Jenny Fielding

When founders and investors clash over Investor Rights it stems from 1) Lack of an open dialogue / communication and 2) Having lawyers run the negotiations. These are relatively easy to fix by first understanding both sides POV on the issues in a live dialogue (not via email) and getting to the heart of the matter which may be about control but is more often about transparency. Second, lawyers should be papering the deal not driving negotiations around terms. Once a lawyer is inserted into the conversation it often gets adversarial rather quickly. Founders and investors must learn how to discuss and compromise in an effort to build a highly functional long term partnership.

Many of the best startup founders will get mixed reviews during due diligence. It's important to remember not to confuse being liked with being great. In the case of outlier founders, many have a chip on their shoulder with something to prove to the world, which makes them less agreeable, fairly intense and likely to rub people the wrong way. So getting mixed feedback in DD is not only healthy but a positive sign.

If deal terms have been agreed upon (handshake or more) and the founder changes the terms without proactively discussing with the investor, then the investor should walk away from the deal. If the deal terms were not agreed on firmly yet but the terms 'discussed' are changed, then the investor should have a direct conversation with the founder to better understand the situation and be open to a new scenario. For example when a founder wants to bump up the valuation because the total size of the round increased. But the hardest part is the grey area when the investor thought they had a deal while the founder was still shopping around for a better offer. The best thing to do is keep open communication and also be ready to walk away.

The common thread among the most successful startups I've backed at pre-seed (5 unicorns) is that while other startups in the space were all running in one direction, the companies that out performed had a completely different view of the market. And since these founders zigged while others zagged, most VCs weren't chasing these deals because they looked and acted a bit different. If the pack is running one way, have the confidence and conviction to look in another direction.

Contrary to what many people think, securing a startup's brand has little to do with intellectual property and all to do with winning the hearts and minds of loyal customers. All too often I see founders worry about buying the perfect URL, filing complicated patents and fussing over trademarks. None of this really matters at the early stage of company development, before product / market fit. Once the company wins market share and develops deep customer love, then it's easy enough to buy the perfect URL or hire lawyers to secure IP / names and other assets.

Well I think we are saying the same thing Reid. Each founder should play a part and not sit silent and say nothing. I consider the pitch to be the entire first meeting, usually 30 minutes.