A tidal wave of investment into AI start-ups lacking products or technology is creating fertile ground for fraud, according to new research. The annual rate of serious alleged or proven fraud cases at US venture-backed start-ups surged more than 10-fold between 2002 and 2021, while fraud rates for other companies plummeted. This stark rise coincides with a boom in 'founder-friendly' governance structures where founders retain significant control, often enabled by hot investment markets where hungry investors compete for stakes. The 10-fold increase in fraud allegations highlights the urgent need for investors to scrutinize governance and market conditions.