My copy of Venture Deals arrived a little while back, but it wasn’t until my trip to SF this weekend that I had a chance to read it. My plan was to skim the book and then pass it on to one of my friends that is actively raising a round. Instead, I’m keeping it on my bookshelf next to the essential Entrepreneur’s Guide to Business Law and sending out a few copies.
I found myself alternately skimming sections and reading every single word. The book is succinct and doesn’t unnecessarily repeat itself. I was able to quickly determine whether a particular section had something new to teach me and dig in as needed. The book easily fit into a few uninterrupted hours on a flight, but I expect I’ll reference it from time to time.
As an early entrepreneur, a disproportionate share of your legal counsel’s time is effectively spent educating you. No sane entrepreneur should negotiate an obscure point on a term sheet that he doesn’t understand. In my experience, one of the reasons legal bills are often higher on a first-time entrepreneur’s company is this education curve. Read the book. The last thing you need is to shovel money from your completed financing to the lawyer that had to coach you through terms you could have quickly taught yourself.
But, the value of the book isn’t limited entirely to negotiating a venture round. I also found the tips on negotiation to be both timeless and more broadly applicable (I suppose there are negotiation books for that also). For example, most corporate legal processes are set up to exploit the tendencies of smaller companies. They take forever to process revisions and can involve many back-and-forth discussions. While I’m not particularly sensitive to the length of the process, I’m extremely sensitive to the time I spend on the process. Looking back, I see myself consistently agreeing to slightly worse terms the more time I spend on the negotiation. This wasn’t something I was aware of, and that self-reflection will be useful going forward.
Some of the biggest gaps in the book are easily addressed if you read it while online - I find that spreadsheets help me internalize the dynamics of financing terms much better than printed text, and there are plenty of resources for that online.If you are operating (or hope to operate) a startup, Venture Deals is a great asset even if you don’t plan on raising any investments.