What an exciting section. No jokes, there are so many choices. Each angel was different; hence each their own. I guess when it comes to structuring, we all like it in different ways. Is there a right way or wrong? I think that depends on who you are asking. I appreciated the menu comparison when starting the section. It laid out the process to help me better understand, and I am always down for comparing anything to food. I want to skip back to the small section right before the menu analogy.
Is the structure irrelevant? Say, what? Yes, if you have read my other post, you will notice a trend of me picking the most off-beat paragraph, but it was something that stuck with me the entire section. Do we have the choice in the structure? Are we subject to work with what is in front of us and slightly tweak it to feel like we have some say in how things are done? Now don’t get me wrong, I think the entire process and understanding it is vital, but also there are times we have to roll with what is given to us.
Say I am an investor; I like the vision, numbers, product/service, and the entrepreneur. Am I going to allow the opportunity to slip by if I am not 100% down with the structure? Probably not. Now, again, I know this does not apply to all deals. I know that there are some significant kick butt people out there who get things exactly the way they want, but I think the power of negotiation on both parties is beneficial.
(2011). Angel Investors’ and Entrepreneurs’ Intentions to Exit Their Ventures: A Conflict Perspective. Entrepreneurship Theory and Practice, 36(4),.
Truly Jae 
Jae,
That’s a good point of view on this particular section. It is amusing that the further I read in this book, the more I realize that many angel investors do not apply many of the fundamentals at all. They know OF the fundamentals, but don’t/can’t apply them in many circumstances. Like you mentioned towards the end of your post, the investor cannot always have it their way. Good thoughts!
Joe Rudy
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Jae,
Nice thoughts. It was a section full of many options which honestly felt a little overwhelming at times. Structuring a deal definitely has to be one of the more stressful times for an entrepreneur and his/her potential investors. There seem to be so many ways to go about doing it. Getting advice from people who have done it before seems like a great start. I like how you mentioned that even though the structuring of deals may not exactly line up with the preferences of all parties involved, it is important for them to remember that some minor details may not be worth fretting over if it is a deal with a lot of potential upside. As mentioned in the book, some of these details shouldn’t matter as much to investors with smaller investment opportunities. On the flip side, I can see how larger investments would make the details more important to the investor.
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Hi Jae,
Great point about negotiation on both sides being beneficial. I also agree that sometimes the structuring is an exercise in futility. I think much of the business world and the back forth in these situations can be looked at as peacocking. Often times in meetings or business discussions I just want to cut straight to the chase instead of going back and forth saying the same thing in different ways. To me, time is money, and often times it’s more important to move along a process quickly rather than try and squeeze every penny out of a deal. That being said I am not dealing with these enormous sums of money. I may be more careful if it meant six figures were on the line.
Brian G.
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Hi Jae,
Great post! I think you raised a really important point, in that something lacking a cohesive structure may not necessarily be a deterrent to some investors. Sometimes the structure can be added later, or reconfigured to meet the needs of the business owner and investor. In smaller startups, I think this makes quite a bit of sense, as many fledgling business owners may not have their structure completely fleshed out yet. When exchanging larger sums of money, though, I would hope both parties would have a clear idea of how the business is to functionally operate, as a failure or loss could be devastating.
Cheers,
Taylor
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Jae,
As Zach mentioned, I really liked you mentioning that the structure of a deal may not line up with both party’s preferences. Sure minor details are important in many aspects of business planning and investing, but they should not cloud either side’s vision of the overall goal that is working the be achieved. AS we learn at a young age, not everything is going to go our way all the time, and when it doesn’t, we need to know how to be resilient and cooperative.
Great post!
Brittany
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Jae:
I believe you raise a good point here: there are many types of entrepreneurs and investors. If the deal structure doesn’t work for you, then it’s ok to walk away and find one that does. After all, you’ll have to live with the outcome of the deal. For me personally, as an investor, the deal better have preferred stock.
Adam
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