These are our top 10 tips when taking investment into your start-up:
1. Do your homework
Investments come with a load of jargon.
2. Get the disclaimers right
Make sure the information you send out contains the correct wording to keep you on the right side of the law. This means making sure you are only sending it to people who are eligible to receive it (high net worth individuals and sophisticated investors).
Even if you have known your co-founders for a long time make sure you get something down in writing to set out what you have agreed about how the initial shares in your company will be divided.
4. Intellectual Property
Investors will want to know you have this sorted. Make sure your domain names are registered, your trademarks are in process and that your open source is clearly marked.
Make sure your developers are working under clear contracts. It is important that any code for your website and back-end functions that they write belongs to your company. Investors will ask you about this.
6. Term sheet
Get it signed. It makes investors feel that they have committed even if you haven’t got to the full legals yet.
7. SEIS and EIS
An application for advance assurance should be sent to the tax man early. HMRC get a lot of these and need as much time as possible to look at yours.
8. Numbers, numbers, numbers
Management accounts, budgets and share capital tables need to be clear and correct. Investors will ask for them.
Getting investors interested and then signed up takes time. Set a timetable with milestones. Measure yourself against them and plan for contingency
Tell your lawyer about them. If you promised someone some equity but haven’t seen them for 3 years, tell your lawyer. The more they know the more they can help.
For more information please go to http://www.nabarro.com/services/sectors/entrepreneurs-smes/