This element is pretty simple: does the management team seem credible? While this element leans heavily on background and reference checks, it is also important to see if there are any inconsistencies with the business plan (insane growth curves, half truths in the market research, or a general state of optimistic denial). If the entrepreneur has great vision, that’s a good thing. If they can’t see the hole in the road because they are so focused on the clouds, that’s not a small mistake, that’s a major problem. References are a great place to start, but are their other ways to find out if someone is being honest? Outrageous financial projections perhaps? Constant name-dropping and false over-confidence?
You’d be surprised at the number of times red flags pop up when performing a simple background check. As Scott Austin reports for the WSJ, these occurrences are all over the startup world: Mahalo’s mishap
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