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Red flags to avoid raising

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

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 references, 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.

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Written by Russell Brand

Russell has started three successful companies, one of which helped agencies of the federal government become very early adopters of open source software, long before that term was coined. His first project saved The American taxpayer 250 million dollars. In his work within federal agency, he was often called, “the arbiter of truth,” facilitating historically hostile groups and factions to effectively work together towards common goals

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