Raising capital for a new startup can be a daunting task for the founders. There are several types of investors and capital sources for startup projects, including friends and family members, angel investors (high net worth individuals), venture capital funds, corporate/strategic investors, and government grants.
Each of these capital sources has different investment criteria and expectations. It’s important for founders to understand those factors and take them into account in developing a fundraising and investor outreach strategy that is appropriate for the company’s stage of development, industry, and funding needs.
In addition, founders should recognize that being introduced to an investor prospect by someone they know and trust is always a better approach than contacting them cold. Doing your homework and being thoughtful about what types of investors you approach (and don’t approach), and about how you approach them, will save valuable time and increase your chances of getting funded.
When Should I Form a Legal Entity?
As startup lawyers, we often receive inquiries from passionate entrepreneurs and founders seeking guidance on when they should consider taking their side projects to the next step by forming a legal entity. Forming a company is a “crossing the Rubicon” moment for any startup. It’s an essential step…
Investment Company Status Considerations for Cash Positioning in Wake of Bank Failures
Given this week’s headlines, many emerging companies may be asking themselves: “Why am I holding so much cash?” The Investment Company Act of 1940 (the 1940 Act) may be to blame. “But I don’t have any intention of being an investment company. Aren’t those mutual funds or…
Distressed Bank Update as of March 16, 2023
In the three days since federal authorities announced sweeping measures to protect depositors of Silicon Valley Bank (SVB) and Signature Bank and help prevent additional bank failures (as discussed in our update of March 12, 2023), the U.S. banking system appears to have stabilized, at least temporarily.…