randomguy123
New member
While you negotiate with an investor:
a. Don’t negotiate against yourself: Often the investors will ask you to revise the valuation number without giving their own number , saying that your expectation is too high. This is a technique to get you to reduce the valuation. In such cases, you should ask them to counter rather than reduce your number.
b. Don;t make too many points : Usually you will have 2/3 very strong points which you would like to project. Instead, if you get too many points, you will be attacked on your weaker points and the discussion will turn against you.
c. Don’t take a strong position without understanding the investors point of view.
d. Don’t give examples of other companies which are not comparable.
e. Be cautious of milestones. If there is a wide gap in the valuation offered by entrepreneurs and the one expected by the investor . an investor may offer an earn-out clause, where the founder gets additional shares on reaching milestones.
f. Try to close negotiations as fast as possible. A deal is not done till a definitive, mutually binding shareholders agreement is signed.
a. Don’t negotiate against yourself: Often the investors will ask you to revise the valuation number without giving their own number , saying that your expectation is too high. This is a technique to get you to reduce the valuation. In such cases, you should ask them to counter rather than reduce your number.
b. Don;t make too many points : Usually you will have 2/3 very strong points which you would like to project. Instead, if you get too many points, you will be attacked on your weaker points and the discussion will turn against you.
c. Don’t take a strong position without understanding the investors point of view.
d. Don’t give examples of other companies which are not comparable.
e. Be cautious of milestones. If there is a wide gap in the valuation offered by entrepreneurs and the one expected by the investor . an investor may offer an earn-out clause, where the founder gets additional shares on reaching milestones.
f. Try to close negotiations as fast as possible. A deal is not done till a definitive, mutually binding shareholders agreement is signed.