How to Negotiate a VC Term Sheet
On his blog, OnlyOnce, first time CEO, Matt Blumberg, who runs email services provider ReturnPath.net, offers this advice on negotiating a VC investment term sheet:
1. Get a good lawyer...
2. Focus on terms that matter, otherwise known as "pick your battles"...
2a (new). Sacrifice valuation for a clean security...
3. Always have a BATNA (Best Alternative to a Negotiated Agreement – a fancy way of saying Plan B)...
4. Be prepared to pay up for high quality investors...
5. Ask for references...
6. Don’t let the VC get away with negotiating a point by saying “we always do it this way.”...
7. If you have multiple investors in the syndicate, insist on a single investor counsel and a lead investor...
8. Try to deal in advance with follow-on financings...
9. Handle the term sheet negotiation carefully...
10. Finally, don’t forget to say thank you at the end of the process...
The full article is well worth reading here.
