As an entrepreneur, the way to get the best deal for a round of financing is to have multiple options. If you’ve been a studious reader of our term sheet series, you are painfully aware that there are many other terms – beside price – that help define what “the best deal” actually is. However, there comes a point in time where you have to choose your investor and shift from “search for an investor” mode to “close the deal” mode. Part of this involves choosing your lead investor and negotiating the final term sheet with him. A “no shop agreement” is almost always part of this final term sheet. Think of it as serial monogamy – your new investor to be doesn’t want you running around behind his back just as you are about to get hitched.
Brad Feld has been an early stage investor and entrepreneur since 1987. He is currently a Managing Director at Foundry Group. Prior to co-founding Foundry Group, he co-founded Mobius Venture Capital and, prior to that, founded Intensity Ventures. Brad is also a co-founder of TechStars.