I think few things could be more rewarding than investing in a company that develops a cure or effective treatment for any of the hundreds of conditions that affect millions of people with no effective treatment. But finding the right company can be fraught with risk. That’s one reason why angel and venture investors have been allocating funds to later stage companies that carry less risk.
Luke Timmerman of Xconomy and David Sable, the portfolio manager for the Special Situations Funds, each compiled a handy list of red flags that should make prospective investors in startup life science companies pause. Here are six of them.