Below you will find some causes that can lead to a breakdown of negotiations during the stage of determining mutual interest of joint cooperation.
You initially came to the wrong investor
Protect yourself in advance from unexpected surprises. Take a closer look at what stage the investor is ready to invest money into the project, if he is concerned with buying out a share of another fund, and by what means he intends on returning investment and at what time period. Ask what his ideal vision of the portfolio project is and adjust all data you receive. Decide “on the shore”, don’t burn your daylight. Sometimes it can be surprising how little the startups interest is how the funds will largely affect their business future.
You didn’t arrive at the point your investor truly wants
There are many cases when the investor is not just eager to earn and emerge from the project, but also has his own strategic objectives. Corporate venture funds may not focus on long-term return on investment, if you touch upon any of their favorite subjects. If your startup will be a supplement to an existing portfolio of projects, or will turn into a driver of growth for the company’s core business, then you’ll be pleasantly surprised with the level of interest the investor will be showing towards your project. If you’re not aware, then negotiations can break down at the final stages and you will consider it unreasonable.
You want to sing NDA at the second “date”
You are building barriers with these three letters when developing your project. You haven’t truly planted the seed of interest yet, but have already laid the corner stone of misunderstanding. Who do you think an investor will choose to work with first? A sociable person who unveils his successes and failures, or those who send a non-disclosure agreement out immediately after the teaser presentation, which features a common thread of “we have no analogues” concept? It’s better to not reveal too much, but to not put out the frames at the same time. In this case when you conduct business, you won’t appear to be dragging out the process of overcoming the far-fetched fears. In any case, if something shall go wrong, you’ll have a chance to receive a good recommendation to other investors and their colleagues.
Business ethics
This is quite a widespread reason and you won’t even realize you can make someone dislike you. When your “opponent” suddenly disappears for 2 weeks with the words “I’m going to send it shortly” after your request for an investment proposal, you can only wondering why it can be so hard to say that you still need to develop it as there aren’t any corporal or other punishments provided given if spoken the truth.
