Looking for an investment of an HVAC? Bring these 3 tips to the trading table – TechCrunch
As venture capitalist the flows continue to fluctuate, the founders must double the conditions on which they have agreed. While it can be tempting to overlook certain terms in an effort to close a deal, founders should remember that almost everything in a deal is negotiable.
Many contractors tend to focus only on evaluating the business during discussions, but often other terms of the contract can have much more impact. The problem is that founders, at the start of their business, often don’t want to hire lawyers because of the costs involved, so they don’t have the legal knowledge or experience to negotiate the best deal possible.
But when you’re dealing with corporate venture capital (CVC), where companies have experienced and dedicated legal teams, founders need to enter negotiations with an understanding of the legal dynamics. This will allow them to be creative with their requests and implement more effective terms for both parties.
Drawing on my legal expertise as head of Wayra X, Telefónica’s investment vehicle, and conversations with founders at the negotiating table, here is my advice for dealing with CVCs.
CVCs also include start-up negotiations
Especially right now, you should feel like you can still challenge investors’ terms and voice your preferences.
It may seem like you’re up against Goliath when trying to negotiate with CVCs, but the size and experience of their legal teams doesn’t automatically give them an advantage. Yes, CVCs are more used to preparing M&As and high profile deals, but they should be able to change their thinking when working with startups.
This means being able to work effectively with a smaller team, write contracts in plain language, and clearly detail requirements before anything is signed.
Nor should CVCs run counter to the wider investment world; their size does not allow them to operate outside standard processes. So if they come up with terms that would seem out of place in a traditional investor contract, founders can definitely call them out. Likewise, if a CVC wants to tie the investment through a commercial agreement, you can refuse, especially if there is a possible conflict of interest.