I said, “Fred deserves a shot. Let’s invest.”
Yellow Flag 6: When you feel your heart taking over by shutting off the blood to your brain, call a time out, shut up, and make no investment decisions for 24 hours.
Well we did invest. The plan we signed off on showed minimal revenue for the first five months. Although Fred would continue to make calls on the current prospect base the investors gave him, he was also to hire the key people, find office space, build the product and build the marketing materials. He did everything he said he would. As we looked to the sixth month we realized the sales were not coming through.
Red Flag: No traction…no company.
That’s the story. I now look back and see all the yellow flags I just blew right by. I kick myself because I know better than to get ahead of my experience-based investment criteria. I made rookie mistakes and I didn’t do any favors for the entrepreneur, my fellow investors or myself. Good intentions, enthusiasm, and money are not the formula for a successful startup.
