Money has been the main issue faced by the majority of startup companies. Unless you have millions of dollars to start your business, you will need many investors to make your startup grows.
Unfortunately, getting venture capitalists is not as easy as falling off a log. There are many ways that you will have to do to assure them investing their money in your startup.
Knowing Your Financial Standing
Inviting money means letting them know your financial standing. You are to define the profits of your services or products, its manufacturing costs, and the number of services or products people buy from your company. All those data will be used as considerations in the negotiating process.
You are to be ready for any questions dealing with your startup’s financial condition. There is also a huge possibility that essential financial facts will be divulged in this process.
However, you have to be confident in delivering it. There is no other way to invite the investors than giving them a promising future of your startup. However, you must know your numbers. For example, if you watch the Shark Tank show, you will see that the investors always ask entrepreneurs their business numbers in terms of sales, revenue, profits, etc. If you don’t know your number, it’s very hard to make investors say yes.
Being Clear about Non-Negotiable Conditions
Clarity is what you need to emphasize when it deals with millions of funding. You have to be clear about the things you will and will not do during negotiation. Being too flexible about some conditions will just split the investor’s focus and make negotiation lasts longer. Offering non-negotiable conditions will also save both you and your investors from possible troubles in the future.
Focusing on Value
Hold yourself from being over excited of the deal’s valuation. You have to put your primary focus on the value as well. Before going for a negotiation, you have to design a plan on essential values in your company that you want to hold on. For instance, you still want to keep your voting rights on the company’s important decisions.
Reaching for An Understanding
Both you and venture capitalists are to be clear about everything during negotiation. Reach an understanding for every point in the discussion by communicating straightforwardly.
For instance, if your venture capitalist aims to have full participation rights in your company that lets him doubles the investment, be sure that both you and the investor understand what this means in the long-run. You surely do not want to sign an agreement without fully understanding it.
This matter might seem very cliché. Lots of people already know that it is good value. However, you have to take it seriously in a negotiation aiming to raise funding for your startup company. Tell honestly about your company’s valuation to the investors. Do not overestimate it.
It is indeed important to let them see a promising future of your company. Yet, you cannot make up facts just to invite the venture capitalists investing their money on your startup. Building a trustworthy relationship is the key to a successful negotiation.
Raising money for your startup is indeed challenging. You have to push yourself out of your comfort zone and unveil some private conditions in your company to the investors. All you need to do is make an effective negotiation that is beneficial for both parties taking part in the process.