Capital raising is a major hurdle for many startup founders looking to take their idea to market. Obtaining adequate funding from the right sources is fundamental in a startup’s growth journey. LegalVision has a dedicated capital raising team who can assist you in the process from early negotiations with potential investors, through to finalising your equity or debt documents.
We have assisted many high-growth businesses and startups to raise capital from small scale raisings to investment by private (angel) investors, through to private equity funds. We can assist with:
drafting and reviewing term sheets, shareholders agreements and subscription agreements;
providing advice on raising capital;
providing advice on corporate governance;
setting up a cap table;
negotiating with VCs, angels and sophisticated investors;
establishing employee share schemes; and
preparing and lodging ASIC registered prospectuses.
LegalVision have not only assisted hundreds of companies through the capital raising process, but we have also raised four rounds of capital ourselves since we launched in 2012. Our team of startup lawyers understand the pivotal role that financing plays in startup growth and can assist you in taking advantage of the right financing opportunities.
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5 Things You Need to Know About Capital Raising
1Capital raising is heavily regulated in Australia, including restrictions on advertising. Understand the laws and exemptions and ensure you conduct your offer in compliance with the law.
2There are three possible structures for an equity capital raise: an equity round (either ordinary or preference shares), convertible notes or a simple agreement for future equity (SAFE). Each structure has benefits and drawbacks, so it is best to research which is best for your startup’s growth plan.
3With an equity round, founders issue investors shares in the startup in exchange for cash. The key areas of negotiation will be the company’s pre-money valuation and investor protections (such as the type of shares they are entitled to receive and their voting rights).
4If you raise too much capital at a low, early stage valuation, you and your co-founders will take excessive dilution — potentially undermining your long-term incentives to grow your startup. Aim to raise enough to help you reach your next milestone.
5Government departments may be willing to contribute to your startup through grants. One of the main advantages of these investments is that the department will not usually be looking for anything in return by way of an equity stake.