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VENTURE-CAPITAL-BASICS4 MIN READ

Diligence Red Flag Cards

Recognize diligence red flags and ask evidence-seeking follow-up questions.

Red flag: 'Customers love us' without usage or replacement evidence Customers love us and keep telling us the product is exciting. Diligence question What did customers stop using after adopting you, and what event made them switch now rather than later? It converts sentiment into behavioral evidence about job, trigger, and switch. Logo evidence versus buyer evidence Ask who pays, who uses, and what changed after adoption. What question tests a huge TAM claim fastest? Ask for the first reachable customer segment, customer count, annual contract value, channel, and obtainable share over a defined period. This turns TAM into SAM…

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