I had a meeting with an angel investor earlier this week. She had started 4 companies in the last 30 years. Now she’s looking at startups to invest in. She talked about her experiences as an entrepreneur and how she had to negotiate with her board of directors, investors and banks.
She pointed out that a lot of deals die because one party is too tired. This is absolutely true. A negotiation can be a long and tiring event. No one likes to negotiate for long hours. There are people who even fear to negotiate.
How do you prevent this? This is specific to entrepreneurs who are looking to negotiate with venture capitalists or other investors.
1) Keep up the momentum
2) Do due diligence on investors
3) Keep valuation of your company in perspective
4) Ignore minor issues
5) Understand the term sheet and its implications
A lot of negotiations ended up negotiating over trivial points. This is the very reason why a lot of deals die.
What’s really important in a negotiation? What’s important to you? What’s important to the other party?
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