“When should we get legal advice?” is always a tricky question for start-ups.
On one hand, you know you need expert advice.
On the other hand, traditionally this legal advice has been expensive; particularly if you live and work in London.
It’s no surprise that many start-ups decide not to invest in legal help at the time they probably should. They then wade into the fundraising world without having the information and knowledge they need to navigate it. This means that they are more likely to make costly errors and that the process just takes even longer.
So when is the right time to look for legal help if you are thinking about securing funding?
We all know that lawyers help with legal documentation. But lawyers specialising in start-ups also know what you can expect during the fundraising process. They offer proactive guidance and support on issues which would never occur to you. This advice doesn’t need to be expensive, and some lawyers will be happy to do this on a fixed fee basis.
That’s why, in my experience, the sweet spot for finding a lawyer is before you speak to any investors – even if those investors are your friends and family. This means that before you ask anyone for money, you have answers to the questions you’re likely to be asked by them, you’ll understand the terminology they might use, and you’ll have some help battling your way through the legal jargon around product protection, fundraising and investor relief.
For example, if you need to protect your intellectual property, you’d do well to speak to an IP lawyer before you speak to investors. Investors will expect trademarking to protect your greatest asset and are unlikely to get involved in a project where the IP may be challenged or opposed.
In this scenario, it’s wise to invest in IP advice, to safeguard the future of your business.
Lawyers who specialise in start-ups will take you through investors’ due diligence processes, so you can think, reflect and prepare answers in advance. Speaking from personal experience, it’s definitely better to have pre-prepared answers to potentially uncomfortable questions before you’re in the room being put under pressure to answer.
This time to prepare also gives you a chance to demonstrate what you are like as a Founder and put that in a positive light. You want to show that you make good business decisions, that you are transparent and honest, and won’t hide awkward information when you’re working together. This is understandably really important to investors.
Having a lawyer on board early will smooth every process for you: from due diligence, IP and the pre-fundraise process, to preparing and checking legal documentation and getting the funds when you need them. It’s an investment in the future of your business and will guarantee time and money saved, and less-stress all round.
This newsletter was inspired by a recent podcast interview with David Turney, a lawyer, who specialises in helping start-ups and scale-up. We talked about the importance of finding the right lawyer at the right time, the fundraising process, investor relief and what to look for in an investor.
Connect with David Turney:
If you’re a founder interested in digital growth then you are in the right place.
I write about digital growth, business strategy, digital marketing, entrepreneurship and my own experience of setting up, scaling and selling businesses in digital, marketing and tech.