A VC serves two masters. Investors in the VC fund and entrpereneurs. Normally the way VC’s get paid is 2 and twenty. 2% of committed capital as a management fee and 20% of profits. 80% goes back to investors.
Valuation must be managed through multiple dependent rounds of financing while considering
1. Ability to attract later investors
2. Management ownership levels
The six keys to improve your negotiating position
1. Credibility ( Serial entrepreneur, Team, Advisors, Board, Plan etc.)
2. Interest from other investors
3. Interest from other investors
4. Interest from other investors
5. Time ( Ability to walk away)
6. Hot Industry/Market
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Hi
In most startups I have worked with, (currently doing one in India again…) the credibility is a key point, try to get a advisory board together of heavyweight people, this helps in two ways, one the VC likes it, two the board can usually open the doors to a lot of people just by picking up the phone, and three (did I say two :-)), they can make the company do more in 4 weeks, than you would in 4 months.
For hot markets there is a problem, what is hot in silicon valley, is not hot in India, india takes time to catch on, but I guess the guys who are pioneers see this in advance.
Iqbal