In their hearts, startup investors are like Agent Mulder: they Want To Believe. Especially after they’ve already invested a little. They are willing to overlook obvious exaggerations up to and including fraud, because the alternative is admitting their judgment is not sound.

Look at how long Theranos went on! Miraculous product. Attractive young founder with all the right pedigree, credentials, and contacts, dressed in black trurtlenecks. Hell, she even talked like Steve Jobs! Investors never had a chance.