How to Negotiate a Term Sheet with a VC

Matt Blumberg:

Based on the financings I’ve seen and worked on – both as a VC and as an entrepreneur – my Top 10 biggest takeaways for entrepreneurs are as follows (not in any particular order):

1. Get a good lawyer
2. Focus on terms that matter, otherwise known as Pick your battles
3. Always have a BATNA (Best Alternative to a Negotiated Agreement a fancy way of saying Plan B)
4. Be prepared to pay up for high quality investors
5. Ask for references
6. Don’t let the VC get away with negotiating a point by saying “we always do it this way
7. If you have multiple investors in the syndicate, insist on a single investor counsel and a lead investor
8. Try do deal in advance with follow-on financings
9. Handle the term sheet negotiation carefully
10. Finally don’t forget to say thank you at the end of the process

Matt goes into much more detail in his post.

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