Legal Advice on fundraising rounds in Portugal
Discover the best way to raise capital for business in Portugal
Our corporate lawyers will guide you through the process step-by-step.
How can a lawyer help me?
A fundraising round entails the acceptance of many obligations on the part of both parties, and if poorly drafted, it can be a genuine source of trouble for the business while draining resources.
Having a lawyer assist you in drafting or revising a Term Sheet will aid in identifying risks that would otherwise go undetected. It can also help you define your negotiation strategy in order to get the best possible deal.
When it comes time to execute your final agreement in the Share Purchase Agreement and other ancillary documents, having a good lawyer on your side will ensure that your will and ideas are properly expressed. As a result, the law will properly defend them.
Our corporate lawyers at Lexidy LegalTech Boutique will make sure that your interests are meticulously expressed and fiercely defended, as we are seasoned legal experts with years of experience in fundraising rounds.
¨We will be with you each step of the journey.¨
What is a Fundraising Round?
When the directors of a company decide that they need additional financial support to move the company forward, they must make a decision. Do they apply for a loan or embark on the journey of attracting the attention of an investor and securing capital?
When a company actively seeks an investor to help fund their business, a fundraising round occurs. In exchange, the investor receives a portion of the share capital.
New businesses raise capital in stages.
The funds raised during the pre-seed and seed phases are typically small, less than €1 million. Generally, this funding comes from close friends and/or relatives, but business angels may also invest in some cases.
At this stage in the company’s life, the goal of the financing is to reach a break-even point, which will allow the company to seek additional investment for their growth phase.
Companies enter their growth phase after successfully developing a minimum viable product, or MVP, and it is during this phase that the company typically attracts private equity or venture capital investors.
How can a Fundraising round help my startup?
The main advantage of working with a private investor rather than a traditional financial institution is simplicity. An investor typically works with fewer regulations and formalities, which is especially appealing in a young environment such as a startup.
Because the amount of capital is often disbursed upon reaching certain pre-established milestones, funding rounds are structured to help business leaders stay focused and not lose sight of the overall goals.
What are the requirements?
A fundraising round has no specific formal requirements.
However, the larger the investment, the higher the investor’s expectations. These demands include things like meeting targets, having a say in company decisions, and other perks.
What is the process of a fundraising round?
The potential investor drafts the Term Sheet as the first step in any fundraising round.
The Term Sheet is a non-binding document that presents the initial investment offer. It is used as a negotiating point and serves as proof of genuine interest in making the investment if both parties can agree on the terms.
Following the distribution of the Term Sheet, the proper negotiation process begins with offers and counteroffers. This phase entails a significant amount of document sending and receiving.
If an agreement is reached, the parties must execute it in the form of a Stock/Share Purchase Agreement. However, these agreements are often split into two different contracts because the complexity in the operation.
The first contract is the Investment Agreement, which fixes the price of the shares as well as the rights and obligations of each party. The next contract is a New Shareholder’s agreement and this regulates the relationship between the shareholders as well as with the company. It must accommodate the demands of the new investor.
We are a department formed by qualified legal experts who have been trained in the field of corporate law. We work on these requests every day and it’s our passion. For us, Lexidy is a way of life and what excites us the most is to be able to deliver the happiness and satisfaction of a successful process. We want to help you achieve your goals and dreams.
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