How to Negotiate with Investors: Tips for Founders

Name: How to Negotiate with Investors: Tips for Founders
Uploaded: 2024-05-28T13:02:47+00:00
Duration: 31 s
Channel: Jason M. Lemkin
Description: In this segment, Jason M. Lemkin advises startup founders on how to use multiple term sheets as leverage during fundraising negotiations. He suggests…

28 May 2024 · 1 min

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In this segment, Jason M. Lemkin advises startup founders on how to use multiple term sheets as leverage during fundraising negotiations. He suggests that when a founder already has two favorable term sheets, they can adopt a more aggressive stance with a third potential investor, requesting a rapid decision (e.g., by Friday or even the same day). However, Lemkin cautions against fabricating urgency or applying excessive pressure, warning that such tactics can cause investors to walk away. He emphasizes the importance of genuine confidence—in the startup’s vision, financial model, and pitch—while maintaining a respectful, non‑coercive approach to investors.

Chapters

If you have 2 term sheets at, on terms you like, you can be a little aggressive on the third. You can say, I need an offer by Friday, by tomorrow, by this afternoon. But I see too many founders sort of fake it, and maybe they're nervous and maybe they haven't done it before. Maybe they got bad advice on YouTube or on the internet, but don't go in too strong. Be confident of what you have. Be confident about your future. Be confident about your financial model. Be confident about your pitch, but don't put investors under excessive pressure to write a check, or they may just walk for that reason. By the same token, this is tricky.