What investors do best is say no. Therefore, the head of corporate finance must understand the language of communication with investors and classify investment institutions.

◆ Venture capitalists with different backgrounds have different styles

At present, venture capitalists in the entire venture capital circle can be divided into four categories, as shown in Table 2-12.

These four types of venture capitalists have their own characteristics, even the same type of venture capitalists, because of different backgrounds, negotiation styles are also different, some like to procrastinate, some are very rigorous, some pursue rules, some like to bargain, etc. Before negotiating with venture capitalists, financing companies should understand the negotiation style of the other party and know that they will not be defeated.

◆ Different types of capital negotiation space are different

(1) Angel investment in seed stage.

Angel investors decide whether to invest in a company based on how well the investor knows the founder. Generally speaking, angel investment has a low valuation of the enterprise, which is limited to the amount of funds to start the project, and is invested according to the registered capital. In the process of financing negotiations, financing enterprises are in a passive position and have a relatively small right to speak.

(2) Early-stage investment institutions.

The criteria for judging investment projects by early-stage investment institutions are almost the same as those of venture capital, but the investment agreement is relatively simple, and there are few VAM clauses, and there is a certain premium space in the valuation of enterprises, and the enterprise has relatively little voice in the negotiation process.

(3) VC investment institutions.

Venture capital institutions will draw up standard investment agreements, discuss negotiation matters one by one during negotiations, highlight key points, open up premium space when valuing the company, and have greater flexibility in financing negotiations.

(4) PE investment institutions.

Private equity firms invest in companies that are already mature and are only one step away from going public, and they will develop standard investment agreements to value the company according to the valuation logic of the secondary market. In the negotiation process, the financing enterprise has a greater initiative.

(5) Industrial capital or M&A funds.

Focusing on industrial synergy, consolidated value, and rebuilding value, we will formulate a rigorous investment agreement and value based on the net assets of the enterprise. In the negotiation process, it is difficult for financing enterprises to grasp the initiative.

◆ The key nodes of different decision-making mechanisms are different

Personal investment seems to be a quick decision-making process, but in fact, the efficiency is very slow, because they have to intersect with the business founder in all aspects, including work, life, career, etc., and improve the understanding of the business founder, this process takes a long time.

Investment decision-making will be carried out in strict accordance with the process and will go through many steps, including project search, preliminary due diligence, internal project initiation (project initiation meeting), due diligence, investment committee, etc. The first person in charge of the investment institution to connect with the enterprise will be responsible for the enterprise to the end.

Government guidance funds will also follow the decision-making process of investment institutions when making decisions, but if large-scale government projects or projects are involved, they may make decisions first and then supplement the process. At the same time, if the enterprise has introduced the government guidance fund in the early stage, it is necessary to formulate a sound information reporting mechanism to cater to the company's deliberation process and rules. Compared with market-oriented investment institutions, the decision-making efficiency of government guidance funds is relatively low.