When pitching to potentials investors, should I let them come to me with offers individually or have a set price?


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I am about to put together a investor presentation for my company. I will be presenting to investors individually.The investors are going to be pitched to within a short amount of time.

Should I be bringing a price to the table that is the same across all investors? Or can I modify my asking price depending on factors such as perceived leverage per investor as well as the experience with the previous investor.

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asked Jun 28 '11 at 10:43
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Michael
234 points
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3 Answers


3

  • Have an amount you want to raise.
  • Have a proposal of what they get for that.
  • Have a solid rational as to why.
  • Be prepared to negotiate
On the amount you want to raise:
  • Have a solid use of funds -- that is based on the deliverable of outcomes.
  • Enhance your offering by showing what the outcomes would be if you raised 80% of your ask
  • Be prepared to answer what you would is the amount and deliverable if you had all you wanted.
On the proposal of what they get for that.
  • This is grounded in your case for the premoney valuation.
  • Be simple, clear and confident
  • Don't make different offers to different people
On your rational for why
  • Why do you think you are worth that now?
  • They aren't going to agree to it -- but they will learn a lot about you by what you consider the pre-money valuation to be.
Be prepared to negotiate
  • You want to be someone they can work with.
  • Focus on a win/win -- it is not adversarial.
  • Money has personality, not all personalities will fit yours. You will learn the money's personality during negotiations. Be prepared to walk if it isn't right.
answered Jun 28 '11 at 12:56
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Joseph Barisonzi
12,141 points
  • Very good answer, great insights. I can't upvote this enough. :) – Tomeduarte 13 years ago
  • Thanks! That was a very complete answer. Gives me a lot to think about. – Michael 13 years ago

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If you get caught you're going to offend the investors that get the high price. Don't think they're not going to chat amongst themselves! Every investor thinks they're the most strategic, useful, best partner in the whole wide world.

answered Jun 28 '11 at 10:57
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Joel Spolsky
13,482 points
  • True. On the other hand, as long as you are just talking, nothing wrong with saying "We're looking to raise at a $2M valuation" to one investor, and a different amount with another one, depending on your leverage. – Alain Raynaud 13 years ago

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Price is a really tricky thing. The best thing to do is set an amount you want to raise and then sort out what your stock price will be later out.

Don't try and play investors off each other quite yet. You really need to be consistent in the amount you want to raise. The negotiations occur when set the round strike price (or price per share).

If you do that, then you will remain consistent among investors.

Now, it's true that they will talk to each other (especially if they want to build a consortium), so be consistent in your amount you want raised but be kinda vague in the share price.

Belief me, they will already have a price in mind and you will need to figure out how to get the best deal for the company. As long as you are straight forward in the amount you need, the rest is just negotiating.

answered Jun 28 '11 at 11:50
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Jarie Bolander
11,421 points

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