You're investing in startup founders. How do you secure fair terms for everyone in your portfolio?

Securing fair terms isn’t just about protecting the investor — it’s about ensuring founders also get their fair share. Therefore: Balance risk and reward for all parties involved in a deal. In negotiations, you should focus on balancing risk and reward. For example, in one of my own recent deals, we agreed on performance-based vesting terms that protected our investment while allowing the founders to benefit from their success as well (progressively). This ensures that the parties remain aligned in their objectives and ensures that both the investors and the founders will mutually benefit from the partnership.

Summary: Navigating Startup Investments To balance a startup investment portfolio: Diversify across industries and stages of growth. Manage risk by limiting high-risk startups in your portfolio. Leverage networks for insights and co-investing opportunities. Allocate for follow-on investments in promising startups. Regularly review and rebalance your portfolio, with clear exit strategies. This approach helps manage risks while maximizing growth potential in the startup space.

it starts from the due diligence on the startup itself then ranking system includes Founders background, technical assessment for their tech,Legal, BD, Marketing, HR, Sales process, add this to their market size and it will led to identify who needs what to get their product market fit. based on the scoring system after we provide in kind services in all the above, we start to take our decisions towards their investment fairly as its based on our judges, mentors, advisors and the investment committee.

To secure fair terms for everyone in your portfolio, establish consistent guidelines for equity, governance, and founder compensation. Be transparent with founders about these standards and ensure each deal aligns with your portfolio’s strategy. Treat all startups fairly, balancing protection for your investment and the founders’ interests. Regularly review and adjust terms as needed to maintain fairness as companies evolve.

In portfolio management, aligning terms with market realities is crucial. Rather than focusing on minimizing risk with familiar solutions, investors should embrace disruptive innovation for higher returns. Data shows that disruptive solutions, not incremental ones, lead to the most successful exits. Therefore, consider reevaluating your investment thesis to prioritize groundbreaking technologies. By fostering an open innovation ecosystem and leveraging external collaborations, you not only increase startup success rates but also ensure fair and forward-thinking terms for your portfolio.