5 Ways You Can Cut Your Legal Costs When Raising Capital

Raising capital is very daunting. It can be even more difficult when you have to speak to lawyers, all before you even receive any money! Thanks to our friends from LawPath and FundSquire we’ve put some details below that can help you when considering scaling up your startups or receiving investor funds.

1. Do your research

It’s always important to do your research when looking for investors. Make sure you take the time to learn what’s involved in a successful pitch and research the type of investment you’re after. Doing this will save you costs down the line. We all know that time is money, so it’s important to dedicate your time to raising capital from suitable sources. If you go in unsure of what type of investment you’re after, you may find yourself spending money to get information that you could have found yourself.

2. Find a cost-effective lawyer

Getting legal advice can be expensive, and this is especially true when it comes to paying by the hour. Although you should definitely seek professional advice when raising capital, it’s much more sustainable to know what you want advice on and how much your lawyer will charge. Many lawyers these days charge on a fixed-fee basis, meaning that you’ll know how much to budget for legal expenses and not be hit with any nasty surprises at the end.

3. Protect your intellectual property

When pitching to investors, you’ll inevitably be giving them access to your intellectual property. What you should also keep in mind, however, is that you don’t know who else your investors are doing business with. If your logo or business name does not have trademark protection, you may find yourself paying thousands of dollars when you see a competing business suddenly using an idea that is markedly similar to yours. Further, having legal protection for your intellectual property will give your brand value increasing its legitimacy to investors.

4. Understand your obligations under the Corporations Act

Depending on the type of company you run, there may be certain legal documents (such as a prospectus) that you have to give to potential investors when raising capital. This mainly applies to public companies, but it can also be useful if you’re a private company. As a private company, you’ll want to ensure you’re providing potential investors with accurate and truthful information.

5. Issue NDAs, but be wary

Along with your intellectual property, you’ll also be providing potential investors with confidential information during the capital raising process. Whether it’s your revenue forecasting, planned product releases or growth plans, this is probably information that you don’t want the general public to have access to just yet. Issuing investors with an NDA will protect the information you divulge, and save costs if you want to prevent information getting out further down the line. But be careful still, NDA’s won’t solve people sharing info.

Don’t worry about sounding professional. Sound like you. There are over 1.5 billion websites out there, but your story is what’s going to separate this one from the rest. If you read the words back and don’t hear your own voice in your head, that’s a good sign you still have more work to do.

Be clear, be confident and don’t overthink it. The beauty of your story is that it’s going to continue to evolve and your site can evolve with it. Your goal should be to make it feel right for right now. Later will take care of itself. It always does.

Hope that helps..