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Founders should pay attention to fundraising terms and seek experienced legal counsel to avoid being taken advantage of by investors who prioritize high valuations and complex terms over the founder's interests.

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    Care about the terms of your fundraise as much as the economics, valuation, and amount of money raised.
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    Investors may take advantage of founders' desire for high valuations by asking for jargon-filled terms and board control in funding deals, which can be detrimental to the founder's interests.
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    When negotiating with investors, it is important to use standard paperwork and a lawyer with startup experience to prevent being taken advantage of, and seeking investors with a track record of building big companies can be advantageous.
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    Investors prioritize safe investments and often offer unfavorable terms to founders, making it difficult for startups to secure funding.
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    Investors who say "come back to us when you find a lead" are actually saying no and are just getting a free option to invest in the future without committing anything.
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    Investors may say no initially, but if you find a great lead investor and come back to them, they may be interested, but be aware of their tactics as they have more experience in the game of investing.
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    Investors may have different incentives to advise companies to raise more or less money depending on the stage of the company.
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    Investors may push for faster growth and more spending on sales and marketing, creating a misalignment of incentives with founders.
    • Investors want startups to have a huge outcome, so they may push for faster growth and more spending on sales and marketing, but this can create a misalignment of incentives.
    • Investors are becoming more professional and have obligations to their investors, which can lead to a misalignment of incentives with founders.
    • Investors have more incentive to convince founders to take more money, and smart founders understand that investors have their own goals and incentives.
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