Cases on Entrepreneurship and Innovation: Unexplored Topics and Contexts – Cap.: Yogome’s dramatic fall for alleged fraud

2024. Elgar Cases in Entrepreneurship.

Francisco Sánchez M., y Alan Mella

Abstract:

This case tells the story of Yogome, a Mexican technology startup that designed educational mobile video games for children and became a benchmark of Mexican entrepreneurship since it was founded in 2011. However, due to alleged financial fraud, Yogome’s success ended on October 4th, 2018. Manolo Díaz, Yogome’s co-founder, was accused by employees of manipulating revenue reports given to investors. The allegations stemmed from an event on September 18th, 2018, when one of Yogome’s employees provided an investor with up-to-date financial data that did not match the reports they had officially received from the company until then. According to a leaked video and testimony from the Mexican startup’s employees, this led to an investigation, which revealed that Manolo Díaz had allegedly embezzled company funds, ultimately triggering Yogome’s closure.

The decision-maker in the case is a Chilean angel investor who, on October 4th, 2018, is considering whether to invest in a promising Mexican startup offering English courses for children on mobile devices. Yogome’s success inspired the founders of this startup. The Chilean angel investor was keen to invest in the startup but grew wary when he discovered Yogome’s alleged financial fraud a day later, on October 5th, 2018. He wondered if the founders might have manipulated the financial data in their proposal to increase their chances of obtaining financing. Therefore, in light of his concerns, he decided to fully investigate the Yogome case. In particular, after studying this case, students will be able to: apply the Fraud Triangle theory to understand the reasons behind the alleged financial fraud at Yogome, learn about the control measures available to investors so that fraudulent financial practices can be mitigated and prevented in startups, and understand investor behaviors that can incentivize financial fraud in startup ecosystems.

Palabras claves: Latin America, Startups, Financial fraud, Fraud Triangle

Acceder a la publicación completa