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Spelling Out Your Funding Terms

Negotiating a VC investment can be tricky. So does it pay to spell out your terms to potential investors from the get-go?

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This story appears in the March 2006 issue of Entrepreneur. Subscribe »

In 1995, Pamela Marrone set out to save the planet-which, as she soon learned, can be very expensive. Marrone, 49, founder and president of AgraQuest, raised over $60 million to develop and market her company's line of environmentally sound agricultural biopesticides. Along the way, she learned valuable lessons about what works and what doesn't during investment negotiations.

These days, Marrone laughs when she recalls the trials and tribulations of negotiating eight different rounds of capital with more than 70 different shareholders, including VCs, customers, angels, agribusinesses, friends and family. "We've gotten money from everywhere," she says. "We've raised a round of capital every year." As a result, her process of turning interested investors into paying shareholders is well-refined.

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