It doesn't have to be a black eye if its done right, and that's why I'm happy you are addressing this issue.

Huge old companies lay people off and discontinue product lines. Heck, they do it because some outside consultant with a freshly minted MBA and nice suit flew in and said: "its not core...out!"

So I always think there is less risk with entrepreneurial companies because this is all we do and everybody has a big part in the success/failure.

The big companies (and good entrepreneurial companies) give some notice to everyone. Might not be as much or the news anybody wants to hear.....no different than what I'm sure you're going to outline.

However, I've seen some flameouts that had raised 8 figures go into the wall as you say and have left employees without a final paycheck and turned off a service that an employee in a Fortune 100 company bosses' boss had to cut short vacation to figure damage control. Not a good way to make the mortgage and not the attention you want from your bosses' boss.

I guarantee you.....know for a personal fact...hit me in the face...that guy who had to meet with his bosses boss after she cut short a vacation.....never will buy from a entrepreneurial company again. I also have had people tell me they'd love to work for me but their partner said after their last screw job...no way.

So do it right and don't piss in the well.

It is a good idea. I'm sure the legal aspects will be covered but there is one constituency that wasn't mentioned and that is the entrepreneurial community as a whole.

When you're open on Thursday and closed on Friday and your employees are reeling and your customers are wondering if they are going to get fired for doing business with your company.........You've pissed in the entire entrepreneurial well.

It makes it that much harder for other entrepreneurs to find employees and close customers because people will remember and tell others about "that entrepreneurial company which screwed me" for life.

I've seen some well funded companies with vc's that I thought were reputable do this.

Yes you are absolutely right on that one. I'm sitting there assuming
we're talking about an entrepreneur asking for funding....but you are
completely right...if you ask to buy my boat, antique car, or
company....and I didn't put it up for sale. You owe me first offer.
Good post as usual.

Again this is spot on.

I would also propose a corollary which is that any additional blathering that you do trying to justify your price after putting it out there weakens your position tremendously because the other party realizes you're not confident in your position.

You figure out what you want, how bad you want it, what you can live with, and put out a price. If it doesn't work so be it you have to be either ready to walk or listen to a counteroffer.

I would also say that the person that is on the selling side (getting money transferred to their account) has to be the one that puts out the price first. I can't stand when the seller tries to get the buyer to put out a price. To use the car analogy: "How much would you like to pay for that car?? One dollar. What?! You asked me a question....how much would I like to pay for that car....one dollar. Now what are you willing to sell it to me for?"

I think trying to "judge" the other parties reaction or sophistication by putting out a range doesn't even work when negotiating with my 7 year old daughter. If I told her we could pick one or two bags of apples this weekend at the orchard she'd start at two and work for three.

The real issue shouldn't be around "founders" it should be do we want to let foreign nationals that have received technical degrees in the U.S. work in the U.S?

To let you know where I stand on that one I think that if you graduate with a threshold GPA from an accredited engineering school they should present you with a green card along with your diploma.

What is INSANE is that we educate people and then not let them work in the U.S. If you care to argue that we shouldn't educate foreign nationals....I'll let you go down path, because I think there is more logic to that argument than investing in the most important asset the U.S. has: Human Capital, and then basically throw it away or worse burn it. Don't misread me....I think we should attract the best, brightest, most motivated, from anywhere.

So I think the whole process (from exploiting Visa holders to providing amnesty for people that blatantly don't follow any rules, etc) is flawed and this is some small band-aid.

We should strive for better.

It is a fact set in stone that if you charge people to present the only people that leave with less money in their pockets than before they presented are the ones that did not receive funding. People who got funding have more, Angels who didn't pay have the same.

I would say that the point of an angel group to pre-screen deals would be to make sure that deals ARE READY (in caps as you put it) so nobody wastes their time and money. What else could pre-screening be for? Why bother having an organized group?

Now then if we want to discuss what is a feasible way to get entrepreneurs advice/coaching/reviews I'll discuss that. It does take a lot of time. Time is money. If you did it for free you couldn't support your family. All your time would be taken. There has to be some way to pay for it. But that's not the discussion

As soon as I see the word "tweak" or "start" with I see the "full employment act" of lawyers being invoked.

My lawyer has to make a change otherwise I'll think what am I paying for and then the opposing lawyer of course can't have the stigma of looking weak by just accepting the changes, and so on and so on. (I'm convinced once you pass the bar there is a secret ceremony where this is taught)

There are many deals where the terms are fixed and you don't "tweak" that are larger than first round deals. Big expensive car leases, purchases of database software from Microsoft or Oracle, computer purchases, lines of credit, etc.

Popular post. It boils down to this:

The only ones that really pay are those that do not get funded. And that really feels like picking on the short bus kids. What you are really doing is making the person that doesn't have a lot of money, and was unsuccessful in raising money pay all of the expenses. And an important point is that they are paying the expenses for the 19 people out of 20 that supposedly are wealthy but haven't put up any money in the last year, and are using the meetings as a social club.

If you get funded money will go towards the fee, so the angels in this round would really prefer there be no fee (why subsidize those that didn't invest)

The only people that should be screened by their ability to pay money should be...de da dee.....those that are there because they supposedly have lots of money.

The best way I can put it is that it feels like "paying somebody to be your friend"

When you pay to get the opportunity to talk to somebody it always feels like I'm paying to be your friend.

I've never been able to get past most of the CEO networking groups because it just feels like this. I've organized one, but the only payment you have to make is playing credit card roulette for the tab. (second to last persons card picked from the hat by the server pays the tip, last pays the tab)

Sometimes, I even get this feeling when going to conferences meant to talk about the industry....

Totally agree. Not to be a stickler but I would also add founders salaries. Maybe we're taking that as a fixed/non-negotiable number because it would be in the budget and therefore valuation would reflect if the salaries are relatively high/low.

Anything that can focus people on the right issues (price and valuation) is good. The toughest part of all negotiations is everything but the main issues because really what you are doing is focusing on worst case i.e. I need to prevent you from screwing me which gets personal.