3 Reasons to Seek Legal Representation for Your Start-Up BEFORE Seeking Investors

3 Reasons to Seek Legal Representation for Your Start-Up BEFORE Seeking Investors

You have a lot on your plate when putting together your start-up: market research, beta testing, and hiring developers. Then you can start the long, exhausting process of securing investors. You know you’ll need a lawyer to draft the agreements once you get funding, but honestly, you don’t need to worry about it now, right?

Wrong. 

The worst thing you can do for your start-up is to walk into a pitch meeting without having retained legal counsel. While you’re the undisputed expert on your product, a lawyer is an expert in ensuring her clients avoid the kinds of legal pitfalls that have undermined countless start-ups. Retaining strong legal representation before you secure fundraising will make all the difference as you head into investment rounds. Legal counsel is a powerful ally who will guide with an optimized legal structure, a correctly valued business, and the expertise to negotiate complicated legal agreements.

1. Give Your Business Firm Footing

Investors are busy people with reservations about giving up their money to risky investments. They see hundreds of pitches a month and can afford to be extremely selective. Investors do not make decisions based solely on a start-up’s groundbreaking idea—they spend time investigating new ventures, which means your start-up needs to be an open book.

Consequently, you need to walk into your pitch meetings knowing that your business is organized. You need to know that you’ve done everything in your power to make sure avoidable problems won't sink your business. You want to show your investors that your organizational structure, financials, and employee agreements have been thoughtfully and intentionally developed, and a lawyer will help you do just that.

2. Capture a Competitive Edge

Let’s say your business aims to offer healthy, affordable meal kit deliveries. You already know that companies like Blue Apron are your competition and you’re prepared to address comparisons. However, the meal kit delivery industry is not your only competition—you’re competing with every other start-up looking to secure funding from that investor.

As such, you need to research your investors. Your legal advisor can help you determine what the investors are looking for as a good investment. What kind of return on investment do they want? What is their expertise? Legal counsel can help you put all the pieces together so that you can target the right investors and knock your pitch sessions out of the park.

3. Seal the Deal Without Headaches 

Once you do secure fundraising, things move fast. You need to understand the terms, negotiate the fine print, and prepare agreements. A lawyer who has been working with you can better represent your interests, guiding the process with a smooth hand while protecting you from giving up too much control or money. And because your attorney has helped you from the beginning, you’ve already overcome the pesky legal problems that plague sloppier start-ups.

If you don’t have representation before you secure fundraising, you will scramble to find fast-tracked legal services. Your attorney will scramble to orient herself to your needs. And you will pay a premium for it. The lack of a pre-existing working relationship with a professional attorney creates confusion, inefficiency, and mounting legal fees at a time when you need things to go smoothly. Your problems will only worsen if your attorney discovers issues that could have been resolved before your pitch meetings and now endanger your funding.

Give your business every opportunity to succeed by recruiting a lawyer for your team. Schedule a consultation today to set your start-up up for success. What else are you working on for your business before you begin fundraising? Have you found investors too soon and had some of the challenges we outlined? We want to hear from you.

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