Do you know that you can raise seed funding for your startup as long as someone truly believes in what you are actually offering? You can talk to your friends and family and see if they can help you out or you could use your own money to start your business. But if you want to raise your capital and reach out to more good investors, you need more than your smile to raise your funds, you also need good negotiating skills to get the job done.
Be Prepared and Plan Ahead
Don’t assume that once you talk to your close relatives that they will chip in. Whether you are aiming to get funds from your family or friends and big venture capitalists, you need to lay down your business plans and investment resources.
Before meeting your investors, it is critical that you have already drafted your investment terms. Make sure you are prepared to explain and defend your cost projection and other questions they may have in mind.
Know Your Wants and Needs
Make certain that you know your minimum or what level you are not going to go lower than you can handle before meeting your shareholders. Never go into a negotiation without considering your hard and soft limits or you might regret saying “Yes” to the deal you made the next day.
While your heart may be pounding a little too fast during negotiations but don’t allow them to see you are nervous especially when you are talking to business angels. Investors will confidently put money with entrepreneurs who also show confidence with their startup business.
Negotiations are not just a one sided deal
While you may always want your investors to listen to every word you say and agree with you to finally give you your seed, your investors are also thinking of ways on how they can get what they want from you that will eventually end up giving them more profit.
As you also assess the situation and your capitalist needs and wants, you can allow your minimum limits that will work the best for the both of you. But make sure you have assessed these limits so that there won’t be any regrets from you in the future.
Create Standard Terms that are non-negotiable
Some investors may want to create and restructure your own investment terms but try to avoid letting them do this unless they would lead the whole fundraising. Do not be tempted in creating individual terms with them as this will also give you a headache in the future especially when you have paid back certain investors and the others are still not. In most cases, they will prefer you giving them standard terms as they can evaluate your business proposition further.
Always remember that you want investors to be lured in your company and not to drive them out. A good negotiator needs to be fair or the deal may just fall apart if they feel that they are not going to get any good thing out of what you are offering. Most lenders want to have a fair arrangement or a fair deal so make sure you know what the other party considers fair and what is not to avoid possible misunderstandings.
Make Them Trust You
Don’t let your business partners mistrust you by not sharing necessary information with them. As much as possible, share information and issues that you think will be relevant to all parties. Be more open and let them see that you are expanding the pie which could create a win-win situation for everyone.
About the Author: Elena Tahora is an avid traveller and a food lover. She is the digital marketing manager for afterfivebydesign.com. When she is not working or travelling, Elena volunteers at Project Cora, a foundation that advocates sustainable tourism.