Angel and venture investors in startups and early-stage companies frequently have the option to determine the extent to which they intend to contribute intellectual capital, beyond their financial commitments. “Value-added” private venture investors often lend their business skills, resources and rolodex to their interests, helping the company solve tough problems, prioritize objectives, build a great team and even seek out strategic partners and potential customers.

Equally compelling to private venture investors is the ability to influence the terms of engagement of their capital in a manner that increases the opportunity for a favorable investment outcome. Unlike conventional public investment vehicles and most alternative products such as hedge funds, the investment terms for private venture investments are generally negotiable…depending on the size of the contemplated investment and stage of the company and the funding history.

Evaluate—Negotiate–Allocate

Between due diligence and the investment decision is the opportunity to influence and negotiate investment terms in a manner that increases the probability of a positive asymmetric outcome. It surprises me when angel allocators, particularly lead investors in a seed round, simply accept the offering terms of a private venture without fully leveraging their currency to negotiate the best deal for their capital. Startup capital for new ventures is scarce today relative to the halcyon days of the 1990’s. That tilts the advantage in favor of capital and provides early-stage venture investors with an opportunity to materially improve upon their position.

Angel round investors are a unique breed. They take on startups at the riskier seed stage (in pursuit of higher-multiple exits) at a point where venture capital firms will typically not engage. VCs and institutional investors are more apt to require some evidence of progress with a startup…whether with regards to financing, product development, a proven business model or market traction. Yet that does not prevent VCs from coming to the table with their own terms for a Series A financing.

On the other hand, angels too often let the entrepreneur set the terms for the seed and bridge financing rounds.

So, which provisions in an angel round’s term sheet are generally negotiable? All of them.

I am humored by entrepreneurs who describe their terms as being “market”. Because there is no market without the angel’s capital, and that means that valuation, liquidation preference, anti-dilution protection, dividends, various protective provisions, board composition and even the vesting of the founder’s stock can and often should be subject to negotiation…particularly in a smaller financing round.

Each of these terms may have a critical influence on the outcome of an early-stage investment, but valuation is arguably the most difficult for angel investors to negotiate as there is little meaningful company history to assess…rather, merely a vision around an idea, a market and a management team, and perhaps a business plan.

The “market” (of angel investors and entrepreneurs) has responded to this quandary by predominantly relying upon Convertible Notes to fund seed-stage companies. Rather than dickering endlessly about the present value of a future uncertainty, angels and entrepreneurs agree to lend their capital to the new venture in the form of a note (often secured with some form of collateral and offering a dividend) and agree to convert their debt to equity at the price set in the subsequent round of financing.

The theory is at that point in the future, much more will be known about the business, market, competition and opportunity and that it will be easier to agree on a valuation.

Consequently, Convertible Notes have become the primary template for seeding young companies and providing “bridge” financing from the concept stage to a larger, subsequent financing round.

Early-stage investors should engage the growing universe of online content that speaks to best practices, suggested deal terms and negotiation tips for investors in early-stage ventures. Most critically, tyro angels should engage a securities attorney with ample experience in private venture financings to advise them on term sheet negotiation.

In Woody Alan’s 1994 crime-comedy Bullets Over Broadway, the gangster-financier played by Chazz Palminteri exploited his angel status by casting his girlfriend in a lead role and rewriting the play’s script.

In early-stage financings artful angels should always consider opportunities to leverage their currency to rewrite the script of the bridge note and positively influence their investment’s ultimate optionality and outcome.

Album:   Script of the Bridge, The Chameleons, 1983

In short-sighted efforts to convey the accrued wisdom and tenets of their craft, venture investors occasionally declare their due diligence dogmas by way of the fallacy of false dilemma…a distorted line of reasoning where an outcome must be the result of either of two options. Often referred to as “black and white reasoning”, a false choice is offered up between two scenarios when in fact many more scenarios are probable.

Our false dilemma du jour is; which venture investment in a startup is positioned for a better outcome…the “A” idea with a “B” management team, or the A team with the B idea?

[Of course, it is never this simple, as the query ignores other critical items such as market size and maturity, competition, barriers to entry and of course, deal terms…but let’s play along…]

I opt in favor of the A team with the B idea. The B team may not be able to execute on the A idea, but I have seen many A teams successfully monetize B (and C) ideas.

I would postulate that the majority of angel and venture investors concur on the acute importance of the quality of the team engaged to execute a new venture’s business plan. But I diverge from the consensus when that same conventional wisdom subsequently surmises that the A team’s commitment is not validated unless those “founders” have contributed a material amount of their own personal financial assets to the venture.

The notion of a founder’s cash as an indication of their “skin-in the-game” ranks among the myriad of myopic and misplaced myths of venture investing. It is derivative of another false dilemma fallacy that evaluates the involved vs. the committed startup founder by pitting the pig against the chicken as the sources of a traditional bacon and eggs breakfast. (The pig has truly “committed” by providing the bacon, while the chicken is merely “involved” in providing the eggs.)

I recently attended the road show where an ambitious retail venture (redundant, eh?) was presented by a genuine A team of co-founders comprised of a young entrepreneur and a seasoned C-level executive CEO. It only took a few minutes into Q&A for an experienced institutional investor to impugn the initiative by inquiring about the absence of co-founders capital committed to the enterprise.

In this particular instance, the young entrepreneur was early in his career with a very young family and simply lacked the personal financial resources to allocate any capital to his vision. On the other hand, the seasoned 60-year old CEO walked away from a prestigious C-level position where he enjoyed a high six-figure compensation from a venerable multi-national concern at the peak of his career to take a flyer on a yet-to-be-financed retail startup…during a recession.

It is certainly appropriate to question a founder’s commitment as long as the answer is evaluated in its appropriate context. The CEO was “all-in” career-wise and the young founder had the chops, but lacked the bacon to commit to the plate.

Considering founder’s personal financial assets to be prerequisite skin-in-the-game simply ignores the lessons of ventures past. Steve Jobs was 21 when he founded Apple and his partner Steve Wozniak was 26. Gates and Allen were 20 and 21, respectively. Google founders Page and Brin were both 25. Hewett and Packard were 26 and 27 and Michael Dell was merely 19.

None of these extraordinarily successful founders had any meaningful cash to invest in their own startups. If they did, angel and professional venture capital investors would have been deprived of billions of dollars in long-term capital gains and carried interest.

Of course if a founder has a material amount of personal financial assets—it is appropriate for an investor to expect those funds to be committed to the venture. Moreover, it is prudent for the founder to use proprietary resources as it enables him to ultimately preserve more equity in his enterprise. But, career risks, opportunity costs and reputational risks can be far more consequential to a founder than losing several dollars or pounds of flesh.

In fact, our only 100% write-off in this decade was an investment in a serial internet entrepreneur who already had committed $13 million of his own funds to the startup.  He had the bacon, but not the chops or experience to execute in the specific sector. The ensuing high-profile strikeout subsequently insured that the failed venture would be the entrepreneur’s final turn at bat, as he was no longer considered bankable.

Before you judge a venture based on a founder’s capital as skin-in-the-game, make certain that you fully understand the emotional commitment, as well as, the actual impact that the demise of the startup will have on the founders. A skin tight founder is not, by itself, a reason to walk away.

Album:   Skin Tight, Ohio Players, 1974

Senator Chris Dodd looks determined to leave his last term in office with a dubious legacy – his sponsorship of the Restoring American Financial Stability Act of 2010  which passed the Senate Banking Committee on a party-line vote  on its way to the House floor.

Dodd’s 1,336-page reform bill seeks to address the timely and substantive need to police abusive and unfair terms for mortgages and other financial products, the “systemic risks” inherent in derivatives such as credit default swaps, as well as, the use of leverage by tackling the “too big to fail” issue. Of course this comes after the barn door has been open and all the horses have fled, and many will argue that The Street will inevitably develop new instruments to challenge the new regulations and oversight…but that’s another problem.

In the over-reaching spirit of not letting a good crisis go to waste, Dodd’s bill also seeks to fix what’s not broken with provisions that asphyxiate investment in startup ventures and subsequently stifles what has historically been the most sustainable source of new job creation during a period of hopelessly high unemployment.

Dodd proposes adjusting for inflation the income and net worth requirements for a person to be considered an “accredited investor” by the SEC under the 1933 Act. If this were to occur it will materially decrease the pool of private capital that is available to finance new companies, and in turn, innovation, job creation and economic growth.

Presently, an individual must have a minimum net worth of $1 million or an annual income of $200K to be an accredited investor. Although the reform bill does not identify the proposed multiplier to adjust these numbers, it is fair to assume that an inflation adjustment approach (based on CPI) is likely which would raise the 1982 mandated $1 million dollar net worth threshold to approximately $2.25 million and the individual annual income threshold to approximately $450,000.

Applying a $450K income threshold to the latest IRS tax return data, the number of accredited investors would drop approximately 77%, from 4.5 million individuals who earned $200K or more to a little over 1 million. That’s a material decrease in the pool of available “angel” capital.

A 2008 study of accredited investors based upon data reported in the 2008 Statistical Abstract of the United States by business demographer Paul Reynolds found that only 10.5% of accredited investors had made a private venture or angel investment in the prior three years. Adjusting that data for the increased thresholds implied under the Dodd bill reduces the number of likely angel investors to between 121,000 and 174,000 individuals…devastating.

We can debate forever the wisdom behind an over-inclusive system that uses personal wealth as a proxy for investment sophistication. Yet, many others (myself included) would maintain that the accredited investor standard prevents those with adequate access to information, or experience, or due diligence skill, or sector expertise, or entrepreneurial spirit or emotional tolerance for risk to embrace the potential asymmetrical upside of private venture investment. (What would you expect from a Venture Populist?)

I agree with the recent opinion expressed on this subject by digital strategist Alex Alben in the Seattle Times…”more investors today have access to financial information and filings through electronic databases than ever before. The old notion that only wealth buys access to financial information is increasingly quaint in our digital age. The financial crisis of 2008-09 was not precipitated by millionaires losing money in private placements…the monetary amount should not be a moving target, changeable at the whim of the SEC… Both houses of Congress should pass a bill with meaningful consumer protection and bank oversight, but not harm privately funded startups in the process.”

I would also add that if the current administration is so intent on identifying the $200,000 income level as “the rich”…as those capable of taking on a greater financial burden in the form of higher taxes, shouldn’t those same individuals continue to have the right of access to private equity and venture capital transactions, the asset class that has historically delivered investors the highest returns?

Rich enough to tax should at the very least mean rich enough to invest.

Personally, I believe the accredited investor thresholds as they are applied to investments in early-stage businesses are arbitrary, under-inclusive, undemocratic, discriminatory, and unnecessarily restrict innovation, economic growth and new job creation. All individuals should be allowed to invest in new businesses. The current rules should exempt venture capital.

But the most that you can ask of a regulatory regime is too simply leave the current law alone. It’s may not be ideal, but it certainly is not broke. Dont’ fix it. Let it be.

Album:   Let It Be, The Beatles, 1970

The common and conventional wisdom of venture investing is populated with a myriad of musty and meaningless maxims that do little to develop due diligence deft. The list of utter untruths include little tarradiddles such as the purported prerequisite that a start-up must draft a comprehensive business plan when seeking financing (wrong), or that there must a clearly defined exit strategy (also wrong).

The often cited notion that the entrepreneurs have material amounts of their personal cash invested as “skin-in-the-game” is another feckless formula for evaluating venture opportunities. It’s bunk. My only private investment write-off in the last ten years was the result of backing a proven entrepreneur with a prior high-multiple liquidity event who put $12 million of his own money behind a good idea that proved to be beyond his ability to execute. An expensive lesson, but…school me once (shame on me).

The majority of the most compelling private investment opportunities originated from entrepreneurs that lacked the personal wealth to back their great idea. Sweat equity, career opportunity costs, an equity positon providing material upside incentive and personal sacrifice are generally sufficient substitutes for a founder’s flesh.

One of the more sophomoric shibboleths among venture investment evaluation criteria is the fictitious “first-mover advantage” (FMA). The naïve notion, which garnered its groupies during the dot-com delirium, suggests that the first entrant to a market space can fend off the followers and dominate the market for a material period of time. Fueled by VC funding and visions of carried interests, blind faith to this “first-to-market” fallacy financed many blow-outs and busts.

Fact is, for every Amazon where the FMA proved sustainable, there are dozens of examples where the market pioneer gave ground to a later entrant. There are only a few instances where the first mover held considerable market share (and developed material enterprise value) for a material period…such as Henry Ford’s Model T dominated the market for years until giving ground to Chevrolet.

The second mouse gets the cheese

My own experiences concur with this more accurate history of venture. I had a hand in the development of a multi-billion alternative strategies asset management firm that picked off the AUM of the first-to-market pioneer firms by developing cheaper, more transparent and more liquid investment vehicles. The pioneers spent vast sums on educating the marketplace. We simply piggybacked and poached the pioneer’s early adopter clients on the way to assuming a dominant market position.

In most cases, you are better off backing the entrepreneurs that are building the second coming of the next big thing. The slower but wiser entrepreneur for me.

Viola, Erwise and Midas, the first browsers, gave way to Mosaic, which in turn, gave way to Netscape. Chux, the first disposable diaper from J&J gave way to P&G’s Pampers. Micro Instrumentation & Telemetry Systems pioneered personal computing with Altair, which later gave way to Apple who hardly dominates the personal computer market today.

Microsoft succeeded not by being first. Digital Research developed the first desktop operating system. In fact, Softy purchased the original DOS program from Seattle Computer works for $50K. Easy to forget today, but back in the day Gates expertise was marketing, not innovating.

Visacalc, the first desktop spreadsheet program, gave way to Lotus 1-2-3 which in turn gave way to Excel.  Boeing did not pioneer the commercial jet, Disney did not introduce the theme park, Starbucks was not the first gourmet coffee shop and Wal-Mart was not the pioneer of discount retailing. They were not first—they were better.

Proponents of the FMA argue that the first entrant achieves name recognition, achieves economies of scale, locks in early customers due to consumer habits or high switching costs and develops brand loyalty…consequently building barriers to entry.

But, with the exception of truly proprietary IP or geographic advantages in brick and mortar or service industries, I don’t find those “advantages” to be sustainable by virtue of fiat. Better will always end up beating out first.

The empirical research bears this out. In the 1996 study, “First to Market, First to Fail?”, Gerard Tellis and Peter Golder demonstrated that pioneers are rarely rewarded for their efforts. Rather, they found that another class of firms labeled early leaders (the category of second and third-comers) enjoyed “a minimal failure rate, an average market share almost three times that of market pioneers and a high rate of market leadership.”

Thats because the first-mover pays a huge cost in R&D, marketing and advertising to educate and entice early adopter customers or clients. The later comers have the benefit of case study, market intel and the opportunity to sell relative value…often referred to as the “free-rider effects”, where late movers may be able to free-ride on a pioneering firms investments in R&D, consumer education and infrastructure development. These “imitation costs” are more vastly affordable than the “innovation costs” that often cause the pioneer to crash and burn.

When evaluating pre-revenue ventures, I find it best to eschew first-to-market business models in favor of the better, faster or cheaper followers. Look to who’s next. It’s easy to be sucked in by the intuitive appeal of the FMA, but I have already been schooled…I won’t get fooled again.

Album:   Who’s Next, The Who, 1971

I have noticed that VCs tend to talk to the public and with their peers more about their home runs than their strike outs. Angel investors, on the other hand, prefer to relentlessly revisit their pain—often comparing their battle scars like veteran samurai. Probably because angels put up their own capital. Because they truly do eat their own cooking it’s harder for angels to forget their fallen soufflés.

VCs achieve their highs from the opium of OPM…so even a bad trip is still a free trip.

I recently had lunch with an inveterate venture investor (aka “angel”) whom I had co-invested with in a biotech, as well as, a med-tech company, several years back. Our conversation inevitably turned to peck at our past portfolios.

The biotech company was a true home run—a high-multiple exit realized in a 2004 IPO. (When was the last time you saw biotech, high-multiple and IPO in the same sentence?)

But, rather than relishing in a reminiscence of our raison d’être, we chose to get muddy in the mire of our miss—the medical device company that (nearly seven years later) was still trudging along with neither an exit, nor a write-off in sight.

There is the baneful scenario–five or more years in an illiquid private investment that just keeps rolling over but never plays dead, and, there is the painful scenario–a company running profitable for several years straight but no IPO, acquisition or distribution on the near horizon.

Two questions dominated our discourse. First, what would become of the med-tech investment? And secondly, what can we do differently as investors to avoid non-outcome outcomes in the future?

My most previous venture ovation opined, “There is very little that is binary about venture investing outcomes. It is not just feast or famine…outcomes are diverse and asymmetric. You can lose your entire investment, just lose a portion, break even, receive periodic distributions producing double-digit IRRs or achieve exits at 5X, 10X, 20X multiples or greater…”

That list of outcomes would be just fine if it was indeed comprehensive, but I employed some autistic license. The reality of the absence of binary outcomes in private venture investment occasionally includes the potential absence of any outcome at all.

In an amusing piece “10 Exits”, Angel Capital Association’s chairman John Huston further parses this purgatory. He evokes the venture vernacular “Zombie” as “a walking dead venture that will never become a great company, nor will it die so I can declare the loss.”

There are a number of ways to euthanize a zombie but what do you do about the investment that Huston calls, “My Grandkids’ Company…a company that is successful but there’s no exit in sight”? (“Maybe it will occur after my grandchildren inherit the portfolio.”)

That is the second question, and yes, there are methods that an investor can apply at the outset of the investment that mandate distributions from profitable private companies.

I have developed some effective term sheet and funding mechanisms that enhance the optionality of a private investment’s outcomes that avoid inadvertently gifting your grandchildren. I will share them in an upcoming post. They are the byproduct of my own experiences, and as you know, experience is what you get when you were looking for something else.

Album:   Hits and Exit Wounds, Alabama 3, 2008

Contrary to conventional cliché, there is very little that is binary about venture investing outcomes. It is not just feast or famine. Rather, outcomes are diverse and asymmetric. You can lose your entire investment, just lose a portion, break even, receive periodic distributions producing double-digit IRRs or achieve exits at 5X, 10X, 20X multiples or greater on your initial investment.

What does appear to be binary is the manner in which prospective investors in private ventures perceive the asymmetric return profile of venture investment outcomes….most either adore it or abhor it.

On one hand, an investor like Jim Rogers is attracted to what he no doubt views as a positive asymmetric profile of venture investment outcomes. His venture acumen began developing at the age of five by selling peanuts and by picking up empty bottles that fans left behind at baseball games. In 1970, he co-founded the Quantum Fund. During the following 10 years the portfolio gained 4200% while the S&P advanced about 47%. Nice.

In a recent rant Rogers opined not only that “diversification was garbage”, but also went on to say that “you only need four or five good ideas in your life to get really rich”.

(Note that Rogers says “really” rich…which seems a bit elitist seeing as how only one or two good ideas can make one simply rich.)

Nevertheless, 90X returns over the S&P implies that he had very little fear of placing losing bets.

But what about those less adventurous souls that eschew positive asymmetric return scenarios in favor of more traditional investments with binary and symmetrical outcomes? Why are there so few angel and venture investors despite the compelling data of the asset class’ returns and the proven history of private enterprise as the single greatest creator of family wealth?

Economics psychologist Daniel Kahneman explained this behavior with his 1979 nobel-winning, Prospect Theory which describes decisions between alternatives with uncertain outcomes where the probabilities are known. In prospect theory, Kahneman identified Loss Aversion–people’s tendency to strongly prefer avoiding losses to acquiring gains. In fact, studies suggest that losses are twice as powerful, psychologically, as gains.

In their perpetual pursuit to mirror the risk-free rate of return, some investment advisors are factoring prospect theory and loss aversion into their asset-allocation schemes. But loss aversion studies opposing symmetrical outcomes…such as either winning $100 or losing $100. It provides little insight with respect to investor’s fear of positive asymmetric return profiles.

I prefer the wisdom in David Gal’s 2006 study, A Psychological Law of Inertia and the Illusion of Loss Aversion, which discounted loss aversion as “superfluous” and found instead that risk/return tradeoff decisions were decidedly “influenced by a tradeoff between the status-quo and change”. Gal calls it inertia, noting that that people will tend to remain at the status-quo when they have no clear preference between the status quo and an alternative option.

The rigid portfolio allocation to the same traditional asset classes within the same stale strategic asset allocation model is the status quo that Gal is referring to. The results have been far from compelling yet most investors, and their advisors, keep doing the same thing while expecting different results.

In a recent WSJ article, Jason Zwieg accounts for this “mental lazziness” that prevents  investors and advisors from challenging their status quo approach to investing (and consequently, not embracing alternative asset classes and strategies). “In short, your own mind acts like a compulsive yes-man who echoes whatever you want to believe. Psychologists call this mental gremlin the confirmation bias…people are twice as likely to seek information that confirms what they already believe as they are to consider evidence that would challenge those beliefs.”

Try Harder. Properly allocated, private equity and venture investments can materiality improve a portfolio’s risk/return tradeoffs and benefit from the proven superior performance of the asset class. But, expanding your repertoire by opening your portfolio to private investment opportunities requires commitment and effort to educate yourself on the rules of the engagement and evaluation.

Achieving superior returns by embracing private investment requires initiative…not inertia.

Album: Underachievers Please Try Harder, Camera Obscura, 2004

One of the few commonalities among the thousands of VCs and angel investors is the consensus that the process of identifying an attractive private venture investment is “part art, part science”. The art part speaks to the inherent absence of certainty with respect to any venture’s viability. There are no absolute truths…no bankable checklist to follow that ensures a successful outcome for a private venture investor.

The science part? That’s simply hindsight, which of course is an exact science. Of the ways that I have derived knowledge as a private venture investor, hindsight is the most expensive, the least merciful and the most valuable.

When it comes to separating the wheat from the chaff, my primary screen is simple. For a private venture investment (PVI) to be worthy of the costly, time-consuming, bandwidth-bogarting process of evaluation, consideration, due diligence and deal term negotiation, it must initially meet these four criteria;

1.  There is a large market for the firm’s products or services

The size of the market must be material for a PVI to potentially achieve a high cash flow or high-multiple (positive asymmetric) outcome. The success of category-killer app, product or service in a small market lacks the potential of an exponential payoff and does not proportionately offset the risk of a loss.

Ideally, the market should not be merely mature—it should be a growing market. The market can be newly-emerging (alternative energy, for example) or non-existent (Twitter) at the point of the venture’s introduction of its product or service, but it’s potential must be measurable and meaningful.

The values set forth in the modern business classic Blue Ocean Strategy often come to mind. Blue oceans denote industries untainted by competition. In blue oceans, demand is created rather than fought over…competition is irrelevant because the rules of the game are waiting to be set.

I am predisposed to the notion that the initially contemplated product, service or business model rarely succeeds, and consequently ventures are frequently forced to adapt to new data points. This requires the room to maneuver that a large market provides.

2.  The firm has a sustainable competitive advantage

The venture must have a sustainable edge to attract and retain its market share. The location or lease of a real estate development can be an edge. The celebrity chef to a restaurant, the IP portfolio of a technology or medical device company or a strong distribution channel relationship can be a critical edge to a consumer product.

The more tangible, unique, defensible and proprietary the edge (such as patents)…the better. The competitive advantage should discourage competition and create a barrier to entry. The edge will vary according to the venture’s industry. First-mover status is often meaningless (like many others I prefer second-mover) and certainly not sustainable in a market of compelling size.

A sustainable edge to compete in a large market is critical to potential acquirers or public markets and the objective of realizing compelling multiples on an exit.

3.  The management team has compelling expertise in the contemplated market

You must have a great execution team. Visionary founders may be inspiring but they alone cannot bring a great idea home. Get an experienced and accomplished operator in early.

In a couple of my early investments I failed to hone this rule to its proper endpoint. Naively, I believed that the serial entrepreneur with prior liquidity events was a proven winner and worthy of the wager. The first time that formula fell short I failed to make the proper connection, the second time I learned the lesson. There will not be a third time.

Successful entrepreneurs too often become deal junkies fueled by the fumes of their prior triumph. Some become self-anointed business “generalist” experts (contradictory, eh?) that no longer feel restricted by the limitations of their actual core competencies.

The founding partners and management team must include an accomplished C-level executive or highly accomplished operator with a track record of proven experience with the specific business model and target market. Moreover, the operator must have the authority and discretion to execute the business plan. Serial entrepreneurial ego in the absence of domain expertise is a formula for failure.

4.  The deal terms are no less than fair, and ideally—favorable

Valuation, investor rights, board representation, management discretion and transparency with respect to material events, protective provisions, anti-dilution protection, liquidation preferences and optionality issues must incentivize and respect the source of the capital. The investor’s capital is the great enabler… the sine qua non for any venture.

Few things are as humbling as the successful venture that does not translate into a successful investment. I respect the often repeated axiom that a fair deal is one where both parties feel that they got a bad deal, but the end game should always be to negotiate favorable deal terms.

The probability of an attractive outcome is diminished if a private venture investment cannot meet these initial thresholds. In VC-speak you are nursing a newborn “zombie”…a walking dead venture…the ship is already sinking and it has not even left the port.

Album:   We Were Dead Before the Ship Even Sank, Modest Mouse, 2007