An idealized case is described here: knowledgeable entrepreneur works with cooperative investor to pre-negotiate all the business terms, with the attorneys brought in essentially to do routine documentation based on the pre-agreed terms.
The points are good ones given the assumptions made.
Practical barriers, however, will often tend to divert you from the idealized case: (1) inexperienced entrepreneurs who will not be able to pre-negotiate any terms without a lot of lawyer help; (2) investors who engage in gamesmanship that precludes an easy negotiation; (3) green associates working for large firms in VC deals who push legal technicalities to the extreme, requiring a lot of back and forth to attempt to document even simple points; (4) complex situations that require lawyer input right from the start to help solve the problems.
Bottom line: aim for the idealized case but realize that attaining it is probably more the exception than the rule.
Quite apart from funding issues, though, the general principle here is important: it pays to do educate yourself, do your due diligence, and to manage your lawyer time carefully.
Very good points grellas.
Particularly on the 'inexperiened entrepreneurs not able to pre-negotiate terms'. I think this may often come down to the essential 'not knowing what you don't know'.
I responded to Ricks blog that i use a boilerplate document and go through line by line to figure out what the important talking points are. Then you can at least get those pinned down before the lawyers come in.
The points are good ones given the assumptions made.
Practical barriers, however, will often tend to divert you from the idealized case: (1) inexperienced entrepreneurs who will not be able to pre-negotiate any terms without a lot of lawyer help; (2) investors who engage in gamesmanship that precludes an easy negotiation; (3) green associates working for large firms in VC deals who push legal technicalities to the extreme, requiring a lot of back and forth to attempt to document even simple points; (4) complex situations that require lawyer input right from the start to help solve the problems.
Bottom line: aim for the idealized case but realize that attaining it is probably more the exception than the rule.
Quite apart from funding issues, though, the general principle here is important: it pays to do educate yourself, do your due diligence, and to manage your lawyer time carefully.