One of the most important things to look at is CONTROL. Who controls your company? If it’s the investors, that’s bad. If it’s you, that’s good. There are other control issues you want to understand around your investors' rights to invest in follow on rounds, block acquisitions, etc. So I’d focus mostly on control and less on valuation or $$ raised.
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I think the most lucrative deal would be the one that comes with no string attached. I would like to have a deal that offers decent amount of money and gives an opportunity to work on a challenging project.
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Definitely is CONTROL the most important. However, ECONOMICS does worth a couple of hours to spend with modeling different kind of situations in the future. For example, what happens if one of the founders intend to quit? What if the VC providing the Round A Finance does not want or isn't capable of participating in the Round B Finance? Many conflict of interests that only occur later. That's why a good VC is much better than an unexperienced VC.
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I would focus on the value of the investment. Do you anticipate down-rounds of fundraising? If so, you need to consider preservation of equity to accommodate those down-rounds. The longer you wait for future rounds while being able to hit milestones, you increase the probability of getting a favorable valuation down the road. So, while $1M might cost you 25% of the business today, the next $1M might cost you 5% down the road if you are able to hit your milestones and, effectively, lower the risk to future investors. I have always thought that you wait to give up a controlling interest as long as possible - and only give it up to a strategic partner capable of taking the business to a level you'd never reach on your own.
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Completely agree with Benjamin's thoughts - Read up a bit on how Mark Zuckerberg (Facebook) has kept his equity even after these many rounds. To get the best deal raise a little initially and grow your business as much as you can by bootstrapping. That way you will get a great bang for your buck in round 2. Raising whole bunch of capital in round 1 and loosing control is not something you want. You will land up working for your investors - which is not something you want.
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I agree with you. When you are making startup, you make sure that it is you who control the company, because if investors control it you may get dumped once profits come in.
