Four Myths About Background Checks

Most people don’t lie, but some people do. How do you know you’re not dealing with these few? Following are the biggest myths about background checks:

1. I don’t need a background because I’d know if someone was a problem.

This guy came referred by a friend. It’s a small industry. The deal is so good I don’t care if he has a few dings. Do any of these sound familiar?

Your instincts are probably pretty good by now so in most cases you’re probably right. That said, would you have intuited that the CEO of Radio Shack lied about his resume? Why didn’t instincts stop industry veterans from investing in John Rodgers’ Pay By Touch? Charismatic hustlers excel at getting past your guard.

2. This guy spent his career overseas so nothing would come up.

Actually, a whole lot can come up. There are “public records” in every country. It’s true that some are more restrictive about what can be disclosed (EU nations), but some have more public information than the U.S. allows (India, U.K. private companies).

Lynx can tell you what to expect before you get going. Then you can decide if you’d like to add reputational source checks to the background.

3. She’s a lawyer/accountant/contractor, so there couldn’t be any major issues in her background.

Background checks uncover more than felonies or fraud convictions. Yes, sometimes we do run across a complete fibber (fabricated education, unlicensed), but more often we find patterns that will give you an idea of what it’s like to work with that person, such as a string of lawsuits with former employers, multiple harassment lawsuits or serious money issues.

4. Firms in our niche don’t do background checks, so it would be overkill.

Not true. Conducting pre-deal backgrounds of executives is becoming standard for investment banks, venture capital, private equity, early seed, angel and private investors alike.