Comment by tptacek

2 hours ago

This is all great. One thing I wanted to call out in particular is Thomas' take on investor verbal agreements. YC has a thing about this: it's called the Handshake Protocol.

The idea is: you and your investor agree on (1) an amount to be invested, and (2) a valuation or cap. Maybe you shake hands. Then, after the meeting, you memorialize the deal in an email. The deal is then socially binding: reneging on a Handshake Protocol deal is a big thing, gets noted in Bookface, whatever.

There's nothing magic or even interesting about the protocol; all it does is eliminate a form of ambiguity that professional investors are facile with and founders aren't. Investors are very good at saying "yes" and meaning "no"; they want the option to invest without the commit. If you don't put it to them directly, they'll take the option! The Handshake Protocol puts it to them directly: "are you committing?"

Most of the time, you're going to get a "no" answer to that, which is exactly what you want: clarity, so you can make decisions.