You know how when you’re about to cross the street, you look both sides for potential danger?

Well, when you’re about to put money into a startup, you need to do the same. Here are four red flags that should make you think twice before writing that check:

Red Flag #1: Everything They Build Is in the Future

Some founders will tell you amazing stories about what their product will do someday, but can’t show you anything working today.

If someone shows you fancy slides of their future product but has no actual prototype you can touch or try — run!

Great founders build simple versions of their ideas quickly to test if they work. They’ll always want to show you something that actually exists (even if it’s small).

Red Flag #2: The Customer Is Last

Imagine if someone wanted to open a restaurant but they had never cooked a meal in their life. Weird, right?

Founders are great at talking about their product and why it’s so cool, but sometimes they forget to talk about the most important thing: their customer. 

You want to invest in founders who know their world inside-out. You want to invest in founders who can say: “I’ve talked to 50 people who have this exact problem”. You want to invest in founders who can easily describe the problem they’re solving for and why it is so painful for their ideal customer.

The customer is first, the product is last.

Red Flag #3: The “I Can Do Everything” Founder

“Starting a company is like jumping off a cliff and assembling the plane on the way down.” -Reid Hoffman (co-founder of LinkedIn)

Building a company is hard.

When you see one person trying to do everything — run. Ideally, what you want to see are teams of two or three founders, each with their own superpower. One might be amazing at building the product, while another is great at selling it.

When someone doesn’t recognize they need help, what they’re really saying is “I don’t know how much help I need.”

Red Flag #4: Literally, No Money.

If people are not willing to pay for the product, it’s not a real business yet.

Founders get super excited about people who “love the idea”, but many times they can’t show you anyone actually paying for their product.

As much as possible, you want to see early customers open their wallets. It proves someone needs this thing badly enough to spend money on it. When a founder can say “these 10 people already paid us because they couldn’t live without our solution,” that’s much better than “1,000 people downloaded our app last week”.

Anything can be a great idea. Not everything can be a good business.

Should you invest or not invest?

Before you write your next check, ask yourself these simple questions:

1. Can they show you something that actually works today?
2. Do the founders really know the customer and their pain?
3. Do they have the right team to build and execute on this business?
4. Are real customers already paying them something?

Some industries — like medtech, biotech, or deep tech — operate differently. In these fields, significant research, regulatory approvals, and product development are needed before customer traction can happen. Early funding isn’t just helpful — it’s essential to reach critical milestones.

Context matters: understanding the nature of the industry helps you set the right expectations when evaluating early-stage opportunities.

Great investors aren’t the ones who never make mistakes.

Great investors are comfortable walking away from a deal if it doesn’t meet their standards.