Legal & Strategic Advice for Financing a Company

Financing decisions are crucial for business owners. The type of funding you choose, and the terms that apply, can have a lasting impact on your company.

Various funding sources each have advantages and disadvantages, so they should be evaluated along with the overall go-to-market strategy. Consider the long-term consequences of relinquishing control, accumulating debt, or allocating a portion of revenue. And these obligations should always be weighed against the capital and other benefits that suitable investors can offer.

Selling shares in your company is the classic way of raising funds from early-stage investors, including friends, family, and angels. Equity financing offers the possibility of faster growth without taking on debt. However, connecting with the right investors can be time-consuming, and their contracts often need careful review.

Traditional bank loans, promissory notes, and other debt-based financing can provide a cash infusion without the need to give up ownership. But your revenue stream may not allow for regular repayments, and collateral requirements can be hard to meet.

Income sharing, factoring, and similar funding is available to companies with consistent revenue. Here, you’re trading a share of your profits for immediate access to capital. This option can be useful for a founder or CEO who may have a harder time getting a traditional loan.

Some early-stage companies can qualify for non-dilutive awards, usually offered by a government entity or a nonprofit. Although the grantor doesn’t take equity or demand repayment, there may be other strings attached. Founders might have to share their research publicly, or participate in donors’ marketing campaigns.

Spark + Sterling can assist with reviewing and documenting these and other types of arrangements. As both a corporate lawyer and an angel investor, I’ve supported growing companies through years of market cycles.

Investors and lenders will also expect you to provide detailed information for their due diligence, including compliance and contracts data. I’ve managed this process for small (and larger) companies on both sides of transactions.

Sample financing matters:

  • Due diligence support
  • Non-disclosure agreements
  • Term sheets
  • SAFE agreements
  • Stock purchase agreements
  • Promissory notes
  • Loan agreements
  • Corporate documents such as board and stockholder consents
  • Grant agreements
  • Reviewing pitch decks designed for investors

Looking to raise capital? Contact me if you’d like to discuss funding possibilities.