Negotiating in Fundraising

People ask me all the time about strategies I recommend when negotiating a fundraise.

The thing is, negotiating dynamics in fundraising are no different than negotiating a job offer, negotiating a contract, negotiating a real estate deal, or even negotiating your way through landing a new romantic partner.

So if you have instincts on how to negotiate successfully in other areas of your life, they probably will help you in fundraising.

Where I can be uniquely helpful is in sharing more about the psychology of investors and the nuance of fundraising processes that impact how negotiating plays out. So let’s talk about common negotiating dynamics and how you should think about them within the context of fundraising.

Running a Competitive Process

This is one of the biggest unlocks in fundraising, and most founders don’t give it the respect (or effort) it deserves.

Fundraising is a momentum game. And nothing builds momentum like the sense that other investors are circling and you have options. If you’re talking to one investor at a time, you’re negotiating from a place of weakness. That scenario allows them to drag their feet and nitpick terms because they know you’ve got nowhere else to go.

On the flip side, when you compress your outreach and drive calendar density, lots of meetings within the same 1–2 week period, you flip the power dynamic. Investors start asking how much time they have, where you are in the process, and what they need to do to get in.

That’s the psychology you want. Not begging people to write cheques. Making them worry they’ll miss their shot.

Understanding Current Pricing Dynamics before Negotiating

There’s no Bloomberg terminal for early-stage deals, so pricing is hard to understand. It’s all narrative and comps and vibes.

That doesn’t mean you shouldn’t get a sense for pricing before negotiating. Being able to reference the market is a real tactic that is very useful.

Founders who’ve done their homework on comps and recent rounds walk into negotiations with confidence and some tangible tools to use. They don’t say, “We’re raising at a $10M cap because that’s what we want.” They say, “We’re seeing similar companies in our space raise at $10–12M. We’ve got some inbound interest and think that’s where this round will settle.”

Anchoring expectations based on tangible examples has a massive impact. You’re pointing to a reference point and establishing a strong launchpad for engaging in a negotiation.

BATNA / Walkaway Power

Having a strong grasp of your BATNA is an underutilized concept in founder negotiations. Most founders never think about it until it’s too late.

So what is a BATNA?

BATNA = Best Alternative to a Negotiated Agreement. If you didn’t know, I’m an MBA, so sometimes I throw annoying terms like that out (it’s the only thing that helps me justify the $100k investment). But even annoying things can be useful. 

Anyway, BATNA is an MBA’s way of saying, "What happens if this investor passes?" And more importantly, "Do I have something else lined up?" or “Can I keep going without this deal?”

If the answer is no, and you’re banking everything on one firm deciding to invest, they will smell it. Whether they mean to or not, they’ll push harder on terms, take longer to decide, and drop last-minute asks.

If the answer is yes, or you’ve done the work to create alternatives, then you have real walkaway power. You can say, “If this doesn’t work, I’ve got others who are moving quickly.”

Even a little optionality makes a difference. Maybe it’s a second fund in diligence. A couple of high-quality angels circling. Another partner from a name-brand firm who asked for a follow-up. Or... just the confidence that you know you can keep going. Operating with the mindset of having options is powerful. Your psychology shifts. You stop chasing. You start vetting.

Before negotiating, make sure you are comfortable with your BATNA even if it is walking away with NO DEAL.

Bundled Asks vs. Piecemeal Asks

Here's a tactical mistake I see founders make constantly: they negotiate each part of the deal separately.

First valuation. Then board rights. Then pro rata. Then vesting provisions. That’s a recipe for death by a thousand paper cuts.

Instead, bundle your terms. Present the package. “Here’s what we’re thinking: $X valuation, standard YC SAFE, put 50% of our shares behind vesting, no board seat.”

This approach forces the conversation to be holistic. Investors can’t nitpick one thing without having to talk about the entire deal. And it makes you look put-together and confident, like someone running a real process who isn’t afraid of negotiating.

Relying on your reputation

This is the invisible hand in every negotiation.

Investors talk. They are also proactively backchanneling during diligence. So your reputation around town will likely make its way into how an investor handles the final stages of a deal…

You don’t want to be a founder with a bad rep. Even vague negative reputations can sour a deal and negotiations. Fair or not, a rumor of something bad can haunt you, so protect your reputation with your life. 

The flipside of the positive is also true. A vaguely positive reputation like “good dude!” or “they’re great!” can be all an investor needs to hear to sway them to the positive or get them to give on an ask. 

This isn’t a tactic or strategy you can apply when in the thick of deal-making, but being aware of its importance will help you prep for negotiations far into the future.

Final Negotiating Thoughts (do we have a deal?)

Fundraising is emotional. It’s hard not to take things personally when you’re negotiating over your company, something you’ve poured your life into. In my experience, the founders who do the best aren’t the ones who memorize tactics… they’re the ones who understand the psychology of the situation and prepare accordingly.

Good luck! 

Be chased,
Jason