1. Whatever mix of investors you bring in, make them diverse, with no one entity owning a majority of the business.
2. When you’re negotiating, you should always submit a term sheet and try to stick to it rather than letting an investor drive the process.
3. Don’t agree to milestones or performance hurdles — you never know what will happen.
4. Make the deal simple and clear, preferably cash for stock without any bells and whistles. For example, don’t agree to crazy multiples or special clauses about taking money out.
5. Don’t guarantee board seats permanently unless you have no choice.
6. Most important, build your terms assuming the worst will happen — in the time it takes you to establish your company, it just might.
Of course, the best solution of all is to not take outside money.
This is sage advice, coming from Tom Szaky is the chief executive of TerraCycle, which is based in Trenton, N.J.
For the complete article go to http://boss.blogs.nytimes.com/2011/05/03/six-tips-on-taking-outside-investors/?scp=20&sq=Tom%20SZaky&st=Search