I have an investor ready to invest, what are the next steps now?

We just hit a new important phase of our development! A company that we're close with would like to invest in us. We've been discussing it for months and have agreed on the general terms (percentage and valuation), they are now waiting to wiring us the check.

I'm completely new to this and just don't know what are the next steps, paperwork (we're a C Corp) or any admin stuff I should know.

Any kind of advice would be highly appreciated!

  1. 2

    Consider doing this via a SAFE instead of giving equity at this stage. Read up about the valuation cap and discount concepts - these are important, they have a bearing on the implied valuation.

    This'll be waaaaaay less hassle. You could even use boilerplate documents and save on using lawyers.

  2. 1

    Ready to invest is not enough. So many paper works down the road. Make sure you have formally agreed with the Terms Sheet, have your Cap Table ready, your legal relationship with your founding team etc. You might expect a Due Diligence process too.

    Been doing early stage investment for the last 4 years, definitely hectic... I designed VenturesList for first time founders navigating a successful funding strategy.

  3. 1

    How big is the round? Have they asked you to draw up a term sheet, or are they going to do it? Are you going to raise more from other investors in this same round?

    You should definitely get legal counsel in any case - someone who has done venture deals before, not your cousin the divorce attorney.

    Most venture/startup firms will have programs for early stage startups where they defer legals costs until after a certain funding round. Fenwick, Cooley etc.

  4. 1

    First Step: Create a C-Corp. I use Stripe Atlas. If you need a coupon code, let me know.
    Second Step: Have you agreed on terms? Convertible Note | Safe | Equity
    Third Step: Use https://www.cooleygo.com/ and find the form of fundraising you are filling out.

    1. 1

      Also, dont take the money until you have formed the C-Corp and issued shares at .0000001 / share, it will mess up your taxes.

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