When Macy Castillo, co-founder and CEO of Enstack, negotiates with VCs, she says she keeps in mind two things: The first being her company’s capital needs. “We need enough funds to achieve the key milestones driving our growth and innovation. Without sufficient financial resources, we cannot realise our vision.”

The second is the VC’s stake. “We want to give them a meaningful share of our venture so that they are aligned with our success and eager to help us,” says Castillo, who believes that this helps a startup and VC to build a solid partnership based on mutual trust and shared goals.

“By striking the right balance between these two considerations, we create a win-win scenario that benefits both parties and encourages cooperation.”

“Pitching to a VC is not just about asking for money. It’s also about finding a partner that aligns with our vision and portfolio,” says Ankit Suri, who is the co-founder of Hong Kong-based fintech app Planto. Does your startup’s vision align with the VC’s investment thesis and portfolio? “We care about how they view the problem we are solving, the industry we are in and the geography we are targeting,” he says.

He adds that startups also need to understand how VCs plan to exit from their investment and how that would affect our growth strategy. “We care about how they fit into our board structure and what kind of influence they have on our decisions.”

Most importantly, he advises startups to avoid competing with another company in a VC’s portfolio, as that would cause a clash of interests, shrink the market potential for your business and weaken your unique selling point.

Read more: The Hong Kong entrepreneur who stopped chasing the startup success dream and built one instead

“Many founders make the mistake of dropping communications entirely with their investors after they raise money. This is risky and foolish,” says Victor Lim, co-founder and CEO of Philippine-based cloud kitchen platform Kraver’s Canteen. Once the deal is closed, he says founders should continue to maximise their relationship with their investors and tap into the benefits and resources they offer.

“One way to attract future investors is to maintain a good relationship with your current ones,” says Lim. “They should show their continued support for your venture by participating in future rounds, as this sends a positive signal to the market. Even if some of them are not investing anymore, they can still help you by endorsing your venture to other potential investors, which also benefits them.”

“To effectively negotiate a deal’s terms and conditions with a VC, you must have a clear and realistic idea of your objectives, priorities and alternatives,” says Lennise Ng, co-founder and CEO of Dropee, a B2B e-commerce solution provider headquartered in Malaysia.

The goal is to find a VC that is fair, transparent and flexible in their terms and that can respect and place trust in a startup’s autonomy and judgement.

Ng also advises startups to use data and benchmarks to support their proposals and align them with industry standards. “Structure your deal based on realistic assumptions and case studies. Be clear about your non-negotiable terms and their rationale.”

See more honourees from the Gen.T List 2023.

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