VC’s Warning: 2 Red Flags That Make Him Pass on Founders
In the fast-paced world of venture capital, seasoned investors often rely on a keen eye to spot potential pitfalls. Carles Reina, an angel investor with experience backing a billion-dollar AI firm, has shared crucial insights into what makes him think twice about investing in a founder. According to a CNBC report from November 1, 2025, Reina focuses on certain red flags that can signal trouble ahead.
The First Red Flag: Lack of Initial Traction
One of the primary indicators that gives Reina pause is the absence of early signs of success. As he puts it, “If the first signs are just not there, I usually don’t want to waste anyone’s time.” This highlights the importance of initial traction in the competitive landscape of AI and other startups. Investors, like Reina, are looking for founders who can demonstrate a clear ability to gain early momentum, whether through product validation, customer acquisition, or market penetration. Without these initial signals, the risk of investment increases significantly.
The Second Red Flag: Inability to Adapt
While the specific details of the second red flag weren’t explicitly stated in the provided context, the implication is that it involves the founder’s capacity to adapt to change. In the dynamic world of AI, the ability to pivot, learn from failures, and adjust the business model is critical. Reina likely looks for founders who demonstrate resilience and a willingness to iterate based on market feedback and evolving technological landscapes. This adaptability is often a key differentiator between startups that thrive and those that fail.
Why These Red Flags Matter
The reasoning behind Reina’s caution is clear: to avoid wasting time. In the high-stakes world of venture capital, time is a precious commodity. Identifying these red flags early helps investors allocate their resources more efficiently and focus on founders who have a higher probability of success. For founders, recognizing and addressing these potential weaknesses is essential for attracting investment and building a sustainable business. The ability to demonstrate early traction and the willingness to adapt are, therefore, vital components of a successful pitch.
The insights shared by Carles Reina provide valuable guidance for both investors and founders. By understanding the critical red flags that can derail a promising venture, both parties can make more informed decisions and increase their chances of achieving success in the competitive AI and tech landscape.
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