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Congratulations! You Landed a Term Sheet But the Work Isn't Over Yet So you've got a Term Sheet - that exciting first step towards securing funding for your startup. But before you celebrate too much, remember: the legal process is just beginning! ⚖️ Understanding key documents like Term Sheets, Shareholder Agreements, and Articles of Incorporation is crucial for a successful funding round. Here's a breakdown of what you need to know: * Term Sheet: This non-binding document outlines the key terms of the investment agreement. Understanding its provisions is essential before moving forward. * Shareholder Agreement: This legal document defines the rights, responsibilities, and ownership structure of your company's shareholders. Negotiation is key to ensure everyone's interests are protected. * Articles of Incorporation This document formally establishes your company as a legal entity. Having these in order is crucial for various legal and financial processes. Don't go it alone! Negotiating these documents and navigating legalese can be complex. Consider consulting with a lawyer or an investment banker experienced in startup funding to ensure your interests are protected and the deal progresses smoothly. #RAISE #fundraising #closing #negotiation #duediligence #legal Let's discuss! What questions do you have about the legal aspects of closing a funding round? Share your thoughts in the comments!

“Day 1 /51 days of series for corporate & legal laws” “What is Termsheet”? ✔️A Termsheet is a Document that outlines the key terms and condition of an investment or exit deal. ✔️It serves as a non binding agreement that provides clarity and scope of negotiation before proceeding to a detailed legal agreement. ✔️Term sheets are most often used for startups.Entrepreneurs find this document crucial to attracting investors such as venture capitalists with capital to fund enterprises. ✔️The company valuation, Investment amount, percentage stake, voting rights, liquidation preference, anti-dilutive provisions, and investment commitments are sone items that should be spelled out in the term sheet. ✔️The language of the term sheet must be clear concise not too vague or overly detailed. #legal #startups #legalinformation #contractual #drafting #company #venturecapitalist #financialinstitutions #conpanysecretary

Term of the Day: Term Sheet In the realm of investments, a Term Sheet emerges as a pivotal document shaping the collaboration between investors and startups. Its significance lies not just in its content but also in the mindful drafting process crucial for a successful partnership. Understanding a Term Sheet: A Term Sheet encapsulates vital terms of an investment deal, encompassing investment size, valuation, ownership percentages, rights, and obligations. It serves as a foundational document, setting the stage for a transparent and structured collaboration. Significance in Partnership Building: Its primary role is in laying the groundwork for trust and mutual understanding between both parties. It acts as a preliminary agreement, guiding discussions and aligning objectives and expectations. Mindful Drafting Considerations: Clarity and Simplicity: Ensure clear and concise language to avoid ambiguity. Mutual Benefit: Aim for terms that offer fairness and benefit to both parties. Flexibility: Allow room for adjustments or contingencies, foreseeing potential changes. Legal Counsel: Involve legal experts to ensure compliance and precision in drafting. Comprehensive Yet Balanced: Cover essential aspects without overwhelming details, maintaining a balanced approach. Importance of Careful Drafting: The significance of meticulous drafting lies in avoiding misinterpretations or disputes. It sets the tone for a harmonious partnership by offering a clear and fair understanding of terms. Curious to explore more about investment terms or seeking specific insights? Feel free to share your queries or thoughts in the comments below! #TermSheet #InvestmentInsights #startups #leadangels #beyondangelinvesting #wealthcreation #valuecreation

Due Diligence Process Due diligence is a vital aspect of entering new business deals and legal procedures. It allows organizations to make careful business decisions and adhere to any relevant laws and regulations. Due diligence helps businesses get a full picture of the risks and opportunities surrounding a deal and avoid taking on serious liabilities  👍 Give this post a thumbs up 💬 Leave me a comment below ➕ Follow me for more Startup Tips Credit Bojan Radojicic #duediligence #finacialanalysis #businessanalysis

YOU can't RUN a startup without knowing these 7 legal terms! 1/ 𝐃𝐫𝐚𝐠-𝐀𝐥𝐨𝐧𝐠 𝐑𝐢𝐠𝐡𝐭𝐬 📄 -𝐃𝐞𝐟𝐢𝐧𝐢𝐭𝐢𝐨𝐧: Lets majority shareholders force minority shareholders to join in a sale. -𝐈𝐦𝐩𝐨𝐫𝐭𝐚𝐧𝐜𝐞: ✅ Ensures smooth sale process. 2/ 𝐓𝐚𝐠-𝐀𝐥𝐨𝐧𝐠 𝐑𝐢𝐠𝐡𝐭𝐬 📄 -𝐃𝐞𝐟𝐢𝐧𝐢𝐭𝐢𝐨𝐧: Allows minority shareholders to sell on the same terms as majority shareholders. -𝐈𝐦𝐩𝐨𝐫𝐭𝐚𝐧𝐜𝐞: ✅ Protects minority shareholders. 3/ 𝐕𝐞𝐬𝐭𝐢𝐧𝐠 𝐒𝐜𝐡𝐞𝐝𝐮𝐥𝐞 📄 -𝐃𝐞𝐟𝐢𝐧𝐢𝐭𝐢𝐨𝐧: Timetable for employees or founders to earn full ownership of their stock options or equity. -𝐈𝐦𝐩𝐨𝐫𝐭𝐚𝐧𝐜𝐞: ✅ Incentivizes long-term commitment. 4/ 𝐋𝐢𝐪𝐮𝐢𝐝𝐚𝐭𝐢𝐨𝐧 𝐏𝐫𝐞𝐟𝐞𝐫𝐞𝐧𝐜𝐞 📄 -𝐃𝐞𝐟𝐢𝐧𝐢𝐭𝐢𝐨𝐧: Dictates payment order in liquidation, merger, or acquisition. -𝐈𝐦𝐩𝐨𝐫𝐭𝐚𝐧𝐜𝐞: ✅ Ensures preferred shareholders get their investment back first. 5/ 𝐏𝐚𝐫𝐭𝐢𝐜𝐢𝐩𝐚𝐭𝐢𝐨𝐧 𝐑𝐢𝐠𝐡𝐭𝐬 📄 -𝐃𝐞𝐟𝐢𝐧𝐢𝐭𝐢𝐨𝐧: Allows preferred shareholders to get their liquidation preference and share remaining proceeds. -𝐈𝐦𝐩𝐨𝐫𝐭𝐚𝐧𝐜𝐞: ✅ Provides enhanced return for investors. 6/ 𝐂𝐥𝐚𝐰𝐛𝐚𝐜𝐤 𝐏𝐫𝐨𝐯𝐢𝐬𝐢𝐨𝐧 📄 -𝐃𝐞𝐟𝐢𝐧𝐢𝐭𝐢𝐨𝐧: Allows the company to reclaim bonuses or stock options under certain conditions. -𝐈𝐦𝐩𝐨𝐫𝐭𝐚𝐧𝐜𝐞: ✅ Protects the company from financial or reputational damage. 7/ 𝐂𝐨𝐧𝐯𝐞𝐫𝐬𝐢𝐨𝐧 𝐑𝐢𝐠𝐡𝐭𝐬 📄 -𝐃𝐞𝐟𝐢𝐧𝐢𝐭𝐢𝐨𝐧: Let preferred shareholders convert their shares into common shares. -𝐈𝐦𝐩𝐨𝐫𝐭𝐚𝐧𝐜𝐞: ✅ Offers flexibility and potential upside for investors. Do you want to ADD any other CLAUSE to the list? #legal #legalclauses #legaldocuments #legalservices

#2 Question Kaliser & Associates PC gets from Clients ⚖️⚖️⚖️ Client calls and says, "I am doing a joint venture with 6 people and they will bring in the funds. We do not want to syndicate this to keep the legal costs down." ❌❌❌ A joint venture and a syndication are both forms of business arrangements, but they have distinct characteristics and are used in different contexts. Here’s a breakdown of the main differences: 🚀Joint Venture: A joint venture ("JV") is a business arrangement in which two or more parties agree to pool their resources for the purpose of accomplishing a specific task. This task can be a new project or any other business activity. Each of the participants in a joint venture has an equal share in the control, profits, management and losses of the venture, unless otherwise agreed. 🚀Structure: It can be structured as a separate business entity (like a partnership or a corporation) where all parties invest and share revenues, expenses, and control. Alternatively, it might be a contractual agreement without forming a new legal entity. 🚀Purpose: Joint ventures are often formed for specific projects, like developing a new product, entering new markets, or combining resources for research and development. A true JV does not utilize Reg D exemptions of the SEC❗ 🚀🚀Syndication 🚀🚀Syndication involves a group of investors coming together to fund a project, but unlike a joint venture, there is usually a syndicator (or sponsor) who pools the resources from various investors to invest in a project. The investors do not directly manage the project but instead invest capital and receive income or profits based on their share of the investment. 🚀🚀Structure: It does not necessarily create a new business entity involving all investors. Instead, it's a way to raise capital from multiple investors (e.g., for real estate projects, media content distribution). 🚀🚀Purpose: Syndication is commonly used in real estate investments, where capital is required for large projects. Utilized to gather capital in exchange for passive ownership interests in the projects. 🚀🚀Duration: The duration can vary widely depending on the nature of the investment. Some syndications may offer returns over a short period, while others might aim for long-term income. To sum up: a JV is more about 2️⃣ or more parties actively managing and controlling a business venture together, sharing both the risks and rewards. In contrast, syndications are pooling capital 💸💵from multiple investors🧑🤝🧑, typically managed by a syndicator, to fund a project, with the investors NOT directly involved in management but receiving income or profits from their investment. Additionally, a syndication is the sell of ownership interests in exchange for capital❗❗ #kaliserlaw #capitalraising #syndications #jointventures #revisionmasters Cindy Mirliss Greg Ehrlich Tandy Robinson, CPA Jeff Satz, PMP Jake Hirsch

The Golden Rules of a Joint Venture Agreement "a joint venture is like a marriage between companies, with shared dreams and mutual benefits. But it's crucial to lay down the rules clearly." Reasons for a Joint Venture: companies combining strengths to achieve the extraordinary. Expanding into new markets felt like charting unknown territories with a trusted partner by her side. The shared risks, the mentor emphasized, were like balancing on a seesaw, ensuring stability and mutual support. Key Clauses: "Define the objectives and scope," the mentor advised, akin to setting the terms of a journey. Contributions, whether financial or technical, should be explicitly detailed, much like partners promising what they bring to the table. The management structure should be crystal clear, ensuring seamless decision-making. Considerations: "Profit and loss sharing is the heartbeat of the agreement," The exit strategy, a necessary safety net, should be ready for unforeseen changes. And always, always have a dispute resolution mechanism, a beacon in stormy waters. Compliance and Due Diligence: "Ensure legal compliance," Thorough due diligence was essential, akin to knowing one's travel companion inside out. "Clear objectives, flexibility, and transparency are the keystones of a successful joint venture." #JVagreement #Contractdrafting #drafting #business #startup

Is your #startup "investment ready?" We all know we should be ready to get financial help before we need it.   By the time we need it, we might be too late.   The best approach with your business is to be “investment ready” at all times.   From a #legal perspective, this means doing the things you need to so investors will be attracted to your business and not turned off by any disorganization with your due diligence documentation. So, can you say you've be "diligent" with each of the following: - Corporate governance (board meetings, etc.)? - Financial statements (reviewed or audited)? - Vendor contracts? - Employee agreements? - Customer contracts? - Strategic partner agreements? - Intellectual Property (patents, trademarks, etc.)? If you're working off of "handshake deals" then you're not ready. You're not alone. But you're not ready. It's time to stop avoiding the issue--get your house in order now before you miss your opportunity.   #innovatewithconfidence #fraxlaw

Are Audited Financials Required for a Regulation CF Offering Entity? If the issuer is executing a Reg CF offering and they are seeking more than $1,235,000 in investment - then the Form C must include audited financials (up to 2 years if the entity has been in existence for 2 years).  Offerings under that amount have lesser requirements for the financials. At Red Rock Securities Law, we provide the legal prowess and cutting-edge technology to prepare your “Direct Issuance” Regulation CF Offering and Regulation CF Investor Raise Portal. Our dedicated team of attorneys provides the deep knowledge base you need to raise capital under Regulation CF with confidence. Interested in a Direct Issuance Regulation CF Offering?  Contact us today at (720) 586-8610. #RegulationCF #FundingOpportunities #RaiseCapital #InvestmentSuccess #startups

🖍️What would I advise to the lawyer leading the investment process on the startup side? Do the work properly before any agreement is drafted! 📁Calculate the shares for this new investment round – the exact number of shares for the new investor and dilution percentage for the existing shareholders; 📁Do not forget to calculate the Price Per Share (PPS); 📁Create the updated version of the captable; 📁Check and confirm the numbers with the CEO, especially the valuation cap. Make sure you understand how everything is calculated, the possibility you will need to re-do the calculations on the fly during the call with the investment team is very high; 📁Send the numbers and the cap table to the investor’s legal and finance team for the approval; 📁Get the Board approval and sign the Board Resolution to approve the investment and share issuance (or Shareholders’ Resolution if your company does not have a Board yet); explain this new round of shares issuance, which share class will be created and the rights distribution among the shareholders; 📁Keep the Term Sheet short and simple. Only now, after the Term Sheet is negotiated and signed, you should start drafting the Investment Agreement. 99% it would be the SAFE, however, it’s always worth it to ensure this exact type of the Investment Agreement reflects all the intentions properly. For more details what is behind the legal framework in each investment process – see my article in the link below. #SAFE #startup #investment #investors #termsheet