As an investor, evaluating the founders and management team is crucial. Since the future is uncertain, exceptional teams possess the ability to execute and adapt their ideas even in challenging situations. Assessing the potential success of individuals is often more manageable than predicting the success of a specific idea. Potential red flags with companies could be: - The lack of a financial model. This indicates that they have not thoroughly considered their market, sales approach, expenditures or hiring. - A disproportionate focus on presentation over substance. This is more evident during conversations with the founders/team. Engaging in dialogue provides deeper insights than just a well-polished pitch. - Lack of transparency and humility. Founders should not attempt to portray themselves as experts in all areas or claim to have considered every scenario. Acknowledging a lack of understanding and where assistance may be required are crucial qualities of a founder.
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