“Han Shot First”

Why Corporate VCs Must Give Before They Get

Scott Lenet
Risky Business
7 min readJun 11, 2018


Have you ever seen a shirt that says “Han shot first” and wondered what it meant?

In the original 1977 Star Wars film, Episode IV, Luke and Obi-Wan first meet Han Solo in the Mos Eisley cantina, where Han is confronted and threatened by Greedo. To settle their dispute, Han shoots Greedo preemptively, using a blaster hidden under the table.

But the original trilogy was updated in the 1990s with contemporary special effects, and the cantina scene in A New Hope was changed so that Han shot Greedo in self-defense — reportedly to make him more sympathetic.

Fanboys were outraged at the retroactive attempt to make their favorite character less of a scoundrel, and the controversy became legendary among the nerd elite, spawning memes, angry screeds, and of course, tee shirts.

From controversy, comes commerce!

Corporate entrepreneurs focused on external innovation — including those who work in business development, accelerator programs, and venture capital — can learn a lot from Han Solo’s selfishness and first mover tendencies. One trait is a formula for failure, while the other sets up success.

Selfishness: a Pyrrhic victory

When working with startups, most large corporations recognize they enjoy a position of strength. The larger company almost always has a bigger brand, team, and resources, especially when it comes to cash. As a result, the established company often acts as a bully, maximizing its leverage, and expects to extract value when working with smaller companies. Big companies have a reputation for taking, and not worrying about giving.

But entrepreneurs approach corporations with their own hopes and dreams. They are happy to help the corporation if there is goal alignment, but no startup CEO wants to be “plankton” for a bigger company.

What does this mean? For starters, corporate innovators should adopt a physician’s mentality: first, do no harm. Then think about how your firm can benefit startup partners.

For example, don’t try to extract punitive terms that damage the startup, like a right of first refusal (“ROFR”) to purchase the company, unless both sides explicitly want this. It may sound like a nice option, but the ROFR will scare away other potential buyers and limit the upside for the startup’s founders and VCs. Terms like the ROFR to acquire are one of the ways that corporate investors made a bad name for themselves in the 1990s (right around the time of those Star Wars re-releases).

Instead of a ROFR, try a right of notice, as recommended by John Somorjai of Salesforce during an interview with Mark Suster of Upfront Ventures. The goal for the corporation is usually to avoid the potential embarrassment of its startup partner being bought by a competitor, by surprise. A right of notice gives the corporation an opportunity to respond, and step up to buy the startup, if desired. But it doesn’t scare away other potential buyers. From the startup’s perspective, it also adds another potential bidder, so it’s a win-win.

There are exceptions, of course. Jerome Metivier recently visited the corporate entrepreneurship and innovation class I teach in the MBA program at UCLA. He described how PepsiCo first invested in the kombucha brand KeVita with the intention of acquiring the company, but did so in a way that was attractive to the company’s management team and other investors before making the acquisition.

It’s similarly bad form to ask for a right to block the sale of the startup. From the perspective of the founders, this represents a potential veto on a positive exit and a devastating situation for a company where the entrepreneurs are giving their all. Preventing a positive exit is one of the fastest ways to ruin your reputation as a corporate VC.

Instead, develop a close relationship with the company and exercise influence, in place of control. While big companies are accustomed to enforcing contractual agreements, including by threat of lawsuit, VCs almost never pursue legal action against their entrepreneurs (which is why Benchmark suing Uber’s Travis Kalanick is such a remarkable event). VCs rely on persuasion, alignment of interests, and consensus building in place of threats and legal remedies.

A startup in the portfolio of one of our corporate partners was recently approached for investment by a mid-sized public company with a $5 billion market capitalization. This investor was relatively new to corporate VC and didn’t have any professional investors with venture capital experience on their team. The investment term sheet was loaded with so-called goodies for the corporation, including a ROFR to buy the startup. None of the existing investors, including both institutional and corporate VCs, would approve the deal. Eventually the public company removed those terms, but the transaction took about nine months and the new investor almost lost the deal. The corporation has a household brand name, but is now viewed skeptically by everyone involved, because of a bad first impression and selfish terms.

These guidelines don’t apply to investments only. If the relationship is primarily commercial (in other words, a business development deal), the agreement should be arms length, distinct from any investment contracts, and contain terms that very clearly benefit both sides.

While external innovation transactions may “mix and match” elements of investment, commercial deals, and eventually even M&A, the best practice is to keep these contracts separate from each other. This keeps the legal documents “clean” and lets all investors sign the same agreements with equal relevance. Of course, if you have parallel or contemporaneous agreements to invest and also start a commercial pilot, make sure these deals are disclosed to all parties. Keeping them separate doesn’t mean keeping them secret.

Ultimately, the simple rule of thumb is that relationships between startups and big companies should be mutually beneficial. Find balance in the force.


Han’s first mover approach is still a good model for corporate innovators, however, because venture capital is a game where you have to give first, before you get. So don’t be afraid to make the first move and provide value.

My friend Matt Kozlov from TechStars also visited our UCLA class and explained this concept using the first principle of their code of conduct, which is representative of the value system that makes relationships successful in the venture capital industry:

We give first.

1. We help others whenever possible. We are all busy, but when the ask is sincere and realistic, we respond and help. We are respectful of each other’s time and are clear and focused in our requests.

2. We deliberately create a virtuous cycle. We proactively work to give back to the ecosystem by giving first to others in our community with no specific expectations of return.

3. We appreciate the help of others. No one goes it alone — startups are a team activity. We express our appreciation for the help of our customers, mentors, and others that make our success possible.

Our corporate partner Kellogg also embodies this virtue, as we’ve written before in describing their midwestern values.

If you take the selfish approach as a corporate innovator, you might get away with it, but not without wrecking your reputation. Eventually, someone is going to want you frozen in carbonite. So learn from Han Solo’s own progression: be a team a player and make some good friends.

Just don’t shoot the startup CEO.

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This completes my “original trilogy” of Star Wars themed venture capital blogs. For further reading, please check out “Darth Venture” and “It’s a Trap!

Scott Lenet is President of Touchdown Ventures, a Registered Investment Adviser that provides “Venture Capital as a Service” to help corporations launch and manage their investment programs.

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Scott Lenet
Risky Business

Founder of Touchdown Ventures & DFJ Frontier, USC & UCLA adjunct professor, father of twins, Philly sports Phan, Forbes & TechCrunch contributor