Okay, I ended the structure post on talking about negotiations, and here we are. The next subject we are bringing to life is negotiations. Take it or leave it? Is everything negotiable? What is the correct answer? The common factor I see in these vital subjects is timing. The direction the investor takes depends on where they are in the deal. The entire time I was reading this section, all I could think of was Shark Tank and some of the good and bad deals that have been offered during the show’s history. I am attaching a short clip for fun.
Now, back to the book after that short break. Under the title “Best Case Scenario,” winning angels mentions seven things winning investors want when investing. They are as followed:
The ability to share in the winnings
Return of capital as soon as possible
A feeling of having contributed/made a difference
The ability to get out if circumstances change
Those seem so simple to achieve. I find it essential to keep those seven points in mind when dealing with an investor in negations in the entrepreneur position. Next, when it comes to negations, it is super essential to make sure you are very clear in what you want. Giving an unclear message can make the entire process complicated. What do they want, and what do you want. Make sure to know this. Each person wants something, and that is the quickest way to a solution or even ground.
7 thoughts on “Everything is negotiable.”
I compared this portion to shark tank as well. That’s what I was thinking of while I was reading the chapter and while I was researching angel investors before the class even started. I love watching them wheel and deal, and those investors are not afraid to say, hey, I am bringing this to the table, if you are not willing to see that, I am out. They make it very clear as to what they want.
I think that focus on clarity is one of the most important aspects of being an entrepreneur. Having more transparency in the negotiation process will assure that no one is trying to take advantage of another. Being able to cut through the jargon and posturing is important when negotiating and establishing a partnership or collaboration. A lack of clarity will only draw out a difficult process even longer.
Being clear and honest upfront seems to be the best way to approach negotiating. I feel as though if both the investor and the entrepreneur go in with a fair bargaining range and are open about those ranges, then a fair deal can be made. Worst case scenario is that no deal is made and sometimes that ends up being the best deal for both parties. Great post!
Shark Tank is a lot of fun to watch, and I will definitely do so now with a different lens. On the surface, negotiations seem so straightforward, but so many things can go wrong. I would lean towards the relationship aspect and shy away from negotiations to preserve the investor/entrepreneur relationship. If one is to negotiate, keeping the list of seven things you mentioned in mind would be paramount. Good thoughts!
Excellent post and discussion. I always enjoy your unique takes on our coursework.
I hadn’t really thought about the prospect of timing being a huge factor, but you are absolutely correct. A seasoned investor likely has some sense of proper timing and implementation, so it is just as likely that they would not necessarily need to negotiate to make the deal. The list you added from the book offers a very logical framework to the intrinsic needs of investors and can be very helpful for us as entrepreneurs.
I think it is hard not to think about Shark Tank when thinking about negotiating. I am glad you shared the seven things winning investors want when investing. Although they would appear simple, I think they are much harder in practice when we are dealing with humans (and egos!). Best – Ed
Thank you for sharing that clip of Shark Tank. I don’t regularly watch the show, but I see how it is an excellent example of negotiation. I agree with your comment that it is vital to keep the seven items in mind when negotiating with an entrepreneur. An investor shouldn’t ask for too much in that doing so may kill some drive and passion the entrepreneur has to move the business forward. I found the point that identifying a “fall guy” to do the negotiating to be amusing.