If you are in the process of or about to start negotiating for VC fundraising, then you need every bit of help you can get. Negotiating can be hard. When you are sitting across the table from someone who is a professional negotiator it makes it even harder. Stay nimble during the negotiations with these hacks.
Don’t settle for “its market standard” – When you are told this, don’t accept it at face value. This line is often used as a tactic to dissuade you from negotiating a point. Challenge this when it is said to you. Ask for more information or why this standard applies to you.
Find your leverage – Everyone has some leverage. Even if you have only one offer and your plan B isn’t much you need leverage. The one thing every founder has is personal bandwidth. This fundraising is likely everything to you. In comparison, it is unlikely to be the only deal the VC is working on and they are not likely to be personally committed like you. Use this to your advantage.
Compromise is a strength, not a weakness – Fundraising negotiations should aim for a win-win outcome. Compromise is therefore not a sign of weakness but a sign of strength. After all, you need to build a lasting relationship with the people you are negotiating with.
Don’t overplay multiple offers – If you are in the fortunate position to have multiple offers don’t leverage this too hard. You should disclose you have multiple offers but don’t disclose who the VCs are or any of the key terms of the offers. Trying to game people against each other will often fail. It is a small world, people talk, and they won’t like to outbid each other.
Have a strategy for discussions – When entering the negotiations don’t just have a list of terms you desire but also the order you intend to discuss them. Having a strategy of how the negotiation should play out allows you to guide the discussion as it progresses.
Understand that as a founder you are an expert in your business, your tech, your customer and your industry. You are not expected to be an expert at negotiating for fundraising. With these hacks, you won’t be able to outwit them, but you should be able to negotiate a better position than you otherwise would have.