wzek1213
Apr 261 min
๐ค
First Time for You. Not the First Time for Them ๐ค
This is how you master VC Negotiations. ๐
Congratulations!
Youโve found a VC that wants to invest in your startup.
They send you the term sheet.
It is good? Bad? Standard?
You must understand common term sheet terms such as:
๐น Valuation
๐น Liquidation preference
๐น Voting rights
๐น Anti-dilution provisions
๐น Board composition
A term sheet is great:
๐ Now you can go back to other firms and tell them you have a Term Sheet (leverage the leverage).
Of course, there will be changes you want to make to it.
Some negotiators advise conducting ALL the term sheet changes you want to see and sending it back.
Iโd take this with a grain of salt especially if you donโt have a BATNA (Best Alternative to the Negotiated Agreement).
Once you make the changes you deem necessary you send it back:
๐ฌ โWe are prepared to accept the deal as we red-lined itโ โ this signals the end of negotiations.
Note that being too aggressive with your asks may turn some investors off.
Negotiate in writing to give yourself time to consult lawyers and field experts.
Hope the flowchart provides some guidance.
What is the best negotiating advice you were given? I am curious to know.
#startups #fundraising #venture
Source: Alex Iskold