The question is, do you negotiate or not?  While reading this chapter it reminded me of something I wrote in the first blog of this book, the show Shark Tank.  That is what the show is about.  Entrepreneurs coming to the table to negotiate the best deal with these investors.  They can take it or they can leave it.  You have both sides protecting themselves while trying to get the best deal.  These investors have a lot to bring to the table, and they know they are worth what they are counter offering to the entrepreneurs. 

            Every deal is different, and some angel investors may decide to not negotiate. Like I mentioned above, they know what they are bringing to the table and what it and they are worth.  Another aspect of negotiating is personalities.  I feel like a keep repeating this in every discussion, but the relationship you have between angel investor and entrepreneur will go a long way.  I do not want to negotiable with someone I feel is not is not quite up to par.  I have learned as I have gotten older and meet more people, there are many snakes in the grass. This is where having people in your corner, lawyer, financial advisor, and other people who are smarter than you to discuss deals with.  Make sure you are negotiating fair. Weed out the deals that not good or you do not feel comfortable with and work with the ones that are good.

            This book once again is showing me how much I do not know about investing. I still feel this route is not for me, but, I will research it more and take my own advice and talk with people who deal with these sorts of interactions and learn from them.  Listen to what they have to say and take it all in for consideration. In order to grow, I know I have to step out of my comfort zone and talking with angels would definitely be out of my comfort zone.  It could be the biggest blessing in disguise.

8 Comments

  1. Hi Katherine,
    This section more than any has also made me realize the need for a good lawyer and financial advisor on your side. The complexities of negotiating these terms seem intimidating and overwhelming. Having someone with experience on your side is the best way to make sure those snakes don’t come for you. While I am in no position to invest either I would love to be able to begin in the near future. Not exactly in these make-or-break kind of deals, but in other areas with smaller stakes. I have a friend who is considering opening a bakery and cafe. Knowing their level of experience makes me want to invest in them. Coming back to your original point, I’m not investing in the company I’m investing in them. That relationship really can’t be properly negotiated.
    Brian G.

    Like

    1. Brian,
      I completely agree, at the end of the day, you are investing in the person. I love that take on it. While reading this book, I have always know relationships are important, but it has shown how important different types of relationships are. I am not in any position to invest on a large scale, but it makes me realize that before I would ever invest in any business, I would negotiate. I have to be in the know.

      Like

  2. Katherine,
    Having a network of people to consult with is so important in these negotiations. I also like your emphasis on relationships again with this topic. You should be choosing to go into business with someone that you trust and work well with. If the negotiation process sours that relationship, then it is probably not a deal worth making. Both parties should feel good about the deal being made in order for the business to have the greatest chance of success.

    Like

  3. Zach,
    I feel this is so important. Before I as an entrepreneur would make a deal with anyone, I would reach out to my lawyer, financial advisor, and those that I know have my best interest at heart. Sometimes we can not see the forest for the trees and need help from others to clear that path.

    Like

  4. Katherine,
    I like how you keep coming back to relationships. That is really what this book is all about. Angel investing is completely focused on the relationship you build with the entrepreneur and your fellow angels. Performing investments of this nature becomes much easier once you have your foot in the door and relationships established. Great thoughts!

    Joe Rudy

    Like

  5. Hi Katherine,

    Oh goodness— This chapter especially made me painfully aware of how much I don’t know about the practices inherent in investing effectively. I also feel as if it isn’t a route I want to take for my business, but I never could have imagined how complicated investing is from either perspective. I really enjoyed reading your thoughts about this. I would guess if I found an investor who was very transparent about their processes, I would be more inclined to potentially engage with them, but I definitely would need a network of people to steer me in the right direction. It seems like “winning” angel investors are aware of how complex this process is and work WITH entrepreneurs to negotiate the process with more ease, from what I am reading. Excellent post this week!

    Cheers,

    Taylor

    Like

  6. Hi Katherine,
    I appreciated your post on negotiating. I have been bit a few times and still learning from mistakes that I have made. One I would consider more of a snake, but the others were good people, not nefarious, just not good deals. As a few others shared, having proper counsel is key. If I had proper counsel, I would not have made the mistakes that I have made. Best – Ed

    Like

  7. Hey Katherine,

    The section that talks about the “Big Wings,” which are angel investors that arrive at the deal with significant success and that are typically well known, reminded me of the “Shark Tank” episode as well, and interestingly enough, when entrepreneurs are on that show there isn’t too much negotiating because a lot of them are happy to get an offer in knowing that these investors have significant success and learn how to run a business.

    I agree with you that on specific investments and even as an entrepreneur getting funding from confident investors that it wise to obtain professionals such as a specialized lawyer and accountant to help you negotiate to be sure you are getting a fair and trustworthy deal.

    Best,

    Stokes Warren

    Like

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s