Nov 2, 2015 · 23 minutes

Update (1pm): Crowdfunder has apparently removed Tellspec's campaign from their site. We'll update this story further once/if we receive confirmation from the company.


I’ll say this for Isabel Hoffmann, CEO of Tellspec: she certainly has chutzpah.

How many other founders, having failed to deliver on a $386k Indiegogo campaign, and having threatened to sue journalists who wrote about that failure, would have the brass balls to launch a brand new crowd fundraising attempt for the exact same product: this time aiming for a staggering $1.5 million?

Yep, it’s time for the latest installment of the the tech world’s craziest reality show: Keeping Up With Tellspec!

In this week’s episode: How Tellspec has partnered with to take even more money from unsuspecting backers, despite now admitting that there is no way they can deliver the product they originally promised. Also: Why, despite now admitting red flags with Tellspec, Crowdfunder stubbornly refuses to pull the campaign.  

A quick reminder of the story so far

Back in 2014, Tellspec raised nearly $400k on Indiegogo for a “miracle” keyring-sized scanner, capable of detecting the ingredients, additives and allergens in your food.

As Pando’s James Robinson reported at the time, the video and description on Tellspec’s campaign page were a total sham. In fact, despite claiming the device was almost ready for manufacture, it turned out the company hadn’t even figured out whether their proposed technology actually worked as promised. (Spoiler: It did not.)

Things got weirder two weeks ago when, with Tellspec already well over a year late on delivering its device, Pando began receiving bizarre messages from CEO Hoffman, threatening to sue us unless we take down all of our coverage on the company. When we refused, and instead published the threats, Hoffmann took the unusual step of… denying all knowledge of the emails and phone calls and LinkedIn messages she had bombarded us with.

What wasn’t clear at the time is why Hoffman had suddenly threatened to sue us – a full year after Pando’s last piece on Tellspec. Sure, James’ coverage of the company is currently the fourth result on Google for “Tellspec” but why would they only now try to bury the story?

Last week, a tipster suggested a possible answer: Despite having just missed yet another delivery deadline, and despite a growing chorus of angry backers demanding refunds, Tellspec is now apparently trying to leverage its Indiegogo “success” to raise even more money, this time via a crowd-sourced investment site called

According to their investor page on Crowdfunder (you need to register to see the whole thing), Tellspec is attempting to raise $1.5m in the form of a convertable note, with a $14m cap. The round is due to close on 30th November.

Alarmingly, the company already claims to have over $1.2m reserved by investors...

I say “alarmingly” because, in addition to the issues we’ve already reported involving Tellspec’s device, their latest fundraising effort shows how the company continues to mislead potential financial backers. It also raises serious concerns about Crowdfunder’s ability – and willingness – to weed out fraud from its platform.

Crowdfunder: So easy, even a four year old can register as an “accredited investor”

Like other angel funding services, Crowdfunder is required to abide by Securities and Exchange Commission regulations. Currently, that means only accredited investors are able to invest in the companies listed on its platform. The SEC has just approved a change in rules which will allow non-accredited investors to back startups, but the new law won’t take effect for several months.  As such, Crowdfunder makes clear:

SEC regulations require that we take “reasonable steps” to verify that investors are accredited.

It was one of those accredited investors who first tipped me off about the Crowdfunder campaign, having read the investment documents uploaded by Tellspec and suspected them of describing “sham science”. I asked if the investor would be willing to forward the documents to me but (s)he declined. However, (s)he did suggest that there was likely nothing stopping me from registering on the site myself.

Indeed there was not: I was able to register on Crowdfunder using my real name, email address and photo simply by answering a question about my income.  I was immediately able to access Tellspec’s investor deck, disclosures, executive summary and other details of their investment offering (embedded below).

A short time afterwards, I received this email from Crowdfunder CEO Chance Barnett,

Hi Paul, 
I'm Chance Barnett, CEO of Crowdfunder. Thanks for verifying your Accredited Investor status, and I'm here to help you have a great experience with Crowdfunder.

As an Accredited Investor you can now see active Deals (both public & private), and check out and filter Deals by Location or Category: See Deals

Feel free to let me know of any questions or ideas you have. You can reply to this email or follow me on Crowdfunder. If there are other ways myself and Crowdfunder can help you find new deals, build your co-investor network, or help your portfolio companies, please let us know.

You could say that becoming an “accredited investor” on Crowdfunder is so easy that even a child could do it.

No, really, you literally could say that. Because, after registering under my own name, I decided to try registering a second account using the details of someone who definitely can’t be considered an accredited investor: Sarah’s four year old son, Eli.

I used Eli’s actual photo, his actual date of birth (2011!) and the job title “Toddler”. Then I simply checked the box marked “I am not accredited, but will invest when the laws change” – which is perfectly true, Eli will gladly become an accredited investor just as soon as the law is changed to permit toddlers to do so. (Crowdfunder didn’t say what “laws” it was referring to.)

And sure enough….

Like me, Eli was able to download all of Tellspec’s investor documents (which he is currently using to practice his coloring.)

I contacted Barnett to ask why his site allowed a four year old to register and be considered accredited. As of press time, he has not responded. [Update: More than 12 hours after I asked Barnett for comment, Crowdfunder has disabled Eli's account. An hour or so later, they suspended my account too.]

On a roll now, and to cover all my bases, I signed up for two more accounts, this time using completely fictional information. I assumed that Crowdfunder’s systems would quickly suspend my and Eli’s accounts when I started asking questions, and I wanted to ensure I would still be able to screenshot the relevant pages for this article. I needn’t have worried: At the time of writing, all of my fake accounts are still active, and listed as accredited.

(Shortly after registering, one of the dummy accounts began receiving messages from Tellspec. Given the company was not aware the particular account belonged to a journalist, Pando is not publishing any of the messages. Nor is any of the reporting in this story based on those messages, which largely reiterated already publicly available information.)

What is Tellspec telling potential investors?

Telspec’s investment deck, as posted on Crowdfunder and embedded at the end of this article, is packed with information designed to delight investors, but which will likely raise eyebrows for anyone still waiting for their Indiegogo device.

[Update, Tuesday 3/11: Tellspec has filed a DMCA takedown notice against our document host, Scribd, to force them to remove the documents. We are working to get the notice quashed. In the meantime, we have reposted the documents below using different servers.]

For one thing, the deck reveals the company is still nowhere close to building a device capable of doing what was described on its Indiegogo page two years ago. Instead it seems to show that the company is now working on three separate versions of its product.

The first version – Tellspec Macro – will be able to “detect” carbohydrates, fats, proteins, calories, glycemic index and fiber. That device is the one currently being developed in a beta version and will, the company promises, be delivered to a small number of beta testers soon. Unfortunately, the company just blew past its latest slipped deadline on Indiegogo – “end of September / early October” – and is now running an impressive 14 months behind schedule.

According to the investor deck, it’s not until the second version of the device that Tellspec will be able to detect allergens. That version is listed as “in progress,” despite the fact that allergen detection was one of the key claims made on the device’s Indiegogo campaign when it launched two years ago.

Another key promise of Tellspec’s Indiegogo campaign – and a mainstay of Hoffmann’s standard product demo ever since – is that the device can detect food additives, including colorings like “Tartrazine”. And yet, according to the company’s investor deck, a  version of the device that can detect “additives” is listed as “target: 2017.”

"[T]he content of this [letter of intent] is confidential as most commercial business agreements are, the content is not your business, neither of your readers." - Isabel Hoffmann

In other words, even if Tellspec does finally deliver a device, its own investor deck now admits that some of the functionality described as “successfully tested” and ready for manufacture in 2014 isn’t even scheduled for development until 2017.

And it gets worse. According to Tellspec’s own investor update videos, and technical details readily available online, the latest version of its device can still only “analyze” a very narrow range of foods. Tellspec works using NIR spectroscopy, requiring users to press it against the surface of food they hope to analyse. Even then, the device is only able to analyse that narrow surface area it’s pressed against.

That means Tellspec can (at best) figure out that it's being pressed against, say, a piece of bread. It cannot determine if that bread forms part of a cheeseburger, or a ham sandwich, or sits wrapped around three tons of lard, or a million walnuts. Any ingredients hidden below the surface – including dangerous allergens or additives -- would be completely invisible to the device.    

In a recent video, Hoffmann acknowledges this limitation by demonstrating how all the elements of a cheese sandwich must be scanned separately to get a usable reading. In the same video, Hoffmann shows a cake but then doesn’t actually scan it, acknowledging that to do so would require analysing each ingredient in turn. At which point, it’s quicker and easier to buy a pre-packaged cake and simply… uh… real the label.

Bluntly put, the device doesn’t come close to being able to detect even the basic constituent parts of most meals, let alone doing anything like this:

Or (lol!) this:

And yet, the Indiegogo campaign page still describes Tellspec as:

“A revolutionary hand-held device that tells you the allergens, chemicals, nutrients, calories, and ingredients in your food.”

Bullshit? Absolutely, and also likely a violation of Federal Trade Commission regulations, just when the FTC has started cracking down on crowdfunding scams.

Here’s what the FTC’s Policy Statement on Deception has to say…

Section 5 of the FTC Act declares unfair or deceptive acts or practices unlawful. Section 12 specifically prohibits false ads likely to induce the purchase of food, drugs, devices or cosmetics. Section 15 defines a false ad for purposes of Section 12 as one which is "misleading in a material respect..."
The Commission will find deception if there is a representation, omission or practice that is likely to mislead the consumer acting reasonably in the circumstances, to the consumer's detriment...
The Commission intends to enforce the FTC Act vigorously. We will investigate, and prosecute where appropriate, acts or practices that are deceptive.

I asked Hoffmann about the possible FTC violation. She responded: “If the FTC raises concerns about our product we will gladly provide them with a response.” Good to know! I’ve asked the FTC for comment and will update this article if I hear back.

Drilling down

Despite the prospect of thousands of disappointed backers demanding refunds, Tellspec makes no reference to Indiegogo delays on its Crowdfunder page. Instead it proudly tells potential investors it has:

$519,710 Worth of Pre-Orders Sold from 2,181 Units

In its investor disclosure document, under the heading “Describe how you win customers today”, the company says  “a significant amount of funding to date has been generated from online pre-orders.” However, the document make no mention whatsoever of an Indiegogo campaign, let alone its failure to deliver a product.

Under a heading “Technological validation… What evidence can you present that your product works as advertised?” the company says, simply:

“We currently do validation in-house, and have written validation reports for several of our algorithms.”

The document makes absolutely no mention of the fact that Tellspec does not currently have a working beta device.

And still the misleading, unverifiable, or plain false, statements keep coming

Under the heading “traction”, Tellspec boasts:

Forbes selected Tellspec as one of the 10 Top Companies Revolutionizing Entrepreneurship

That’s not true. In fact, a Forbes user-contributor named Drew Hendricks wrote a post about Tellspec on back in 2014. But the post makes clear it is not produced by Forbes’ own journalists and that “opinions expressed by Forbes Contributors are their own.” On his personal website, Hendricks describes himself as a "marketing professional and social media strategist."

Under the heading “Key customers and partners”, Tellspec boasts partnerships with companies including Google, Nestle and Samsung.

I contacted those three companies last week but, by press time, none could confirm any partnership with Tellspec. [Update: A Nestle spokesperson responded: "no one [at Nestle] has any knowledge of this company"]

Tellspec also says it has signed a letter of intent with Samsung. A representative for Samsung has been trying to help me confirm the existence of the letter since Friday but, as yet, hasn’t been able to do so. I’ll update this story if and when she succeeds.

Meantime, I emailed Hoffmann to confirm the details of the Samsung partnership. She responded:

[T]he content of this [letter of intent]  is confidential as most commercial business agreements are, the content is not your business, neither of your readers. Regarding our partners and customers: again any information about the nature of the partnership is also confidential.

She also warned me not to publish Tellspec’s investor documents:

I ask you to not publish any information your [sic] have obtained by registering as a certified investor in the crowdfunder site and by reserving  an investment in the amount of US$25,000 in Tellspec. This information is confidential and for personal use, not for public use...
Tellspec's customers and partners are also confidential information which is presented in our crowdfunder page for investors only, not for the general public.

Again, the documents are available to anyone, including a four year old, who registers on Crowdfunder. They do not require any investment reservation. Details of Tellspec's customers and partners are visible to anyone, without registering. 

Under the “Previous funding” section of their Crowdfunding page the company claims to have raised a little over $800k in two rounds:

...but again makes no mention of crowdfunding or Indiegogo.

That total is odd given that, back in 2014, Hoffmann told John Boitnott, a journalist for Fast Company, that she had recently “received $1 million in seed funding.” Boitnott also apparently had the distinction of being one of the only journalists (possibly the only journalist) who has ever used a Tellspec device.

Except, he hasn’t. I called Boitnott yesterday and he explained that, while he did meet Hoffmann at CES in 2014, he never actually tested the device himself. Instead, he watched as Hoffmann demonstrated it for him by pointing it at a bag of bread that she had brought along – an image that instantly calls to mind Uri Geller bringing his own spoons to the Johnny Carson show.

“What Hoffmann showed me was a black box with wires… She showed me what it would do with a bagel, and some chips…” Boitnott recalls. “It was clear the device was [already] familiar with these things.”

I've been able to obtain a photo of the box that Hoffmann showed Boitnott. Here it is, pictured next to Hoffmann's bag of bread:

At the time Boitnott asked Hoffmann how she intended to shrink that much larger prototype into the small device shown on the Indiegogo page. “She didn’t want to get into that... It wasn’t clear she knew the answer.” Boitnott says.

Boitnott confirms that Hoffmann told him that Tellspec had recently raised $1m, but wasn’t clear about where the money had come from. “It might have been from angel investors,” Boitnott recalls. “She [also] said she was going to Palo Alto to talk to investors.”  Today that million dollars, if it was ever real, is nowhere to be seen on the Tellspec Crowdfunder page. I asked Hoffmann about it but she didn’t respond.

Which brings us to the obvious question: How on earth has Crowdfunder allowed a company like Tellspec to purportedly raise so much money on its platform, with so many red flags?

Tellspec and Crowdfunder: We’re in this together!

The first answer is that there’s no way to know exactly how much money has really been committed to Tellspec on Crowdfunder. With just two clicks, I was able to “reserve” two “non-binding” $25k investments using my own account and one of the dummy accounts I created. Those reservations are, apparently, subject to approval by Tellspec. 

Given the reservations are non-binding, I asked Hoffmann to confirm the legitimacy of the $1.2m figure shown as committed so far. Again, she did not respond to the question.

But it turns out there’s an even bigger reason why Crowdfunder might not want to pull Tellspec’s campaign: Crowdfunder itself is an investor in Tellspec.

In response to my questions about the campaign, Crowdfunder COO Douglas Strasnick explained (emphasis mine):

We were aware that Tellspec had run a successful Indiegogo campaign, and that the perks were outstanding. They have a milestones document uploaded to their confidential documents section that states they plan on fulfilling the Indiegogo perks sometime between Sept 2015 and Nov 2015. We were not aware that Indiegogo backers were reporting red flags...
In the case of Tellspec, we are in fact investors in the company (which we disclose to other potential investors in our disclosure), having traded our services for options in lieu of cash.

That’s right: Crowdfunder has agreed to forgo its fees – and apparently some of its critical faculties – in return for equity in Tellspec. Still, Strasnick assured me…

We are always concerned when someone raises an issue with one of our clients and we do our best to quickly evaluate the situation… We do take down campaigns that are flagged as potentially fraudulent once we are notified and we feel there is reason for concern.

Apparently my questions about Tellspec were enough to give Crowdfunder that reason for concern. Shortly afterwards, one of my dummy Crowdfunder accounts received an email from Katie Talati, Crowdfunder’s Investor Relations Manager.

One of the purposes of my setting up the dummy accounts was to understand how Crowdfunder and Tellspec communicate with potential investors. To be absolutely clear: Unlike the other comments received from Crowdfunder for this article, the company had no reason to know they were sending the following message to a journalist rather than a regular user. 

It has come to our attention that there have been recent concerns raised with Tellspec’s Indiegogo campaign specifically regarding Tellspec’s delivery of their product to Indiegogo backers.

We wanted to take this opportunity to reiterate a few important items about Crowdfunder and the companies on our platform.

Crowdfunder is not a broker-dealer, does not take contingent compensation and does not take any percentage of funds raised.  We do not perform due diligence for companies that join our platform and are fundraising with accredited investors. Instead, we try to provide all potential investors with the opportunity to make his/her own decision based upon information provided by the company. In no way do we ever recommend an investment or alter material data and information.

Attached is Crowdfunder’s relevant disclosures in regard to Tellspec (which can be found in Tellspec’s deal room). One item we note is that Crowdfunder is a stakeholders in Tellspec, as we traded our services (in lieu of cash) for stock options in Tellspec. In this sense, we have accepted the same risks as cash investors in Tellspec, and indeed are value-aligned with investors.



What Talati glosses over is that, while Crowdfunder is an investor in Tellspec, they most certainly have not “accepted the same risks as cash investors.” Unlike other investors, they didn’t actually give Tellspec any cash which might be lost if the company is unable to deliver a product.

Given Crowdfunder is now actively warning its users of the risks of investing in Tellspec, I emailed Strasnick again to ask if he was now intending to pull the campaign. He replied...

We feel that we've made our position clear in our prior communication and we will have no further comment at this time.

I contacted Hoffmann again, giving her another opportunity to comment. She responded with another warning: (Emphasis hers)

Please read the Crowdfunder Terms of Use ( ) to understand how you will be in bridge [sic] once you make public any information you have gather [sic] in their platform, being it Tellspec's or not. Tellspec's information that you have gather [sic] from the Crowdfunder site is confidential and not to be discussed in public.

So stick that in your sandwich and scan it!

What now?

Not for the first time in writing about Tellspec, or crowdfunding campaigns gone bad, I’m at a loss. It was already clear beyond doubt that Tellspec has taken over $380k from Indiegogo backers for a device they admit they are unable to deliver. It was already messed up beyond comprehension that the company’s founder threatened to sue journalists for reporting that fact.

But now we find ourselves gazing into a fresh circle of hell: The one populated by the executives of Crowdfunder who, despite having clear evidence of misrepresentation by Tellspec, and despite pledging to “take down campaigns that are flagged as potentially fraudulent”, are apparently still hoping to line their own pockets by allowing the company to turn a $386k disaster into a $1.88m outrage.  

“Backer beware” doesn’t quite cut it any more. I’m continuing to try to confirm any of Tellspec’s corporate partnerships, including their “letter of intent” with Samsung. I also have a request for comment in with the FTC.  

I’ll update this story if I hear back, or if Crowdfunder has a change of heart between now and when Tellspec’s campaign closes at the end of the month.

Update (1pm): Crowdfunder has apparently removed Tellspec's campaign from its site. 

4:30pm: I received the following message from Crowdfunder CEO Chance Barnett, also apparently sent to Isabel Hoffmann:

Dear Mr. Carr and Ms. Hoffman [sic],

One of the roles of an online equity crowd funding platform such as Crowdfunder is to empower the crowd to engage in collaboration and discussion surrounding companies and the information provided by companies to prospective investors. We strive to provide a forum for investors to discuss companies and conduct diligence regarding potential investments. To further enable the flow of information, we provide a social network and messaging tools to directly connect investors with companies / founders on our platform. Crowdfunder is committed to working diligently with entrepreneurs and investors to enable open communication and foster a secure environment for entrepreneurs and prospective investors to connect.  

As part of that commitment, we require users of our website to comply with our website’s Terms of Use. It recently has come to our attention that both Tellspec and Mr. Paul Carr may have violated those Terms of Use in their respective interactions with Crowdfunder. In light of that recent information and related communications, we have suspended both the Tellspec company and associated user accounts, as well as user accounts associated with Mr. Paul Carr. All such actions are pending further review



Chance Barnett, CEO


Ms Hoffmann's email address was included in the CC, which would appear to be a violation of Crowdfunder's own privacy policy

I have responded asking whether it's normal practice for Crowdfunder to send account notices to multiple users in that way. I'll update the story (again) if I hear back.

Here are Tellspec’s investment documents in full...

Update (Tues, 11am): Tellspec issued a DMCA takedown notice (full text below) against Scribd to delete the documents. We have, of course, filed a counterclaim and are working with Scribd to avoid any future attempts by Tellspec to use copyright law to silence news reporting.

Update (November 12th 2015): Tellspec issued a second DMCA takedown notice, this time against AWS. We have filed a second counterclaim and have no intention of taking down the documents.

Here are the documents. If the embeds don't work for you, the PDFs are here, here and here... 

Here's Tellspec's DMCA takedown notice against Scribd:

has posted my copyrighted/trademarked work without my permission.

I am (choose one): * 
the duly authorized representative of the exclusive rights holder

for the following titles: 
Tellspec Executive Summary 09-30-2015 3 

These exclusive rights are being violated by material available on Scribd at the following URLs (include as many as necessary): *

I have a good faith belief that the use of this material in such a fashion is not authorized by the copyright holder, the copyright holder's agent, or the law. * I agree

Under penalty of perjury in a United States court of law, I state that the information contained in this notification is accurate, and that I am authorized to act on the behalf of the exclusive rights holder for the material in question. * I agree

I hereby request that you remove or disable access to this material as it appears on your service in as expedient a fashion as possible. Thank you.

Your full legal name (required) * 
Isabel Hoffmann

Company name (if applicable) 
Tellspec Inc.

Physical address: * 7B Pleasant Blvd, suite 991 
Toronto, ON M4T 1K2 
Email address: * [redacted by Pando]
Phone number: [redacted by Pando]