Pitching the concept and strategy to prospective investors is a vital stage for entrepreneurs seeking startup fund.
But it doesn’t end with a successful pitch; I’ve seen startup entrepreneurs pitch fantastic concepts but never receive the cash they need to build their businesses because they lack negotiation skills.
Recognizing what works and what doesn’t with well-grounded investors who’ve gone through it before is even more critical for those who are fortunate enough to reach the point of actually negotiating your startup fund.
I believe that with these steps, you will learn how to negotiate your startup fund
Establish a closing date from the start
Always be aware of your intended result and what you consider to be a reasonable result. Consider what a deal would imply for you and your company, and identify the dealbreakers before engaging in negotiations with possible investors.
Simultaneously, try to identify what the eventual goals of the investors are likely to be, and leverage this by constructing a vision that coincides with their aims.
Great startup negotiators always look at the problem through the eyes of the other party. Highlight how the deal will be of an advantage to them and assist them, in putting the pieces together on how you plan to establish a game-changing company.
Don’t be scared when you hear “NO”
The most effective startup negotiators are concentrated and committed people who comprehend the motivations of both parties.
Don’t be hesitant to express your desires, and don’t be disappointed if you hear “no” from time to time. That is unavoidable. However, in a negotiation, “no” does not always mean “no.”
As a matter of fact, hearing the “no” often means you are closer to your goal than you think, don’t get frustrated because the word yes will follow soon.
Furthermore, investors adore and seek out persistence in a business founder. Even if money isn’t provided the first time, your perseverance and ambition may entice investors to come back to you another time.
Remember that little is more
This is quite crucial. Before you start negotiating, try to narrow down your chances as much as possible. Most startup entrepreneurs get into negotiations with a variety of finance and investment options.
Choose the two or three best possibilities, and make sure you understand and can communicate the distinct advantages of each.
Keep things simple, and make sure your messaging is the same and consistent across all selections. Resist sounding unsure about the best way to proceed.
Investors may have different views, and you’ll want to keep some wiggle room. However, confidence is essential.
Concentrate on the big picture
Acknowledge the bigger picture, focus on it, and avoid getting bogged down in minutiae. Trust your intuition, and if you think the bargain is fantastic, don’t let tiny details get in your way.
It pays to attempt to distance yourself from the contract and not let your pride or feelings get in the way. All too often, startup negotiations fall short because one or both parties are distracted by personal matters irrelevant to the trade at hand.
Make small steps forward
Don’t be too quick or too enthusiastic, as a startup negotiator, I understand your need to get startup fund. The fact that the pitch went well and that an investor is eager to continue talking does not guarantee that the deal is done.
Request the next step, and ensure that you thoroughly comprehend any offer, as well as the unavoidable terms that come with it. Yes, momentum is essential. However, before making any decisions, ensure that the key aspects are properly understood.
Provide an escape route
It may also be necessary to provide investors with the broad strokes of a viable exit strategy. In a nutshell, they’ll want to know when and how they’ll get a return on their investment.
They may like your concept, but if they don’t believe they’ll make a lot of money from it in a fair amount of time, they’ll likely seek elsewhere.
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