Two founders can present the same investment case and land very different deals, because perception trumps reality. In a 2017 negotiation workshop at Microsoft ScaleUp, senior VCs negotiated a startup sale with identical facts: some groups closed no deal, others agreed on $10 million, and some “founders” sold for more than $500 million.
Two founders can present the same investment case, yet one might land a ten times better deal.
Let me illustrate the reason for this with a real-life story.
In 2017, I organized a negotiation workshop for top VCs at Microsoft Scaleup. We invited an internationally renowned negotiation coach who was for many years part of negotiations between Israel, Palestine, the US, and many more.
And here’s the experiment we did in the room:
We did a role-play with the senior VCs.
We paired them up in groups of two VCs each.
One VC in every group played the role of a founder who wanted to sell their startup. The other VC in that group played the role of a corporate M&A manager who wanted to buy the startup. And then they negotiated the deal.
We gave all the groups identical information about the base facts of the startup that should be sold and the corporate that would be the acquirer. Information like the revenues of the startup, the criteria that are important for the buyer, etc..
So all groups had the same information, and the VCs who played the “founder” in all groups had the same startup they wanted to sell. The VCs who played the “acquirer” in all groups had the same buying criteria.
And the outcomes? They were so, so different. We had groups who didn’t close a deal, they didn’t find a common ground.
Then we had other groups who agreed on a $10 million exit. And then we had some “founders” who were able to sell their startups for more than $500 million.
What made the difference?
It wasn’t the facts, because everyone had the same information.
The big difference came from how each founder communicated, negotiated, and – most critically – how they shaped the perception.
This is a powerful fundraising reminder: Perception trumps reality.
It’s not just about having a solid business case; it’s about how you present it, how you negotiate, and ultimately, how you control the perception of your startup’s value.
It’s about creating a compelling narrative so investors can’t help but see the value in what you’re building.
So, as you step into your next investor interaction, remember the lesson from that workshop:
With the right story and positioning, you can significantly increase your startup’s value.
Perception can be the difference between a no-deal and a groundbreaking deal.
(Click here to watch a video from the negotiation workshop I referred to)
Frequently asked questions
What does “perception trumps reality” mean in fundraising?
The same investment case can lead to very different outcomes. What makes the difference is how founders communicate, negotiate and shape the perception of their startup’s value, not only the facts.
What happened in the negotiation workshop for VCs?
Senior VCs were paired up: one played a founder selling a startup, the other a corporate M&A manager buying it. All groups had identical information, yet the outcomes ranged from no deal to a $10 million exit to more than $500 million.
How can founders increase their startup’s perceived value?
By creating a compelling narrative and the right positioning, and by controlling how they present the case and negotiate, so investors see the value in what they are building.
