When you have experience as both an entrepreneur and an investor, it’s natural to want to show off your diverse set of skills at the negotiating table, says Matt Geiger.
Resist the urge.
“You always want to let the investor be the smartest one in the room,” says Geiger, a financial professional at Grosse Pointe-based Lakeland Ventures and co-founder of Ovid BP Systems.
“When you’re on the entrepreneurial side, you have to exert patience with potential investors when they request information as part of the process. You’ve been there, and you may know that something really shouldn’t be a sticking point. But you’re going to blow up the deal if you don’t oblige their request and get them the information they need. Engage with them as far as they want to and go through the steps.”
In this Dealmakers feature, we spoke with Geiger about the role collaboration can play in being a more effective dealmaker.
Learn to collaborate
Prior to Lakeland Ventures, Geiger was a portfolio analyst for the market-neutral equity hedge fund Sangamon Trading. He was responsible for the strategic identification, valuation and monitoring of the fund’s investments across several market segments, including a variety of private placement transactions. These days, he’s focused on the entrepreneurial side with Ovid, a patented software system that can assess and monitor blood pressure using a camera on a smart phone, tablet or computer.
After more than a decade in which he has done more than 25 venture capital investments and co-founded two companies, Geiger says the dynamics of M&A activity have become much more collaborative. It’s not about defeating the other side.
“Dealmaking on every level is what generates progress,” he says. “Especially today, when information is so widely shared, collaboration is the way to move things forward, rather than in years past where it was more about having something that nobody understood.”
He says now, it’s more of a cooperative strategy to move things forward.
“It’s about finding that right partnership that’s fruitful both financially and operationally to both sides and accelerates progress,” he says. “In terms of the health of the overall economy, that's incredibly important.”
One key to being successful in the VC space is possessing an inherent curiosity for your work.
“Your pitch deck is going to put the entrepreneur in the best light, but it’s truly taking the steps to understand the technology, the market and how to potentially be disruptive that separates the great investors from the average one,” Geiger says. “Whether that’s bringing in experts — which costs money — or doing it yourself and being diligent in that regard, it’s a lot of work that can end up being unpaid. But you’re learning along the way, which is a great part of being in this space.”
Don’t take failure personally
It’s typically a lot harder to identify a new investor than it is to give a little leeway in negotiating a deal, Geiger says.
“That doesn’t mean we don’t have our limits,” he says. “But if you find an investor that’s willing to work together, you understand that the minutiae shouldn’t break up a deal and a potentially fruitful relationship. If you take that attitude on either side of the table, you’re going to have a lot more success.”
When you do have a situation where things just don’t work out, don’t take it personally.
“You can’t get down if you get negative feedback or if someone isn’t interested who you thought would be,” Geiger says. “There are a lot of boxes to check to get these deals done. Someone is going to take notice of what you’re doing and be excited about what you’re doing to the level that it fits their portfolio or the size of investment they’re looking to make. You just have to keep telling yourself that.”