How can you negotiate for more control over your startup?

Securing startup capital is an art, not a science. However, you can educate yourself to understand what factors might influence negotiations. Influenced by factors such as the industry sector your innovation applies to, the size of your market to serve end-users, revenue projection and business model, geographical impact (e.g., Silicon Valley vs. Paris), and co-founder track records, especially previous exits. Your company's stage, demonstrated user/revenue growth, and a robust roadmap play pivotal roles. Confidence in your team's execution capabilities, a clear plan, and industry benchmarking enhance negotiation prospects. While optimism is key, realism is crucial; compare against similar companies for fair valuation expectations.

The implied know how, when innovating in a new product or service, sits with the founders (or product managers, if the startup already scaled). Investors are typically too distant to value the details, and sometimes even try to find similarities with existing businesses.

The only control you really need is to make sure there's a consistent product-market fit and that everyone understands the vision and stays motivated. If you can consistently convince investors, board and employees that there's a demand out there for the product, you'll have the control anyway.

Most investors look at a new venture from their perspective whether this new investment opportunity does diversify enough with the existing portfolio. Marketability of the product, growth rates and ability to be contestable to upcoming competition are other important factors for an investment choice. Understanding investors means to build a story that fulfills their needs for diversification and yield expectations.

Consulting a seasoned lawyer is crucial. They decode complex terms, safeguard your rights, and anticipate potential disputes, ensuring your interests remain protected. Legal advice provides the clarity and confidence needed in negotiations, steering you away from costly missteps. It's a preemptive strategy, vital for steering negotiations smoothly, safeguarding your startup's future, and averting regrets down the road. Seeking legal guidance is akin to securing a sturdy foundation for your entrepreneurial journey. ????

One of the top tips I have here is to join a few startup communities and try to get a sense of the terms other startups in similar spaces and with similar business models have been able to negotiate. How does your traction (what you’ve already achieved/proven works) compare? We recently helped one of our community members negotiate better terms with an investor because we quickly asked around our network, found someone else backed by them and were able to compare terms and find more wiggle room.