Negotiating Venture Capital Financing

by Tyzoon Tyebjee, Albert Bruno

Fall 1986

Volume 29
Issue 1

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An entrepreneur who needs to finance a venture must be well prepared before approaching his first round of venture capital financing. Most entrepreneurs have inadequate experience and information when it comes to such negotiations and are vulnerable to strategic and tactical blunders which may close many doors in the venture capital community. This article addresses the problem of placing a valuation on what the entrepreneur brings to the deal; suggests mechanisms for expediting the infusion of capital once the deal has been struck; shows how to deal with rejections constructively; and discusses the changes venture capital financing brings to a business if it is going to avail itself of additional rounds of financing in the future.

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