Hello Blog readers! I will be continuing to use Amis’s and Stevenson’s (2001) information regarding angel investing in their book Winning angels: The seven fundamentals of early-stage investing. I will be sharing valuable information in this Blog from Amis and Stevenson (2001) about Negotiating.
Why is Negotiating important?
Let’s say you have pitched your new venture to an angel investor and they appear to be interested in your venture. You want to be sure that you close the deal and to close the deal it may take negotiating.
The article, Negotiating with Angel Investors (2019) states, “…negotiating with angel investors becomes a very important and prime feature in a business environment” (para. 1). There are several considerations that new entrepreneurs should be made aware of which include: entrepreneurs should use their pitch to an angel investor to target the immediate goal, your conduct is being evaluated by the angel investor, giving an angel investor 20% of your company is reasonable, entrepreneurs should be able to show company value, and an angel investor may want to be on your board of directors (Negotiating with Angel Investors, 2019).
The following is a link to the complete article which may help you understand negotiating with angel investors:
Now that we know some points that entrepreneurs should be aware of let’s discuss the point of view from the angel investor. Amis and Stevenson (2001) note that some investors negotiate and some do not.
Negotiating approaches include direct negotiation, one-shot offers, and negotiation led by an outside party. For those angel investors that do not negotiate several factors come into play including: the price, terms, investment, and role (Amis & Stevenson, 2001).
Amis and Stevenson (2001) point out that “Determining a negotiation strategy requires consideration of your (the angel investor’s) preferred role, time availability, preferred relationship with the entrepreneur, whether you are the lead investor, and the amount of capital you intend to invest” (p. 225).
One thing to be sure of, if you have an angel investor interested in your brand new entrepreneurship venture, then take the time to appeal to what they are looking for…if you want to obtain their funding. From reading back through previous Blog posts, readers will remember that the entrepreneur must be at the top of their game plan in all aspects of their venture. Investors are looking for competent entrepreneurs who are on top of their game. The entrepreneur is being evaluated in every arena. Therefore, entrepreneurs must be prepared in all areas including when it comes down to negotiating. Be sure to take a look at the full article at the link posted in this Blog for ideas already mentioned in this Blog along with other ideas to prepare for negotiating. Preparation is a key to success. You want and need for your venture to be and remain successful over the long haul. Obtaining an angel investor or two could just be what you need to push your new venture into success and to keep it there.
Amis, D., & Stevenson, H. H. (2001). Winning angels: The seven fundamentals of early-stage investing. London: Financial Times Prentice Hall.
Negotiating With Angel Investors. (2019). Retrieved May 23, 2019, from https://www.angelinvestorreport.com/negotiating-with-angel-investors/