But lying isn’t the answer.