Tips for Navigating Investor Negotiations

I always get asked how to move a conversation forward when you're in the limbo stage after that first or second investor meeting, and you, as the founder, don't know how serious they are. I've got a suggestion. Ask the investor if they'd like to set up a meeting for you to run them through your financial model. - Your financial model tells your story. - It demonstrates your growth trajectory. - It displays your expansion plans. - It shows your revenue streams. - It proves your grittiness. - It exhibits your team. And you should know it inside and out. You should be able to drive the model and the conversation. And, you should do this without your CFO. Be prepared to show them what their investment will directly do for your business. Here's an example: Let's say you're talking to them about investing $25K in your CPG company. In that discussion, work this into the conversation: "If I receive your investment of $25K by the end of next week, I'll use $10K for marketing and slotting fees for my new retailer, $5K for inventory, and $10K to hire the fractional person I've had my eye on. As you can see from the model, I'll see the benefit of your investment within two months. It will help me grow revenues by Y%, improve my margins by Z%, and accelerate my growth in that retail channel by A% faster than if I received that cash in 3 months." The investor will see how detailed you are, how well you know your numbers, KPIs, and metrics, and understand the power of their money - and your respect for it.

I’ve helped several entrepreneurs navigate 8-figure negotiations. This is my negotiation masterclass: — 1. Be “un-ok” with the deal When you need the deal, you say yes to everything. When you know that what you have is worth a lot, you question the deal. - Ask all the questions - Don’t rush to get the deal done - Make “no” your default answer You should be “un-ok” with the deal going through. — 2. Trigger decisions not emotions You can only make a clear decision when you have all the information. - Guide towards a decision - Never manipulate emotions - Handle objections with FACTS You’re not there to get to ‘yes’. → You’re there to get to a decision. — 3. “No” is not personal They’re saying no to a deal, not to you. - Remember the value you're offering - Be ok to walk away if it isn’t right - There are always more buyers It’s not a personal rejection, it’s a decision. Keep moving. — 4. Equal exchange of value An unclear mind loses touch of the value you’re offering. Try a mental clarity reset with positive self-talk to make your mind clear and confident. (Wood, Perunovic, & Lee, 2009). — 5. Control behaviors, don’t focus on the goal You can’t control outcomes. → you can only control your inputs. Get obsessed with: - What you say - How do you speak - How you create an irresistible offer — 6. Ask open-ended questions These are the best tools to extract information from the other side. More info = more leverage. Aim your questions at the most silent one in the room (they’re usually the decision-makers). Then shut up and listen. We have two ears and one mouth for a reason. — 7. Never assume When you assume, the information you *think* you know blinds you from knowing the real situation. - Always do your research on the other party - Go into the meeting to gain clarity; not to confirm your bias. The better you know the field, the better you can play it. — 8. Speak to the pain Every decision comes from a position of pain. Even an acquisition. - Don’t beat around the bush - get to the pain - Find the EXACT words they use - Use those words when you talk about your painkiller The more you can get them to talk about their pain in their own words, the more they will feel like your solution is their own idea. — 9. Know your endurance I used to think negotiation also meant social events and getting drinks to bond. Lesson learned: Alcohol only drains your energy. Be disciplined and say no to free booze. Being the sharpest at the negotiation table is your competitive advantage. — 10. Get physical Negotiation isn’t all in your mind. - Slow down - low + slow voices show openness and confidence - Dress for success - ‘Enclothed cognition’ means that what you wear determines how you think - Sit up - Just like good clothes, good posture gives you confidence to feel in control — Enjoyed this? Repost ♻️ to share to your network and follow Ignacio Carcavallo for more content like this!

Negotiating with investors can be intimidating! Here are some key takeaways that helped me navigate the process. This time around, as a second-time founder, I approached the table with a bit more experience (and maybe fewer butterflies): ✔ Did my research  I was 100% prepared. We talked to other founders in their portfolio. After all, investors do their due diligence on us, so why shouldn’t we? It’s important to get the scoop on the person I'd be working closely with. ✔ Asking a lot of questions We didn't shy away from asking thoughtful questions to understand what kind of investor they are. Are they betting on the industry potential or the people behind the company? Understanding them helped build a stronger foundation for the partnership. ✔ Not settling below my worth My first go-around, I made the mistake of getting influenced by one perspective. This time, I talked to a variety of people, did my market research, and benchmarked valuations to determine my true value. Negotiations happen, but always know your worth. Else it is a rabbit hole - where every meeting you might have a 10% cut on valuation. ✔ Not being afraid to walk away Raising money takes a long time. Even though it was our second time, we met with a lot of people—some decided not to invest in us, and others we decided not to work with. We were always ready to walk away if things didn't feel right. ✔ Sought help when needed Might sound basic, but it's super important: Never sign any papers, even if everything seems great. Always read the fine print carefully. And don't hesitate to get advice from experts. Here's to the art of negotiation and the growth it brings! #entrepreneurlife #fundraising #negotiation #secondtimefounder