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FUNDING

zone of possible agreement is the bargaining range in a negotiation

Startup founders looking to raise funds are always skeptical regarding the value of the equity they are looking to offer, and the value that an investor will place on the same amount of equity. Some startups value their equity at a much higher rate than what is acceptable, whereas some are willing to sell equity at a much cheaper rate than the actual value.

This is where ZOPA — the zone of possible agreement, comes into the picture. The zone of possible agreement is the bargaining range in a negotiation where two or more parties can find a common ground.

In these instances, a deal can or cannot be reached unless one or both parties are willing to adjust their view of what is acceptable. …

About

Vinay Nair

Managing Partner at Nair Ventures

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