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Looking for an investment from a CVC? Take these 3 tips to the negotiation table – TechCrunch

as venture capital As flows continue to fluctuate, the founders must double down on the agreed terms. While it can be tempting to overlook certain terms in order to close a deal, founders should remember that almost everything in a deal is negotiable.

Many entrepreneurs tend to only focus on the company valuation in discussions, but often other clauses in the contract can be far more effective. The problem is that founders often do not want to hire lawyers in the early stages of their business due to the costs involved and therefore do not have the legal knowledge or experience to negotiate the best possible deal.

But when you’re dealing with corporate venture capital (CVC), where firms have experienced, dedicated legal teams, founders need to enter negotiations with an understanding of the legal dynamics. This allows them to be creative with their requests and implement more effective conditions for both parties.

Based on my legal expertise as head of Wayra X, Telefónica’s investment vehicle, and conversations with founders at the negotiating table, this is my advice for dealing with CVCs.

CVCs also understand startup negotiations

Right now, you should feel like you can still challenge investor conditions and voice your preferences.

It may seem like you’re dealing with 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&A and high profile deals, but they should be able to change their mindset when working with startups.

This means being able to work efficiently with a smaller team, writing contracts in plain language and breaking down requirements clearly before anything is signed.

CVCs shouldn’t go against the grain of the broader investing world, either; Their size does not allow them to work outside of standard processes. So when they come up with terms that would seem out of place in a traditional investor contract, founders can definitely call them. If a CVC wants to tie the investment through a commercial deal, you can also opt out, especially where there is a potential conflict of interest.

Looking for an investment from a CVC? Take these 3 tips to the negotiation table – TechCrunch Source link Looking for an investment from a CVC? Take these 3 tips to the negotiation table – TechCrunch

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