Last updated on
2024年9月29日
Facing valuation and dilution disputes with investors in a VC round?
由人工智能和领英社区提供技术支持
When facing valuation and dilution issues in venture capital (VC) rounds, you'll want strategies to stand your ground while keeping investors on board. Here's what to consider:
- Engage a reputable third-party evaluator to provide an objective assessment of your company's value.
- Offer alternative deal structures, like convertible notes, that might align interests without immediate equity dilution.
- Communicate transparently about your business plans and projections to build trust and justify your valuation stance.
What strategies have worked for you when discussing valuation with investors?
-
Most investors aren't trying to get into a heavy negotiation at the early stages (and especially when you get more than one term sheet). If an investor does have specific concerns about valuation or dilution that aren't just typical negotiating tactics, find out what their true motivation is. It may be the case an investor had a bad experience related to dilution with a down round. It is good to compromise, but it's better to give them exactly what they want/need and nothing more.
-
Dans un pareil contexte, il faut toujours : - Clarifier la situation au niveau de tous les acteurs en tenant un discours cohérent et franc et rechercher ensuite les causes Puis mettre en place des actions correctives - Ajuster la stratégie en optant pour une diversification en mettant l’action sur des produits rentables à court terme - Et enfin adopter une communication claire avec un Check up réguliers en mettant tous les acteurs au même niveau d’information
-
For startups, there are some well-established 'first principles' in place to help address these: 1. Venture Debt: Zero dilution. Danger being is you are introducing fixed cost to (often) variable revenue, thereby increasing risks of bankruptcy. Do so, only once revenues are predictable 2. SAFE - Kick the can down the road, Wait for the next round where a lot of uncertainties have been ironed out and by extension. 3. Competition for the deal: Get multiple term sheets - a time honored principle for optimal price realization of any asset. With one caveat - Quality of the investor DOES matter in the mid- and long-term; not all money is the same hue of green. Value addition and a congenial relationship with investors is of utmost importance,
-
Be Prepared for Compromise: While it’s important to stand your ground, be ready to explore reasonable compromises that address both your needs and the investors’ concerns. Utilize Expert Opinions: If applicable, bring in industry experts or advisors to validate your claims regarding market potential and valuation. Focus on Long-Term Vision: Emphasize your long-term vision for the company and how maintaining a strong equity position now can lead to greater returns in the future. Consider Phased Investment Rounds: If possible, discuss the option of phased investment rounds based on performance metrics. This approach can minimize dilution while allowing investors to reassess the company’s value as it grows.
-
To close a round, you need to find a middle ground where both sides feel a little happy and a little unhappy. As a founder, be the leader who drives value and uses data to prove it. Surround yourself with strong partners to help your company thrive—success is never a solo game!