guideExecutive Skills
Negotiation Fundamentals for Founders
From term sheets to partnership agreements, founders negotiate constantly. This guide covers the core principles of negotiation — anchoring, BATNA, silence as a tool — applied to the specific contexts founders face.
Negotiation Is a Skill, Not a Personality Trait
Great negotiators are made, not born. The core skill is preparation — knowing your walk-away point, the other side's constraints, and where there's room to move before you're in the room.
BATNA — Your Most Important Concept
BATNA = Best Alternative To a Negotiated Agreement. It's what you'll do if this deal falls through.
Your leverage in any negotiation is directly tied to the strength of your BATNA. In fundraising, your BATNA improves dramatically when you have multiple term sheets. Always be building optionality.
Anchoring
The first number mentioned in a negotiation often anchors the entire conversation. In fundraising, let investors make an offer when possible — but if you need to anchor, set a valuation that's ambitious but defensible with data.
In hiring, salary anchoring matters too: know the market rate and anchor to the top of the range with justification.
The Power of Silence
After making a statement or proposal, stop talking. Many founders fill silence by talking themselves into worse deals. Silence signals confidence. Let the other party respond. Their response often reveals more than you expected.
Founder-Specific Negotiations
Term sheet: Focus on valuation, board composition, and pro-rata rights. Don't over-optimize on minor terms.
Customer contracts: Know your minimum viable deal and your ideal deal. Agree on value first, then negotiate terms.
Hiring: Equity and scope are often more flexible than salary — get creative with the full package.
Always get a lawyer for anything with long-term financial implications.