

Don't Shop Your Term Sheet - kareemm
http://www.cdixon.org/?p=655

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Retric
Note to self: Ignore Chris Dixon.

A small number of VC’s have a real value add. I would not shop Sequoia's term
sheet, but a second tier VC has little to leverage other than cash.

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danbmil99
correct.

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danbmil99
puhleeze. If your startup is hot, shop the fuck out of it. VC's are lemmings;
once they decide with their collective hive mind that you're the hizzy, it's
basically impossible to piss them off enough to kill the deal.

OTOH, if you're not hot, they will use any lame excuse to walk, and you won't
have anything to 'shop' in the first place, other than warm fuzzy talk at the
end of an expensive lunch.

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wwalker3
If you read through the whole article and the comments, the author adds more
nuance to this advice than the title suggests.

It boils down to "shopping your terms verbally is fine, just don't flash your
actual physical term sheet around town."

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Nwallins
Hm, I distinctly recall reading:

 _Also, don’t shop a verbal offer._

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mediaman
There's a difference between verbally shopping a written offer and verbally
shopping a verbal offer.

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mattmaroon
That would have a lot more credibility where it not coming from an investor. A
VC writing an article that says "just sign the term sheet immediately without
having your attorney review it" is actually preposterous.

His overall sentiment is not necessarily without merit (that you should shop
around terms/valuation verbally rather than emailing out copies of the term
sheet to every VC on Sand Hill Road) but wow did he go about expressing it
poorly.

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mustpax
I don't know anything about VCs and funding, that being said how are you
supposed to get competitive bidding going if you can't shop term sheets, or
verbal offers as this article suggests?

What are you supposed to say, "I have a very good feeling VC X might offer me
4, so you are going to have to offer 5." You can't haggle unless you have
concrete alternatives to push the price up.

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hwijaya
As i am reading into this whole "raising money" topic recently, this is what i
came across in Venture Hacks.

My understanding is, shop around, but, don't say it as "shop around". Use
other languages or excuses.

<http://venturehacks.com/articles/shop-around>

This is the summary:

Summary: A deal is only as good as its best alternative. Keep improving your
alternatives until you have a signed term sheet. And keep developing your
current offers or they will die. Finally, don’t say "shopping around", it puts
investors off their stroke.

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lsc
yeah, many people selling, for example, bandwidth also try to keep prices
secret; as far as I can tell it's nothing more than an effort to make the
market less efficient.

