People who claim negotiation to be a form of art are true. Once you have caught hold of a potential investor, the next step is to negotiate the deal. This is the point where even most experienced entrepreneurs are sweating. According to William Schantz, the hard work starts after finding an investor because then you have to persuade them to give you the venture capital. Not only this, but you have to build an image of your company that can open doors for you in the industry and makes you part of the network.
Most people find negotiation a dreadful task, so here are some easy negotiation skills by William Schantz to get better capital.
Negotiating With Investors 101: By William Schantz
Start With Research
The first thing is the in-depth research on everything related to the investor as well as most information you can get related to your project. The background of the investing company, the branches it has in different industries, how your project or collaboration of your company can bring value to the investing company, and what other probable incentives can the investing company provide apart from the capital; all such questions must be a part of your research.
Before you sit in a meeting, you must know the actual worth of the company and its financial portfolio. As per William Schantz, you must learn the capital limits of the company by analyzing the trends of previous investments it has made. The motivation, attraction, budget, and future vision must all be thought out and answered so that deal terms are clear.
According to William Schantz, miscommunications lead to a bad reputation and severely harm the relationship between the two companies. When the investment deal is struck out for the first time, both ends do not trust each other, so every move and every communication is scrutinized.
You can avoid miscommunications by always laying out the goals clearly to the other party earlier in the meeting. Once the goal is clear to the investors about the meeting, they, too, lay out their own aims regarding the outcome of the meeting. It becomes easier to navigate once everything is communicated.
Furthermore, always listen actively, concentrate on the investor when they are talking and make points of the things you would like to address once they are done.
Go All In With Questions As per William Schantz
Apart from pitching a new proposal, the investor meeting is all about establishing communication and understanding each other better. The only way to gain this is to ask all the questions you have, even those that you don’t think are directly linked to your project. You never know if some irrelevant information may come in handy.
Always ask for feedback when you are in the Q&A session.
Trust Building: By William Schantz
The primary difference between a sales negotiation and an investment deal is that one requires trust between two parties. The sales negotiation is all about giving the payment once you have possession; however, investment is a risk. So, to take a risk, one has to trust another party; in this case, investors have to trust you. So, to build this trust, entrepreneurs have to be transparent with the investor, and similarly, they have to give entrepreneurs confidence as well.