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Red flags to avoid raising

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Steve Goldberg is a partner at Finistere Ventures, an early-stage venture fund focused on food, , and sustainably feeding the world. This is our fifth article from a single half-hour .

When Steve evaluates a company there are certain red flags he looks for.

The first is mismatches between the execution plan and the fundraising. This doesn’t surprise me as I often see draft investor presentations made with the raise-amount set but no budgets, timelines, or milestones.

Second is companies that are asking for money too late or too suddenly. A company should know when it is going to run out of money and how long it will take to raise money and then be able to do a little bit of math. When they haven’t, it’s not a good sign.

Finally, companies that can’t provide appropriate , or otherwise fail a reference check. I’m always glad to see when a firm is properlly checking references. All too often this step is skipped leading to unnecessary risk and failure.

As a start-up worthy of investing in, you should be able to avoid raising these red flags.

Written by Russell Brand

Entrepreneur in residence at Founder Institute, he has mentored, performed due diligence on and invested in numerous early stage companies. Hundreds of these early stage companies have described Russell’s insights and advice as the most useful thing in the history of their companies. He has always had an inborn ability to find more valuable uses of new ideas and faster ways to achieve results.

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