After finishing the process of filing an LLC, entrepreneurs need to line up funding for their new venture. Entrepreneurs should be aware of the red flags, which will discourage investors from supporting a company.
Martin Zwilling, the CEO and founder of Startup Professionals, offers seven factors that investors consider high risk.
First, is an inexperienced team. Investors look for people with knowledge in the market the startup wants to reach. The sector a startup is planning to reach is also an important issue as certain areas have a high rate of failure.
If a business model is dependent on government approvals that could take a long time or requires political connections, can make an investor wary of supporting the project. However, products such as a new medicine can result in high returns if successful.
When a significant initial investment is needed to boost manufacturing for products such as electronic chips, almost all except for the largest investors will pass, Zwilling writes for Business Insider. On the other hand, ventures such as web-based businesses, can do more with less capital.
Finally, startups that have operations in another country may cause trepidation. The market rules vary from nation to nation, and it is harder to manage and predict success.