Another "fake it 'til you make it" founder has wound up in handcuffs, after raising millions of dollars from venture capitalists.

Why it matters: This is a reminder of how easy it is for young startups to defraud their investors, who rely almost exclusively on management for financial data.

Driving the news: Joanna Smith-Griffin, founder of an ed-tech app for reducing student absenteeism, was arrested earlier this month and charged with securities fraud, wire fraud, and aggravated identity theft.

• Smith-Griffin, a onetime member of the Forbes "30 Under 30," faces decades in prison.

Zoom in: Her startup was called AllHere, and raised around $4 million in seed funding led by ReThink Education. In 2021 it raised an $8 million Series A round led by Spero Ventures. Both Rethink and Spero received board seats.

• According to the Justice Department complaint, however, Smith-Griffin lied to investors about nearly everything — including revenue, customer contracts, and cash-on-hand. And she profited, selling around $750,000 of shares into the Series A.
• Many of these alleged falsehoods were made during Spero's due diligence for the Series A, and continued long after the money was raised. AllHere also allegedly lied when trying to raise $35 million in Series B funding, although that (unnamed) firm seemed to realize something was off and didn't invest.
• The company also requested, and received, $250,000 in bridge financing from its VC backers in the aftermath of Silicon Valley Bank's collapse, in order to meet payroll that was actually around $200,000 lower.
• Finally, Smith-Griffin is accused of embezzling around $600,000 from the company for her personal use, usually via small wire transfers via PayPal or Zelle.

Behind the scenes: Smith-Griffin got caught when an outside accountant sent financial data directly to one of the company's investors from ReThink Education, rather than funneling it through Smith-Griffin.

• She allegedly tried to stem the damage by creating a fake email address and fake documentation, posing as an an outside financial consultant, but by then the jig was up and AllHere was heading toward insolvency and closure.
• It's not the first time a founder tried to pull the wool over investors' eyes by masquerading as an accountant, and likely isn't the last.
• AllHere's former director from Spero Ventures declined to comment, while one from Rethink (who's since left the firm) also declined. Another from Rethink (still there) didn't respond.

The bottom line: Trust without verification is the norm at early-stage startups, but the time saved — and maybe even the deal won — isn't worth the pain and embarrassment if it all goes awry.

Roon, a video Q&A platform for health care, raised $15 million in Series A funding co-led by Forerunner and FirstMark Capital.

Why it's the BFD: Many of us have used WebMD or Dr. Google to double check medical symptoms or a treatment, including for loved ones, only to remember that they're full of unvetted noise.

• Roon could become an antidote for both patients and caregivers, via its vetted, short-form videos created by real doctors.

Details: The New York-based startup isn't yet monetizing, but is likely to eventually launch subscription offerings.

• Other investors include Sequoia Capital and TMV, while the co-founders are at the intersection of surgery (Weill Cornell Medicine) and SEO (Pinterest).

The bottom line: "So much of what's out there is a cesspool full of advertisers preying on the vulnerable, pretending to have authority. This is an expert-led network that's creating guides to help people really understand what's happening, including disease progression and treatment, which can be shared with caregivers and others in the community." — Rick Heitzmann, FirstMark Capital

• Eyewa, a UAE-based eyewear seller, raised $100m in Series C funding. General Atlantic led, and was joined by Badwa Capital and Turmeric Capital. axios.link/3ZtHtjB

• Eon, a New York-based cloud backup platform, raised $70m in Series C funding at a $1.4b valuation. Bond led, and was joined by insiders Sequoia Capital, Greenoaks, and Lightspeed Venture Partners. axios.link/4gouCWL

• Dev Agents, an operating system for AI agents led by former Stripe CTO David Singleton, raised over $50m in seed funding. Index Ventures and CapitalG co-led, and were joined by Conviction. axios.link/414qkiw

• Zopper, an Indian personalized insurer, raised $25m in Series D funding co-led by Elevation Capital and Dharana Capital, with participation from Blume Ventures. axios.link/4eJuVKo

• Constrafor, a provider of financing and software for contractors, raised $14m n Series A funding led by NFX, per Axios Pro. It also secured a $250m credit facility. axios.link/498gheq

• OpenYield, a New York-based bond marketplace, raised $7m. Canapi Ventures led, and was joined by Clocktower Ventures, and Flow Traders. axios.link/3Z1xW2O

• Teachy, a provider of AI tools for teachers in Latin America, raised $7m in Series A funding. Goodwater Capital led, and was joined by Reach Capital, Endeavor, NXTP, and Roble Ventures. teachy.app

• Argil, a French video engine for creators, raised €4.9m led by EQT Ventures. argil.ai

• OpenTrade, a stablecoin yield products startup, raised a $4m seed extension led by AlbionVC, with participation from a16z Crypto and CMCC Global. axios.link/3ZaN8dY

• StoreCash, a San Jose, Calif., mobile cash-back rewards app, raised $3.7m in seed funding. Black Ops Ventures led, and was joined by MaC Venture Capital, 43North, and Alumni Ventures. axios.link/49a49JY

•Norbr, a Dutch payments infrastructure-as-a-service provider, raised €3m led by Alstin Capital. axios.link/414sbE0

• Pylon, a VC-backed mortgage infrastructure startup, secured a strategic investment from Citi. axios.link/4g4CjkB

• Black Forest Labs, a German AI startup that helps Grok produce images, is in talks to raise up to $200m led by a16z, per Bloomberg. axios.link/4g1vSP2

🚑 Brookfield Asset Management is dropping its takeover effort for listed Spanish blood plasma company Grifols, after the company's founding family signaled a lack of support. axios.link/3Z73rbK

• KKR is weighing an investment in York Holdings, the supermarket unit of 7-Eleven owner Seven & I Holdings (Tokyo: 3382), per a local report. axios.link/415lCRG

• NewSpring acquired C Speed, a Liverpool, N.Y.-based provider of radar systems and engineering solutions for civilian and military use. cspeed.com

🚑 Paine Schwartz Partners acquired nutritional supplements maker Promix. promixnutrition.com

• PSG Equity invested in Plentysystems, a provider of e-commerce ERP software. plentyone.com

• StarCompliance, a portfolio company of Marlin Equity Partners, agreed to buy Aer Compliance, a provider of cryptocurrency compliance software. starcompliance.com

⚡ TPG is in advanced talks to pay more than $300m for the Indian wind energy assets of Gamesa, a unit of Siemens Energy, per Bloomberg. axios.link/495QPq5

Source: Giphy

• Pony AI, a Chinese robotaxi operator, raised $260m in its IPO, pricing shares at the top of its $11-$13 range. Backers include Toyota (13.4% pre-IPO stake), HongShan (10.2%), Ontario Teachers' (6.8%), IDG (5.8%), and 5Y Capital (5.7%), Fidelity, and Saudi Arabia's NEOM Investment Fund. axios.link/41ppe1l

• FACT II Acquisition, a financial services SPAC led by ex-Credit Suisse execs, raised $175m in its IPO. axios.link/3M9nnEN

• Just Eat Takeaway said it would withdraw from the London Stock Exchange at year end, but will maintain its Amsterdam listing. axios.link/4eN88xd

🚑 Archmed sold a 71.4% stake in Ad-Tech, an Oak Creek, Wis., maker of intracranial neuro electrodes, to Nihon Kohden (Tokyo: 6849). adtechmedical.com

• Equistone sold French sneaker retailer Courir to JD Sports (LSE: JD) for €520m. axios.link/3CJtY7F

• Air France-KLM (Paris: AF) is in talks to buy up to a 20% stake in Air Europa, which was blocked by Spanish antitrust regulators from being acquired by IAG (LSE: IAG). axios.link/4g5E8xH

• Apse Capital of London raised €350m for a continuation fund tied to three portfolio companies: TerraQuest, Kallidus, and Ultima Business Solutions. apsecapital.com

• ClearSky, a Florida-based VC and growth equity firm, is raising up to $500m for its fourth fund, per an SEC filing. clear-sky.com

• Collab Capital, an Atlanta VC firm focused on Black founders, has secured over $41m of a $75m-targeted second fund, per an SEC filing. collab.capital

President-elect Trump will nominate private equity exec John Phelan to be U.S. Navy secretary.

• Phelan co-founded MSD Capital, an investment arm of Michael Dell's family office, before which he spent seven years at ESL Partners. He now leads a Florida firm called Rugger Management.
• Phelan has no past military experience.

Trump also picked Kevin Hassett to head of the National Economic Council and Jamieson Greer as U.S. trade representative.

Dealmakers aren't the only ones huffing animal spirits, as a record number of everyday Americans expect stocks to rise over the next year.

• The optimism predates the election, but has since intensified.
• Wall Street is more cautious, except for the big pipeline talk coming come its IPO bankers.