Founders that try to squeeze every penny out of me while fundraising
I do appreciate founders that negotiate offers and provide well thought-out counters to an offer and its terms. It showcases the founders’ negotiation skills and builds confidence that he/she will not fold quickly in the future rounds, but as everything does, this too has a limit. When founders start to nickel & dime, hold onto positions that they cannot fully explain or ask for unreasonable terms it shakes about getting confidence that caused me to vouch for that entrepreneur in the worst outcome. I start to second guess my own convictions and re-read everything that I have been provided by the entrepreneur, that was not a good sign. Eventually, this leads to Jerry fatigue and it will be followed by a quick exit from the i.e. the negotiations and the deal. Knowing when to stop stretching the rubber band before it snaps is an invaluable negotiation skill.
Shark Tank provides an abundance of prime examples of negotiation tactics that lead to Jerry fatigue. One that I saw this week and stayed with me is the negotiation between Chris Sacca and the Bitsbox founders. It was cringe-worthy to see founders take an investor from above the buying line and bury him (and his offer) into the seabed. To know that Chris was ‘the’ investor that the founders had sought out, only made me cringe more. You can see this horror show for yourself.
This video is a huge lesson for any start-up founder negotiating deal terms right now or about to start fundraising. You must decide what your own limits are and how far you are willing to stretch a negotiating hand. If you fail to sense the limit that the person across the negotiating table is willing to extend themselves to, you are going to regret a costly mistake. After all, as a fellow VC once told me what she had to say to a founder who was nickel and diming her, “It okay to leave a little on the table for me too”.