Silicon Valley tech founder sentenced to prison for fraud

• It's also an indirect indictment of diligence-light venture capital, as documented by the NY Times' Erin Griffith.

Driving the news: Lachwani on Friday was sentenced to 18 months in prison, after pleading guilty to two counts of wire fraud and one count of securities fraud.

• He also will be required to serve three years of supervised release after leaving prison and pay a $1 million fine. A hearing on restitution is scheduled for July 31.

Catch up quick: Lachwani was charged in 2021 with lying to investors, both to raise capital and to enrich himself.

• He inflated company financials, lied about customer contracts, and altered invoices.
• HeadSpin used this bogus info to help raise around $117 million from firms like Google Ventures, Iconiq, Dell Technologies Ventures, Battery Ventures, Felicis, and Tiger Global.
• At one point, Lachwani sold around $2.5 million of personal shares.

The bottom line: The defense argued for a lighter sentence because HeadSpin backers were later offered their money back, minus lost opportunity costs, but neither the judge nor prosecutors were in a forgiving mood.