During fundraising, General Counsel reviews and negotiates key legal documentation -including term sheets, investment agreements, and shareholder rights. They help ensure that terms align with your long-term goals and that you retain necessary rights without unintended obligations.
CAUTION: not every GC is an experienced transactional attorney. Be sure to evaluate the level of sophistication and experience your GC can bring to a deal, and whether you may be better off hiring outside transactional counsel.
Investor relations extend beyond the fundraising event: GC helps you set up reporting practices, disclosures, and communication frameworks that keep investors informed and foster long-term trust. This has legal and strategic importance, as consistent communication reduces misunderstandings and aligns expectations.
FAQs
Q: What is a term sheet?
A: A term sheet is a non-binding document outlining the basic terms and conditions under which an investment will be made. GC helps clarify and negotiate these terms.
Q: Should founders share bad news with investors?
A: Transparency builds trust. Founders should share significant issues with context and mitigation plans so investors remain confident and aligned. Be sure to run these kinds of communications through your GC to strike the right balance between transparency and over-sharing; i.e., what’s legally required v s. what poses a business risk/opportunity.
Q: How often should startups update investors?
A: Monthly or quarterly updates are common - consistency and relevance matter more than frequency. Some transactions have a prescribed investor update frequency that your GC will be able to point out and ensure is being met.
Frequently Asked Questions
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