10 Red Flags Growth Equity Investors Watch for During Due Diligence
The due diligence process is not merely a matter of checking numbers— it's a matter of spotting would-be deal-breakers that can explode a growth equity investment. Investors need to spot red flags like shaky finances and an unreliable team. Here are ten key warning signs that should raise alarm and further trigger investigation. 1. Overstated or One‑Off Revenue Claims If the spikes in revenue are based on one-off deals and not repeat streams, it's a big risk . Investors want stable, repeatable income, particularly in SaaS companies. An analysis on Medium points out this as an all-too-often mistake in early-stage transactions . Medium 2. Unrealistic Financial Projections & Unit Economics Overt forecasts usually have little data grounding. Weak unit economics (such as CAC without the backing of LTV) imply little profitability potential. VC veterans stress the significance of good assumptions and good KPIs 3. Disharmony ...