Startup Funding Espresso -- Negotiate Good Terms
Hello, this is Hall T. Martin with the Startup Funding Espresso -- your daily shot of startup funding and investing. A key part of angel investing is negotiating terms with the startup. It\u2019s important to take time to negotiate good terms for the investors in your group. Key areas to focus your negotiations include the following: Valuation - this is the most important term as it determines equity ownership and is the primary determinant of returns. Option pools and who pays for them - the options pool is important to the growth of the company as it incentivizes the team. The investors could pay for a portion of it as part of the overall negotiation. Board composition - for most companies raising a Series A, the board consists of two investors: two from the company, and one as an independent. Vesting founders\u2019 shares - requiring a portion of the founders\u2019 shares to vest over time ensures there will be shares available to pay for a replacement if needed. Liquidation preference - it can compensate for what the investors consider too high a valuation. Minimum amount of funding required - it\u2019s important for the team to raise enough to achieve a meaningful milestone before the next raise.\xa0 In addition to negotiating good terms, the process should maintain a good relationship with the startup. Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.Let\u2019s go startup something today. ___________________________________ For more episodes from Investor Connect, please visit the site at: \xa0 Check out our other podcasts here: \xa0 For Investors check out: \xa0 For Startups check out: \xa0 For eGuides check out: \xa0 For upcoming Events, check out \xa0 For Feedback please contact info@tencapital.group\xa0\xa0 Please subscribe, share, and leave a review. Music courtesy of