In 2025 and 2026, three notable cases emerged where founders raised significant seed funding, only to pocket the money without making any attempt to build their products. These deals, structured through SAFEs (Simple Agreements for Future Equity), involved $2M to $5M each. In all instances, founders asserted they had no obligations to the investors, claiming the SAFE holders lacked true investor status. The alarming trend highlights a breakdown in due diligence, as many investors skipped reference checks, assuming others had done the necessary vetting. The first case involved a $5M seed round where no reference checks were completed on all founders. In another $4M round, only one founder was vetted—who ended up being trustworthy—while the problematic founder went unchecked. The third case had no lead investor and no reference checks at all, culminating in founders misappropriating funds under vague justifications like "market research." This behavior isn't rooted in fraud but in a calculated risk-benefit analysis, where founders opted for personal gain over building a viable product. The acceleration of AI-driven deals has created an environment ripe for opportunism. With capital flowing freely and pressure to invest quickly, many investors overlook thorough diligence. They often convince themselves that smaller checks don’t require extensive background checks or that others will handle it. As a result, founders can manipulate the system, using vague expenses to justify keeping millions while contributing little to product development. The underlying issue isn't just the SAFEs themselves but the lack of understanding of their legal implications by many investors, who mistakenly believe they have more rights than they actually do.