Wasabi Ventures Academy: The 5 Red Flags of Startups

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All startups have a handful of things that are instant red flags. These warning signs are universal and not dependent on the vertical, geography, or technology. Learning to identify these red flags so you can avoid them no matter what part of the startup ecosystem you are filling.

This is part of the Wasabi Ventures Academy Startup Foundations cohort. If you are interested in joining a future cohort, visit http://academy.wasabiventures.com

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Wasabi Ventures Academy: The 5 Red Flags of Startups

  1. 1. Analyst Training: The 5 Red Flags of Startups An Innovative And Dynamic Approach To Venture Capital And Incubation
  2. 2. Academy.wasabiventures.com @wasabiventures 5 Red Flags = 5 Deadly Sins
  3. 3. The Red Flags Academy.wasabiventures.com @wasabiventures 1 2 3 4 5 Founder(s) Always Need to be the Smartest Person in the Room Target Audience/Customer is Other Startups You Don’t Talk about the Startup Startup has “Rent” or “Legal” as a Measurable Expense Founder(s) are not also Customers
  4. 4. Smart People Need To Be Humble Academy.wasabiventures.com @wasabiventures • Usually have a hard time listening to customers • Don’t tend to be good managers • Think the whole world is like them • Think that being smart is all that matters • Always think that they have to have the answers to all questions WHY IT IS AN ISSUE:
  5. 5. Startups Make Bad Customers • They never have a lot of money • They tend to think they can build anything themselves • There aren’t that many of them • They tend to disappear! Academy.wasabiventures.com @wasabiventures WHY IT IS AN ISSUE:
  6. 6. The Startup Didn’t Move You Academy.wasabiventures.com @wasabiventures WHY IT IS AN ISSUE: • If you don’t get a great feeling, it isn’t worth caring about • The people involved weren’t inspirational • You don’t have a personal vested interest
  7. 7. Lawyers, Accountants, Real Estate = NO ROI Academy.wasabiventures.com @wasabiventures WHY IT IS AN ISSUE: • Shows that a startup is focused on the wrong things • Can’t usually be zero, but needs to be close to zero • Early Stage it needs to cost less than lunch per month • None of these make a company more valuable, they are just necessary evils
  8. 8. Would The Founder Pay For This? • They aren’t passionate about the problem • They don’t understand the problem • Have zero credibility as an authority in the space Academy.wasabiventures.com @wasabiventures WHY IT IS AN ISSUE:
  9. 9. Key Take Away None of these items are 100% disqualifiers, but any of them should give you pause as a co-founder, investor, or interested party Academy.wasabiventures.com @wasabiventures
  10. 10. Academy.wasabiventures.com @wasabiventures If you are interested or know some interested in the Wasabi Ventures Academy, email wvacademy@wasabiventures.com

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