Investment discussions often begin with valuation and the amount of money required. Those are important, but they do not explain how the relationship will work once the investor joins the business. Before moving too far, discuss decisions, information, future funding and the circumstances in which either party expects an exit. A commercially attractive investment can still create friction if those expectations remain unspoken.
Understand the investor's objectives
Ask why the investor is interested, what return they are seeking and how long they expect to remain involved. A strategic investor may value access to products or markets. A financial investor may focus on growth and an eventual sale. A founder may prioritise independence and long-term operation. None of those objectives should be assumed from a label or an introductory conversation.
Discuss what contribution is expected beyond capital. Is the investor offering contacts, management support or access to customers? What involvement does the business actually want? Distinguish an aspiration from a commitment. If the investment case relies on a particular contribution, identify how it will be explored and what happens if it does not materialise.
Talk about decisions early
Discuss which decisions management should make and which should require broader agreement. Hiring, budgets, borrowing, acquisitions and issuing further equity can become sensitive subjects. Your lawyer should advise on the legal arrangements, but the commercial negotiation needs a clear understanding of the balance between investor protection and the ability to operate the business effectively.
For example, a hypothetical founder may welcome experienced guidance but be surprised by an investor's expectation of approval over significant spending. The issue is easier to discuss before documents are advanced. Both parties can explain their concerns and consider thresholds or processes that fit the business, subject to appropriate legal advice.
Plan for more funding
The current investment may not be the last capital the business needs. Discuss the circumstances in which further funding might be required and each party's expectations about participating. Ask your advisers to explain potential dilution and the implications of different funding structures. A growth plan should acknowledge the possibility that later capital is unavailable or comes on different terms.
Agree on the information needed to monitor progress. Reporting should help the investor understand performance without creating an unrealistic administrative burden. Consider what the business can reliably produce, how often it can do so and which financial or operational measures matter. Clear reporting expectations reduce the likelihood that ordinary uncertainty is interpreted as a lack of transparency.
Discuss the eventual exit
Explore possible outcomes such as a sale, refinancing or continued ownership. What happens if one party wants to exit and another wants to stay? Ask your lawyer about the mechanisms and protections relevant to the proposed arrangement. The immediate goal is to identify differences in expectations while the parties can still negotiate constructively.
Ardian Law helps founders and investors work through commercial terms and coordinate their advisers. Call 02 8111 7700 if you want help preparing for an investment negotiation or resolving outstanding points before funding progresses.