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General VC Questions

How can VC professionals spot potential red flags when evaluating the “Business Model” of early-stage companies?

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Answered by

Adeo Ressi

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The business model of early stage startups is often a guess that gets refined by constant customer development. In this context, red flags are not knowing who the actual customer is, not being diligent with customer development, and not running tests to understand pricing and demand. It is also a red flag when a Founder doe not appear to care about revenue.

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