| Administrative Science Quarterly
Deepak Malhotra and J. Keith Murnighan
Malhotra, Deepak, and J. Keith Murnighan. "The Effects of Contracts on Interpersonal Trust." Administrative Science Quarterly 47, no. 3 (September 2002): 534–559.
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| HBS Working Paper Series
When 3+1>4: Gift Structure and Reciprocity in the Field
Duncan Gilchrist, Michael Luca and Deepak Malhotra
| Harvard Business Review
How to Negotiate with VCs
Understand your leverage. Your leverage is not only a function of your alternatives; it has a lot to do with the VC's as well. Seek to understand them, and be prepared to educate the VC about why his exercising too much power could hurt both parties in the long term.
Maximize trust. Beneath all the financial projections, the VC negotiation is a process in which people are deciding whom they want to associate with for years to come. If the VC is vulnerable, use the opportunity to build trust rather than to take advantage.
Focus on value-not just valuation. Nonfinancial considerations such as control are also important.
Strive for understanding. Seemingly abstruse provisions can be highly consequential. And bear in mind that the choices a VC makes when negotiating can contain important clues about her assessments and expectations.
Above all, when you're negotiating with a VC, think not only about what will look good in a press release today but also about what will help you create and capture value over the long run.
Keywords: Venture Capital;
| HBS Case Collection
(Revised November 2012)
Negotiating Equity Splits at UpDown
Noam Wasserman and Deepak Malhotra
Keywords: Business Startups;
Compensation and Benefits;
Partners and Partnerships;
Division of Faculty & Research
Harvard Business SchoolSoldiers Field
Boston, MA 02163