If you are considering a funding round, congratulations! It’s an incredible achievement to build a business that is worthy of external investment. That said, if this is new territory for you, it’s highly recommended to seek professional support, including lawyers and accountants, to guide you through the process.
Thinking about a Funding Round?
The type of investor you want to attract will be astute and experienced. To ensure your interests and your business are protected you need an experienced team advising you so the final terms
are both fair and workable in the long term.
Lawyers for Startup and Scaleup Businesses
We have supported numerous startup and scaleup businesses through the legal aspects of their funding rounds. We can help at every stage from Seed Round to A Round and beyond.
Taking advice in the early stages is highly recommended, which is why we offer a free initial 30 minute consultation to discuss the legal element of your funding round.
Preparation
-
Understanding Investors
Understanding what investors want and the legal implications of their requirements is essential. Whether it’s a private investor or an investment fund, your investors will negotiate hard to protect their investment. With our experience, we can help you to protect your business from unnecessary risks. It can be tempting to give too much away to secure the investment, but with
our advice you will understand the risks and get a fair deal. We will also help you to ensure the detail in the legal agreements leaves you with enough flexibility to run the business effectively post investment.
-
Legal Audit
A savvy investor will conduct due diligence and will review the legal structure of the business and all important contracts including ownership of intellectual property rights, directors’ service agreements, contracts with major customers and suppliers; and the list goes on. Before starting the funding process, you may wish to conduct a legal audit to ensure that all your legal documentation is current, compliant and fit for purpose. You don’t want to secure a potential investor only to lose them because the legal foundations of the business are not solid.
-
Letter of Intent
To start your investment campaign, in addition to your pitch deck, business plan and NDA, a valuable document to have is a Letter of Legal Intent which outlines the deal you envisage without being legally binding. Such a document helps the investors understand your vision and generally helps when it comes to agreeing the Term Sheet and final agreements.
The Investment Negotiations
Once the business has secured an interested Investor(s) there are numerous documents to be drafted.
-
The Term Sheet
The Term Sheet is a headline document which outlines the terms under which the investors invest e.g. equity in the business, convertible loan. It also outlines all other terms and rights such as conditions, targets, ownership and control of the business. This is not usually a legally binding document but it is essential to understand the legal implications of each option during these negotiations, to ensure the final agreements do not go beyond what has been agreed in principle in the Term Sheet. JPP Law can help and is on your side.
Closing the Deal
-
Deal Documents
Once the Term Sheet is agreed a solicitor will be required to draft or review the final, legally binding documents that will seal the deal.
These may include:
• Shareholders Agreement
• Articles of Association
• Vesting Provisions
• Subscription Agreements
• Convertible loans
Book a free Consultation
Seeking investment is exciting, stressful, rewarding and hard work! It’s potentially the first step towards much bigger things, so it’s important to get it right. Research in depth and take as
much advice as you can get in the early stages. Talk to others who have gone through the process. Good preparation will hugely increase your chances of success.
If you want some initial, no obligation legal advice, book in for a free consultation which you, and any of your team, are welcome to attend.
