Ask HN: Is this normal ask from a VC?

Having said that, in business negotiations there are no rules. Each party needs to skillfully position and ask for what is in their best interests. If your friend doesn't like the terms and conditions proposed by the VCs, then it is for him to come up with a strong counter-offer and so it goes on.

For any business one of the many choices is to grow organically and retain full ownership. The faster you want to grow, the more control you give away. That is simply the nature of investors maximizing for their own gain.

After running my co. for over half a decade, I wouldn't touch these investors with a 10-ft pole. "Helping you raise" does not justify the additional equity being sought.

If your friend isn't in dire need of money, I'd recommend avoiding being invested in by these investors and instead, only going after Tier-1 VC firms.

All in all, this is really bad for the ecosystem.

However, in situation where candidates are offering adversarial terms, the answer is often to strengthen the fundamental self-funded position away from the negotiating table.

When you offer something innovative, self evident, and set to grow regardless of investment, it becomes much easier to find favorable terms, or plain old loans.

For example, a friend was finding skeevy and overbearing offers when he was looking for investment in his CNC furniture shop when it was struggling to keep up with customer demand and ballooning lead times. For instance, one investor promised to help him run the business "on a tight ship, just like I run my Reposession business". It's questionable whether this person's leadership style would have solved the lead time issues, which were caused by weakness in material sourcing and production planning. These investors wanted not only a share of profit, but also control in a business they did not understand.

It turns out that after we analyzed his unit operations and lead times, developed standardized production flows, and got better vendors for our CNC parts, we were able to drop average lead times from two months to two weeks. This gave the company the ability to meet its customer demand without new equipment, raising revenue from 200k to 600k over the next 18 months. The organization was eventually able to secure a favorable CNC equipment loan directly from the CNC vendor, and continues its organic growth without having to take on an overbearing investor.

I'm sorry that I don't have more relevant examples, or examples of successful VC funding - in my experience the organic route of drilling down on technical fundamentals has been beneficial and led to healthy growth, when the offering was not appealing to honest investors. Realizing that the org is less desperate for investment than it seems let's us have peace of mind when we walk away from an unfavorable negotiation.

If your friend continues to struggle to find solid investors, I would encourage them to make peace with this rather than normalizing or accepting it, and commit to innovating and growing within the org's natural operating envelope, without taking on the risk of an adversarial stakeholder.

Good luck to your friend, and thank you for sharing your quandary with us.