Getting a startup investor can be just the thing you need to launch your business or just the thing that ruins your opportunity for long term success. Doing this “deal” the right way will give you and your investor a chance for success.
1. Get professional legal and accounting help. I know, I know, you may be like me and have the best ideas in the world but may not have the best attention to legal and accounting details. Well, fortunately for people like me there are people not like me. People who actually love (and I mean love with a heart emoji ❤️ ) legal and accounting details. Whether you spend a ton per hour on accounting help or find an attorney who just graduated and is willing to work for a free lunch, good advice is worth it. Solve the problems and answer the questions before they get out of hand. The devil is in the details, so get the devil out of the deal before you sign!
2. Read and understand the deal. I used to feel embarrassed to ask questions about contract or financial details. Then I got my butt handed to me by an attorney working for the other guy and I decided feeling a little dumb and asking questions before the deal is done was WAY better than proving I was dumb and paying for it. There are no dumb questions, only dummies who don’t ask questions.
Tip: Play to your own strengths. Learn with your learning style. I am an auditory learner, so I often have my computer or another person read contracts aloud to me. I want to understand what I am getting into so I do what it takes to really get the details in my head until I am convinced that we have it right. You know how you learn best. Follow your learning style.
3. Stand your ground or someone else will stand on it for you. Be nice but be strong. You have something of value or else you would not even be having a conversation with an investor. You should get paid and paid well for your time, experience, insight, strategy, personality, creation and potential. Own it. Know what it is worth. Sell the value and don’t let anyone buy your awesomeness at pawn shop prices. Sure, there is a balance that you have to find with your investor. Every deal has a value and you need to be reasonable, but be careful. Get advice.
Tip: Talk to other investors who are not interested in your opportunity but can give you an idea of what they think it is worth.
Bottom line: The day after you sign the deal you want to wake up feeling like you know what you and your investor exchanged in the deal and you want to feel great about it. If you think you will wake up with buyers, or in this case, sellers remorse, then don’t sign. Get solid advice. Dig into the details. Do a deal that’s good for everyone.
