At the heart of every great enterprise is the fuel it runs on: capital. Whether you're a startup dreaming big or an established player eyeing expansion, the process of raising capital is often critical to turning visions into reality. Our Venture Capital and Angel Investment lawyers are here to assist.
Our connections to early stage investment networks allow us help make connections and introductions to ensure that great companies find smart money.
In any fundraise, preparation pays great dividends and you’ll want to have all your corporate records be “investor ready”. The consequences for a business and its owners in due diligence exercises can be delay, price reduction or ultimately a failure to conclude a deal.
Find the right investors
Ideally you want to be in the position where you have multiple potential financing sources. This will give you leverage to negotiate the best possible terms but also find the best possible partner for you to work with going forward. It is important to remember that you will build a close relationship with your investor over many years and it is key that the personal dynamics and relationship work well – if not, it could be an uncomfortable ride.
Know what investors are looking for
Bottom line: they want to make money. They invest in the senior management team and not just the product. They need to believe in you and what you are capable of as well as your idea. You could have the best idea in the world but if an investor doesn’t buy into you, they’ll not give you any money. Do you research and make sure that your idea and business can change the world, disrupt existing industries and make money.
Term sheet
The term sheet is an important document. It will set out the key commercial terms of your deal. Although it won’t be legally binding, it will be the document the lawyers use to prepare the agreements that formally document your deal. Get the term sheet wrong and it can be difficult to change the direction of negotiations.
If possible, raise more than you need
Whatever you raise, you’ll probably wish that you raised a little more. If you have access to capital and the terms are reasonable, raise more than you think you need. There may be compelling reasons to put off raising more (dilution) but don’t lose sight of the transaction costs and time involved in a further round. By the time you need more money, you’ll wish you didn’t need to shift focus from the business to raising money.
Be Realistic and Honest
Don’t overestimate the valuation of your company. Be honest and build a trustworthy relationship with your investor from the start.
Hire the right lawyer
The final point and perhaps one of the most important is choosing the right lawyer. Obtaining venture capital funding is a high stakes game. Venture capitalists are smart and they negotiate deals all the time. You need a lawyer with plenty of experience in negotiating and closing venture capital deals. A good lawyer will anticipate pitfalls and understand the nuances from both sides of the table. They can help advise you on what is ‘market’, when to stay firm and when to concede. Crucially, they’ll help you drive your deal to a successful close.
The mark of a truly professional legal team is the ability to provide clear guidance, pragmatic advice, and unwavering support throughout complex processes, and the MBM team exemplify these qualities, consistently demonstrating their expertise and commitment to their clients' success.
Contact our Capital Raising Solicitors in Edinburgh & London Today
Key Team members
Useful Guides
An Introduction to the Investment Process
We’ve prepared this short guide to provide you with an introduction to the process so that you are equipped to navigate the path to getting funding.
Mergers & Acquisitions
A substantial sale or acquisition will often represent a life changing event for a founder shareholder or a game changer for an acquiring business.
Articles of Association
All UK companies must have Articles of Association. The “Articles” are essentially the company’s constitution or internal rule book, which set out the rights of the shareholders, the directors and the company itself. As such, it is a very important document.
Directors Duties & Responsibilities
A guide to the general duties of Directors under the Companies Act 2006 and Fiduciary Duties.
Top 10 Commercial Contract Clauses
From Liability to Governing Law & Jurisdiction, we define the most common clauses that are typically included in any contract.
HolisticHR
Our Holistic HR service offers employers a retainer package that provides you with specialist employment law advice at a fixed cost - without the uncertainty and worry of escalating or unknown fees. You’ll get responsive and bespoke HR advice for your business delivered in an understanding and friendly way. It’s like having an on-demand employment law team at your fingertips.
