How can you prepare for a negotiation with limited information?

Going into a negotiation without knowing your goals is a negotiation almost lost already. You need to investigate and pressure test your own goals before going into the negotiation. Only with a clear picture can you work towards your outcome and avoid ad-hoc reactions that you might regret later. Preparation is key, as you can lead the conversation towards your desired outcome, but have in mind how your goals also create a win-win for the other stakeholders involved. Considering alternative options and fall back solutions as part of your goals keeps you flexible and empathetic to find a swift solution. One concept of a fall back solution is the BATNA (best alternative to the negotiated agreement),providing clarity on when to walk away.

Hopefully, this doesn't happen often, but if it does you should preemptively define a win-win situation with the lowest common denominator. One time I went into a deal meeting thinking it was going to be a consulting pitch, but I ended up getting equity in the company in exchange for my help and time. The worst case scenario was a lost income opportunity, but years later it has been one of my favorite deals to date.

Preparing for a negotiation with limited information can be challenging, but a key strategy is to ask open-ended questions during the negotiation itself. In my experience, these types of questions are invaluable for gathering information and understanding the other party's needs, priorities, and constraints. Start the negotiation with general inquiries like “What are your main goals in this negotiation?” or “Can you tell me more about your priorities?”. This approach not only provides you with vital information to guide your negotiation strategy but also helps in building rapport and a collaborative atmosphere, often leading to more favorable outcomes.

Be very direct with your open-ended questions. Your time is valuable, and you want to see what the table stakes are for you and them. Is there cash, is there equity, are there active users, etc. This will give you most of the information you "didn't" have going into the meeting

When preparing for a negotiation with limited information, it's crucial to identify and test your assumptions. Before entering the negotiation, list out any assumptions you have about the other party's needs, limitations, and goals. In my experience, you can use the negotiation itself to test these assumptions. Pose questions or make statements that invite clarification or correction. For example, you might say, "I assume that your primary concern is X. Is that correct?" This approach not only helps you gather more information but also demonstrates your willingness to understand the other party's perspective, laying the groundwork for a more constructive negotiation.

Negotiating with limited information is challenging, with the potential for costly mistakes depending on the stakes. Despite the scarcity of publicly available information, these situations present learning opportunities akin to a delicate dance uncovering valuable insights. Persistence and strategic questioning are your allies in this negotiation dance. While the path may be longer, the journey provides chances to piece together the puzzle and make well-informed decisions. Engaging with the other party is crucial, as genuine interest often fosters a more open exchange of information. In essence, negotiating with limited information is a challenge met with adaptability and perseverance, offering a path to successful outcomes.

I see little knowledge as a chance to use agility and intuition in deal-making. A forward-thinking VCist should adapt and evolve while still analyzing market size, trends, and competition. Overcoming benchmarking with real-time data and predictive modeling allows one to create dynamic strategies that fit today's startups. Negotiating without target valuations or equity stakes allows for creative agreement arrangements. Performance-linked equity reallocations or staggered investment tranches could reflect the startup's growth and milestones. A flexible, growth-centric investment culture that promotes flexibility, constant learning, and collaborative value creation is needed to thrive in a world with limited knowledge.

Most negotiations take place with less information than you wished for. Negotiations and investment decisions will always be based on your best educated guess (hence the value of educating yourself on each point). You need to differentiate among several types of uncertainties: - the ones that do not matter much - the ones that matter and that nobody knows (that's where you take risk) - the ones that matter and where you can make up your own opinion (where you research) - the ones that matter and where the venture should have an answer (where you ask & discuss). In the latter case, if the founders do not have an answer (1) ask yourself whether they should have thought this through! and (2) this may be your first opportunity to add value!