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Securing Investors and

Structuring the Deal

Things may come to those who wait, but only the things left by those who hustle.

—Abraham Lincoln

OUTLINE

LEARNING OBJECTIVES

After reading this chapter, you will understand

• what constitutes a good investor, and a good investment.


• the nature of the investment process.


• the financial factors involved in making a deal.


• how entrepreneurs can create value with a well-structured deal.


• the fundamentals of negotiating strategy and tactics.

CHAPTER

8

Approaching Investors
The Ideal Investor
The Ideal Entrepreneur
New Venture Investor Processes
Structuring the Deal
Segmenting the Investor Market
Risk Sharing
Staged Financing
The Option to Abandon
Warrants

Pitfalls and Problems to Avoid

Negotiation skills

Basics of Negotiation

Research into Negotiation Tactics

Summary

Appendix 8A Sample Series A Preferred

Stock Term Sheet

Appendix 8B Investment Agreement Outline

Appendix 8C Negotiable Terms to a Financial

Agreement