Issue 38 ·

When to say no to a strategic investor

Information rights, signalling, and the quiet cost of a corporate logo on the cap table.

A corporate investor brings credibility, distribution and sometimes a large cheque. It can also bring information rights a competitor would love to have, a signalling problem if it declines to follow on, and a buyer who has seen your numbers before anyone else.

None of this means saying no by default. It means negotiating the side letter as carefully as the price: limited information rights, no board seat, no right of first refusal on an acquisition, and a clear understanding of who inside the corporate sees the data.

If those terms are not available, the logo is probably more expensive than it looks.

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