A lot of Redditors hate the Reddit IPO | Reddit warned us that its users were a risk factor, and boy do they sound excited about shorting its stock.::Reddit seems like a likely candidate for a meme stock. But the actual reaction suggests that r/WallStreetBets isn’t going to send the stock to the moon.
Not sure why you brought up lying, that’s totally different (and still illegal, public or private).
The difference between raising public vs private money is whether or not you are legally required to actively disclose your financials/risks/business plans/etc. I can (legally) raise money from a wealthy family office with nothing but a phone call (basically how most angel investments work). I can’t do the same if I’m trying to raise money from a random Joe off the street, that will land me in jail.
Again, like I said, it’s because it’s assumed that they have a direct connection to you to ask about the company and make decisions.