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As a startup founder looking to raise your company’s first major round of capital, you may feel unsure about where to start. Successful startups typically have a strong network of professionals who can help them throughout their development. When you need to secure investment, having knowledgeable friends in your corner can be extremely helpful. This article sets out the three professionals you should meet with when you are raising capital.

How Will I Structure My Capital Raise?

Before you approach these professionals for help, you should have a clear idea of the structure of your capital raise. You should consider:

  1. what the key goals you will use the investment to achieve are;
  2. how much investment you will need to achieve these goals; and
  3. what kinds of investors will be able to contribute to this amount of capital.

If you are a young startup in the early stages of growth, you might be looking at pre-seed investment from family and friends or an angel investor. An investment of $50,000 from friends and family or a high net worth individual in your network may not have any prerequisites or requirements. In this case, you may not need to spend as much time with the professionals listed below.

However, if you are looking to bring on new team members, launch your product and get traction, a seed round involving angel investors and early-stage venture capital (VC) might be more appropriate. This is likely to be the case if your startup already has market validation and has begun to generate revenue. With more sophisticated investors onboard, your startup will need to engage the professionals below to prepare for the investment and plan for future success.

If you are raising capital in Series A or Series B rounds, your startup will require ongoing assistance from a range of professionals. Venture funds or VC firms will be looking for: 

  • a finalised product and market fit;
  • a robust business model;
  • revenue; and 
  • traction with an established customer base. 

This will require more assistance from professionals who can set you up for success. 

Which Professionals Can Help Me?

1. A Startup Accountant

A good accountant is a critical partner in your startup’s development. When looking to raise capital, a startup accountant can provide a range of helpful services, including:

  • identifying alternative cash-flow strategies (e.g. research and development grants and investor perks such as early-stage innovation company (ESIC) tax incentives);
  • advising you about structuring your business from a tax management perspective;
  • building investor-ready financial models to help with capital raising; and
  • providing independent valuations and reports to help you understand how much your business is worth.

These are invaluable services for any start-up looking to raise capital. It is therefore important that you choose the right accountant for your startup.

You should try to find an accountant with a range of existing start-up clients. Experience with startups who have successfully raised larger rounds of capital is also helpful.

If your accountant understands your industry and has clients in your area, they may also become a valuable extension of your network. Lastly, you should find somebody you feel comfortable working alongside. Accountants are likely to be with you for a long time.

2. A Mentor

Rather than contributing a specific skill or service, a mentor can provide you with general guidance, a sounding board for ideas and their experience with the types of problems you face. This can be critical if you are looking to raise capital.

In the past, mentoring in the startup space has largely been in the form of informal and unstructured relationships. This was especially the case when the Australian startup industry was smaller than it is now. As a startup founder now, you have access to a range of mentors and mentoring programs that can help you prepare to raise capital. 

The first place to look is within your existing network. If you are already operating in the startup space, you may be connected with a startup founder you admire or an angel investor with experience in your industry. Reaching out to these people can be a great way to kickstart a meaningful relationship. 

Alternatively, accelerators such as Muru-D offer structured mentoring programs. At Muru-D, you can consult with expert ‘entrepreneurs-in-residence’ and benefit from a network of mentors from a range of backgrounds. These mentors may have experience with: 

  • building their own businesses;
  • working for venture capital funds; or
  • professional services. 

A good mentor can support you and answer questions about capital raising that you might not even know you had.

3. A Lawyer

If you plan to raise capital, you will definitely need a capital raising lawyer. Just as you are a specialist in your field of expertise, a capital raising lawyer specialises in: 

  • preparing businesses for raising funds;
  • negotiating terms; and 
  • executing deals. 

A lawyer can help you when raising capital in several key ways. For example, they can help you:

  • prepare for the raise (i.e. set up your company’s structure, protect your intellectual property and draft or amend your shareholder’s agreement);
  • review and negotiate term sheets;
  • draft and negotiate the investment documents (e.g SAFE or convertible notes, subscription agreements and shareholder agreements); and
  • issue shares.

When choosing the right lawyer, factors such as experience, legal knowledge and industry expertise are crucial. However, you should also look for a lawyer who understands startups. If your lawyer understands the pace and nature of early-stage businesses, empathises with your situation and shares your vision, they will be in a much better position to help you achieve your goals.

Key Takeaways

Raising capital is an exciting stage of your startup’s development, but it can also be one of the most daunting. As a startup founder, you may not have experience with the process of securing investment. 

Fortunately, certain professionals can help you throughout the process. If you can find a good accountant, mentor and lawyer to help you along the way, you will set the foundations for a successful capital raise. Connecting with professionals who understand your vision and have expertise in their field is crucial to your success. If you need help with raising capital, contact LegalVision’s startup lawyers on 1800 534 315 or fill out the form on this page.

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