Be a Better Negotiator

Being a great negotiator takes discipline. From my time negotiating technology licensing agreements, and interacting with business development professionals I've put together this list of guidelines for success.

Never fall in love with a deal
Whether we admit it or not, almost all decision making is done at an emotional level, with facts and data used to rationalize the decision. That may not be so bad when buying a car, but business deals need to be as emotionlessly calculated as humanly possible. You must be prepared to walk away. Falling in love with a deal can lead to what is known as the "winner's curse." Bidding high to win a deal leads to the winner overpaying. Let judgment win over emotion.

Don’t believe the numbers
They're wrong. No matter how scientifically derived the financial projections are...they're wrong. You need to know the potential of what you're buying, but don't give the numbers too much credit. It is impossible to predict the future.

Sell yourself and your company
You never know who the other party is also speaking with. You should communicate all the advantages you offer as a partner. Make them believe that doing this deal with you is best for them. This will help keep them at the table, improve your bargaining position, and make them feel good about the deal after it's signed.

Build a relationship
Negotiations are the start of a partnership. They are not battles, or confrontations. They are a forum for creating mutually beneficial arrangements. Your interaction should reflect a good faith effort to build value. Approach your counterpart not as an adversary, but as a future partner.

Find a win/win.
Deals are about creating value. Each party is giving up something that the other party places greater value on. Find the deal that puts you in the best possible position and creates the most total value. The best negotiations leave both parties feeling good about how they came out of it.

Be prepared
Enter the negotiation knowing your position. Know what you want, what you can give up and what you can't. Know at what point you're prepared to walk away. And, just as important, know the same things about your counterparts! Think through their position to help you prepare for their reactions.

One exercise to help prepare for a negotiation is to fill out the worksheet below. It will help you frame your strategy.

Peer 2 Peer Angel Investing: The Future of Funding Startups?

I have a friend who is staring her own business. It's a for-profit social impact enterprise. As a result, the financial returns she aspires to achieve are lower than a typical startup's, and she's struggling to attract investors. Creating an enterprise that aims to generate social benefit as well as financial benefit requires a specific type of investor that is rare. That is to say, there are few entities willing to make a large investment in a company without the potential of a large return on investment. But there are lots of people interested in making social change, and in backing it financially. Most people make some sort of charitable donation each year. Perhaps these people and their social change-seeking dollars could be channeled towards people like my friend.

a new model for individuals to contribute financially to social change organizations

In the spectrum of how an individual can invest in social impact organizations, donating is the first step...simply giving money away. People who donate get a tax write-off and a warm feeling in their cockles.

Microfinance is the next step in the spectrum. Instead of giving money away, investors seek to make back what they invest, perhaps with a modest return. Kiva.org has taken Microfinance to the masses with a peer to peer (p2p) model. Through Kiva, anyone can invest in a small business in the developing world. Individual's investments are pooled with other investors who choose to invest in the same company. Investors do not receive interest, Kiva simply provides a way to make an impact through low risk, short-term loans. Like simple donations, lending through Kiva is still charity. The idea is that a person's dollar goes farther because it will be repaid and can subsequently be reinvested. The impact per dollar also has the potential to be higher with Microfinance because the people who receive the money are striving to help themselves rather than rely on donations. Give a man a fish and he'll eat for a day, teach him how to fish he'll eat forever.

P2P loaning is a relatively new phenomenon. Kiva has an interest-free, social impact model, but there are other services with a traditional interest model (Prosper, Lending Club). But something that seems lacking in the mix is an opportunity for an individual to make an equity investment. In the traditional startup world, this area is typically reserved for Angels, high net worth individuals who make large investments. For example, the first Angel investment in Google was $100,000. Why shouldn't every individual have an opportunity to make an early-stage equity investment? The response is probably that normal individuals wouldn't be willing to make large enough investments to impact a startup. But what about as part of a pool? There seems to be an opportunity to follow the model of P2P lending communities, but with equity investments.

P2P Angel investing seems like a logical progression of the new P2P financing trend. I think it makes sense for startups of any kind, but particularly for startups like my friend's, for whom traditional Angels and VCs are even harder to attract. Right now, the tools are lacking, and there seems to be an opportunity for a new community/website dedicated to the idea.

Give a man a fish, he'll eat for a day, invest in his fish market startup and you'll both eat forever!

For more info on internet-based P2P lending, a good place to start is: http://www.transcapitalist.com/

Off to Duke to get my MBA!

I'm heading to Duke's Fuqua school of business to get my MBA. I've put most of my Innovance work on hold while I'm at school, so there will probably be few updates. I'm enrolled in the school's Health Sector Management program, where I hope to learn more about commercializing early stage medical technologies. For more information on the Health Sector Management program, click the image below.

Click for more info on Fuqua's HSM program

New Technology Transfer Clients in South America

Partnering with Russ Bown of ipXpress http://www.ip-xpress.com/, I have been working with international technology management organizations, helping them move beyond a regional or national focus, and establish collaborations with international commercial development partners.

I have helped Russ expand ipXpress’ business to South America, and will be working with two new clients there: NEOS http://www.neos.cl/ in Santiago, Chile, and Inova Unicamp in Campinas, Brazil http://www.inova.unicamp.br/site/06/english.php.

NEOS - Pioneering Tech Transfer in Chile
Technology transfer is extremely new in Chile, and NEOS is the country’s leading tech transfer organization. It is rare for Chilean universities to have their own office of technology licensing (OTL), and NEOS generally acts as a national OTL, working directly with inventors at several different research institutions. NEOS has set its sights on becoming the leading technology transfer organization in South America, and I will be working with them to help target international commercialization partners for their portfolio of technologies.

Unicamp - Success With a Nontraditional Model
Inova Unicamp is the OTL for The State University of Campinas, a leading research university in the state of Sao Paulo, Brazil. Inova has established a very successful technology licensing program, and is the leading university patent holder in South America. Serving a large research university, Inova manages technologies in a wide variety of technical areas, but has a particular strength in Chemistry and Agribusiness.

While most OTLs market their technologies in an active “push” manner, triaging technologies, and proactively seeking industrial partners for the best candidates, Inova operates under a unique “pull” model. Inova files a Brazilian patent application for every technology that is disclosed. Companies contact Inova with a technology need, and are provided with a portfolio of active, related technologies. When a match is made, a contract is negotiated and patent protection is normally expanded. If no interest is shown for a technology, the Brazilian patent is allowed to go abandoned. Inova’s large volume of new technology disclosures is necessary for this unique model to work, and they have had significant success with it; 270 new contracts have been signed in the last three years.

I will be helping expand Inova’s international outreach by keeping them abreast of commercial technology needs, and match-making available technologies with industry.

StrataGent Closes 16 M Series B Financing

Innovance client, StrataGent Life Sciences has just closed a $16M round of funding. I've been involved with this company since my Stanford days, and am really thrilled to be able to help them develop and find success.

Congratulations StrataGent!

http://www.prnewswire.com/news-releases/stratagent-life-sciences-inc-closes-16-million-series-b-financing-58084402.html