Negotiating with Investors: What VCs Give and What They Rarely Give
Negotiating with investors starts before you sit down. The largest survey of venture capitalists to date, with about 900 investors at 681 firms, shows that the average fund screens 200 companies a year and invests in 4 (Gompers, Gornall, Kaplan and Strebulaev, JFE 2020). The good news: the same survey shows where founders have real room to negotiate.
1. Come in through a referral
Over 30% of deals come from the fund's professional network, 20% are referred by other investors and 8% by portfolio companies. Together, 58% or more come through referrals. Only 10% come inbound from founders; almost 30% are sourced by the fund itself.
In practice: before sending the deck, ask for 3 introductions. The best one comes from a founder the fund has already backed.
2. Lead with the team, not the price
For 47% of funds, the team is the most important factor, and 95% call it important. Valuation ranks only 5th (3rd in later-stage deals).
In practice: the first meeting is about team and traction. Price comes up once the fund wants in.
3. Know where there is room and where there isn't
The survey asked which terms VCs are most and least flexible on:
More flexible: option pool, participation rights, investment amount, redemption rights and, above all, dividends.
Rarely flexible: pro rata rights, liquidation preference, anti-dilution, vesting, valuation and board control.
In practice: if you give on price, ask for something in the left column. For the right column, bring your lawyer and market standards.
Checklist for your next meeting
3 introductions from founders the fund has backed.
2 or more funds in parallel. Your best leverage is another live conversation.
A written list of what you will trade and what you won't.
The survey covers US funds. Use it as a reference: the logic of the table is the same in Brazil.
Informational content only; not an investment recommendation.
Leia este artigo em português: https://blog.kurumiventures.com/post/negociacao-com-investidor-o-que-o-fundo-cede
Sources
Gompers, P.; Gornall, W.; Kaplan, S.; Strebulaev, I. How Do Venture Capitalists Make Decisions? Journal of Financial Economics, 2020. Authors' summary on the Harvard Law School Forum on Corporate Governance (Aug 20, 2019): https://corpgov.law.harvard.edu/2019/08/20/how-do-venture-capitalists-make-decisions
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