Risk dimension
Team & Founder Risk
Founder-market misfit, key-person dependency, co-founder conflict, leadership gaps
Key-person dependency can concentrate execution risk in a single founder.
01Solo non-technical founder building a deep-tech product
023 co-founders with identical skill sets, no commercial lead
03CTO left 2 months before fundraise, not disclosed
Risk dimension
Market Validity
TAM inflation, adoption friction, timing mismatch, competitive saturation
Top-down market sizing can obscure the realistically addressable segment.
01Claiming $50B TAM but addressable segment is $200M
02Product requires behavior change in a regulated industry
035 well-funded competitors launched in the last 12 months
Risk dimension
Product & Tech
Technical debt, build-vs-buy fragility, no defensible IP, scalability ceilings
Outsourced core logic and unclear ownership can constrain defensibility.
01Entire product is an API wrapper with no proprietary layer
02Single-server architecture with no horizontal scaling path
03Core algorithm uses open-source models with no fine-tuning
Risk dimension
Financial Health
Burn rate unsustainability, revenue-expense contradiction, margin erosion
Revenue inconsistencies are surfaced for evidence-led verification.
01Burning $180K/month with $90K MRR and 4 months runway
02Revenue grew 3x but losses grew 5x in the same period
03Customer acquisition cost exceeds lifetime value by 2.4x
Risk dimension
Valuation Fairness
Overvaluation vs. sector benchmarks, dilution vulnerability, cap table red flags
Valuation assumptions are tested against the evidence supplied in the deal materials.
01Pre-revenue startup seeking $25M valuation in a down market
0240% of equity allocated to non-contributing advisors
03Previous round priced higher than current ask, down round signal
Risk dimension
Execution Risk
Delivery compression, hiring bottlenecks, go-to-market failure patterns
Delivery commitments can expose hiring, capital and sequencing constraints.
0112-month product roadmap with 3 engineers and no DevOps
02Enterprise GTM strategy but zero sales hires on the team
03Launched 18 months ago with 4 pivots and no retained users
Risk dimension
Legal & Compliance
Regulatory exposure, IP ownership gaps, pending litigation signals
Undisclosed IP assignment gaps trigger automatic compliance flags.
01IP developed during founders' previous employment, unresolved
02Operating in fintech with no regulatory license or counsel
03Sector-specific data processing with no compliance plan
Risk dimension
Exit Pathway Risk
No viable acquirer landscape, IPO readiness gaps, liquidity timeline mismatch
An unsupported liquidity pathway is recorded as an unresolved evidence gap.
01Niche vertical with zero M&A activity in last 5 years
02Fund expects 3-year exit but sector average is 8+ years
03No strategic acquirer alignment, purely financial exit hope
Risk dimension
Cognitive Bias Alert
Confirmation bias in due diligence, halo effect, anchoring on vanity metrics
Anchoring, halo effects and confirmation bias can distort committee discussion.
01Lead partner anchored on founder's previous exit, ignoring current metrics
02Team uses 'downloads' as traction metric, zero revenue correlation
03FOMO-driven urgency: 'round closing in 48 hours' pressure tactic
Risk dimension
Macro & ESG Exposure
Geopolitical sensitivity, supply chain fragility, ESG compliance gaps
Unstated geographic dependencies are surfaced as structural exposure.
01Single-source hardware dependency from geopolitically unstable region
02Carbon-intensive operations with no ESG reporting framework
03Cross-border data flows with no regional privacy controls