Navigating the VC Jungle: Debunking the Myth of "Sharky Deals"

The venture capital market can be a difficult place for founders. Recent data from Carta has shown that there have been significant down-rounds and funded deals with unfavorable terms over the last quarter. Many founders feel like they are being disenfranchised as the market appears to have turned on them. They feel that they are going to face more dilution and unfavorable terms. The term "sharky deal" has been circulating in the founder community. However, I want to share with you some news that you may not like - there is no such thing as a sharky deal in venture capital.

Venture capital is just like any other market. It's when a willing buyer meets a willing seller. If you feel that you are being offered an unfavorable deal, it's important to remember that it's not personal. You just need to go out and find someone else who can offer you a better deal. There are other investors out there who might be a better fit for your company and can offer better terms.

One of the reasons why it's difficult for founders to get good deals is that the VC market is inefficient. Closing deals takes time and effort, and it's not as straightforward as selling a house or public security. Founders tend to get complacent and only talk to investors who are the closest to them. Instead of doing this, it's important to widen your investor funnel. Talk to as many investors as possible and get their feedback. If you are receiving the same feedback from everyone, that might be the market price.

Another thing that founders can do to improve their chances of getting a good deal is to work on building their company. The more value you can create, the better the deal you will be able to negotiate. Investors are more likely to be interested in companies that are making progress and showing promise. Focus on creating a great product, attracting customers, and growing your revenue. These things will help you negotiate better terms when the time comes.

It's also important to remember that venture capital is a risky business. Investors take on a lot of risk when they invest in startups, and they need to be compensated for that risk. This compensation comes in the form of equity, dilution, and other terms. As a founder, you need to be aware of this and understand that it's not personal. An investor who is offering unfavorable terms is doing so because they believe that the risk justifies it.