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SERVICES Start-Up Financing
Start-Up Financing
We structure, negotiate and draft the contracts implementing private investment in start-ups.
These begin with term-sheets, in which investors set out what they feel that they and the founders should receive. The term sheet develops typically into three agreements, whose basic principles are summarized on the right.
The combination of negotiations between the investors and the company and its founders, and the extensive due diligence that goes into the Stock Purchase Agreement, makes for a process that is inevitably time-consuming during the initial financing rounds.
Be patient, and don't cut corners!
EntrepreLaw lawyers have been involved in angel and venture capital financings on both sides of the Atlantic involving hundreds of millions of dollars.
We help start-up companies obtain a fair deal, even when confronted with sophisticated investors who know how badly their money is needed.
Core Financing Contracts
1. An Amendment to the State Charter of the company to provide for the equity (or debt) issued to investors. This is where the famous preferences are defined, as founders and investors seek a fair return from the collective pie. The Charter Amendment also normally covers who gets what if the company is subsequently sold.
2. A Purchase Agreement covering the investors' purchase of their equity (or debt). The investors obtain comfort here that there are no significant surprises. The Company needs to be careful to inform the investors about its situation, and in particular to disclose anything unusual or worrying.
3. A Rights Agreement, covering the investors' and company's rights if there is an IPO, and other matters such as Board seats and rights to purchase new shares.