Red Flag List for VC Deals

I was watching an episode of a Chinese-version Shark Tank show on my flight back to the States from China. I found many red flags in the startup ideas pitched in the episode, and I decided to write down a list of red flags that I noticed in my VC career.

There are two posts (here and here) that have already covered many red flags identified by the top VCs. Therefore, I am not going to cover many of those “entry-level” red flags such as “founder being slow in replying emails”, “founder not grounded in reality”, and “founders are dating”.

Instead, I will cover the red flags that might be easily ignored. Please be aware that this list only covers part of the potential red flags.

Founding Team

1. Being emotional or irrational under pressure. This is especially a big red flag for those execution-heavy startups that will heavily rely on the founding team’s leadership skills. We could always expect a lot of challenges coming up during the start-up process. If the founders cannot control their emotions well, they might not be able to lead the team to overcome the challenges in execution.
2. Lack of empathy. To me, everything can be changed along with the growth of a company, while there’s only one thing that will not change: the team. If the team does not know how to refine the technology, improve the product…