If you are raising a round of funding, you need to ask the right questions. Let us help you!
So you’ve bootstrapped and got yourself to a point where you need to raise a funding round. Congratulations! You have customers, revenue and now you are ready to move to the next step. Raising for an investing round can be a tough process and it can be hard to get it right, particularly for first-time founders. Too many times founders just see the dollar signs in a raise and don’t see the importance of asking the right questions. You want someone to invest in your company that believes in your vision, but getting the right investor for your business is just as important as getting the right amount of money. Not all founders are blessed with management expertise or previous exits. You may not know what the best structure for raising this capital, what licenses you need or what due diligence is, but a capital raising lawyer does. Investing in a specialised capital raising lawyer is an investment in your venture that can provide you with the expertise to ensure your round is destined for success.
Not all investors are good investors
Most investors in the ecosystem are good, but not all will be as invested in your success are you are. Any investor, as much as they believe in you and your journey, are investing in your company so they can get those 10x returns. Before entering into any deal with founders an investor is going to do their due diligence on you. However, not enough time is spent talking about the necessity for founders to undertake reverse due diligence on their future investors.
Any person that invests in your company is going to be with you for generally a minimum of 3 – 5 years so choosing correctly is critical to your success. You want an investor that adds value to your business. Additionally, you need to feel comfortable enough to bring both good and bad news to them over the next few years. Making sure you get the right personal fit is an important part of the process. Even if you like them and think they add value to your business do you like the terms they are offering?
During fundraising, an important part of this process is dotting your I’s and crossing your T’s. Hiring an experienced capital raise lawyer will help you cut through the noise to make sure that you go into your investor agreement with your eyes wide open.
Think of it like hiring a Personal Trainer – paying now is better than paying later
When you have a start-up, money is always going to be tight. Understandably, you need to look for cost savings wherever you can and founders often take the DIY approach for funding rounds. However, this can lead to bigger and costlier mistakes during the funding round. Think about it, if you decided to run the New York Marathon, you would invest in a personal trainer or gym membership to get yourself over the line. When partaking in a capital raising round, hiring a capital raising lawyer is a valuable investment in your future. A great lawyer not only understands their client’s needs but knows and understands their business. A specialised capital raise lawyer is someone that has seen the good, the bad and the ugly. They can give you advice as to what structure is best for your raise, what corporate governance systems you need or any additional requirements for your raise.
Conclusion
When you are raising for a funding round, it is easy to let things fall through the cracks. Mistakes are human, but these can be costly when you are giving away shares of your company to investors. This is why having an expert capital raising lawyer is vital during this process. Let them focus on getting your company the best deal so you can focus on taking your business to the next level!
Need specialised advice regarding your company? Contact a LawPath consultant on 1800 529 728 to learn more about customising legal documents, obtaining a fixed-fee quote from our lawyer marketplace or any other legal needs.
Contact a LawPath consultant on 1800 529 728 to learn more about customising legal documents, obtaining a fixed-fee quote from our lawyer marketplace or any other legal needs.
