Fundraising Big Picture Tips

Sridhar Rangarajan

Associate Director (South Asia),
Jafco Asia

4. Be realistic about valuation. Valuing an early stage company is more art than science, regardless of, however, many multiples or comps the parties throw at each other. It basically comes down to how much you are willing to give up. It’s far better to have a smaller share of a potentially large pie than holding 90 percent of a company that is likely to go nowhere fast.

5. Term sheets are tricky; get an advisor to help you navigate the legal jargon. Know exactly what you are signing up for. But be reasonable – investors are taking on significant risk, and will insist on all kinds of protective provisions. Term-sheet negotiations and the ensuing legal drafting can be a long drawn out process. This will take even longer in today’s market where investors are in less of a hurry to fund companies and may want to renegotiate previously agreed upon terms. This process brings out the best and worst in individuals – so keep an open mind and don’t hesitate to walk away.

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