Angel and Venture Capital Financings
You supply the talent, ideas, and ambition. We’ll supply the legal guidance to help your startup with formation, IP protection, and growth strategies.
For any entrepreneur, deciding to go into business with colleagues or friends is a big and exciting step. It’s important, however, to keep your eye on the business side of things. While contracts and legal formalities may not be nearly as fun as watching your dream become a reality, having the right agreements in place is critical to the success of your company.
If you’re like most emerging companies out there, you’re likely looking into all your possible options for obtaining funding to help get your business off the ground. While there are several different avenues of financing you can consider, venture capital financing and angel investors are two options that are very popular with entrepreneurs.
While there are similarities between these two forms of financing, there are also significant differences that you need to know before you go forward. Deciding which is best-suited for your business will depend on a number of factors, including the amount of capital you need and how much control you want to give your investors. At Gouchev Law, we know the ins and outs of both angel investing and venture capital financing, and can help you determine which avenue of funding is right for your particular business.
Venture Capital Financing
Typically speaking, venture capital comes from groups of financial institutions or wealthy investors that are focused on getting involved with early-stage, high-growth companies. These companies frequently lack the amount of assets or capital necessary to attract traditional investors, who require some sort of financial cushion or collateral before they’re willing to invest in new or small businesses. That’s where venture capital comes in – it gives financially strapped startups the assets they need to get up and running.
Venture capitalists usually invest for longer terms than traditional investors, and engage in active monitoring of the companies in which they’ve invested, which often includes involvement on the board of directors. Because equity investors have a lower priority when it comes to claims on the company’s assets, they demand, in turn, higher rates of return on their investments. In short, the risks are usually higher, but so are the rewards.
Angel investing is a similar, but typically more hands-off, form of funding. Angel investors are high-net-worth individuals who make private investments in startups and emerging companies in the hopes of receiving large returns. These investors come from a variety of backgrounds, but are typically all looking for the same thing – companies with strong growth potential and solid business plans that seem well-positioned to succeed. Often, they are former entrepreneurs themselves and are looking to invest in new technologies in their field of expertise.
Angel investors are attractive to start-ups not just because of the money they bring to the table, but also because it’s not uncommon for them to bring on friends and business associates as additional co-investors who are willing to take larger risks. This obviously has the effect of drastically widening the potential pool of funding for new businesses.
Typically speaking, angel investors have less capital to invest than venture capital firms do, but they also generally take a much less active role. It’s very rare that you’ll ever see an angel investor wanting a seat on your board of directors. If you’re looking for a limited amount of funding, and possibly some extra expertise and contacts, without relinquishing control of your company, angel investing may be the way to go.
Whether you’ll want to seek out venture capital funding or instead look to possible angel investors really comes down to the stage of development in which your company currently finds itself. If you’re just starting out and are in the initial stages of developing a product that you’re hoping will take off, angel investors might be your best option. If your company is more advanced, with products that are about to hit the market and a board position to offer up, venture capital financing might be the better avenue.
There’s no one-size-fits-all approach to funding your startup. The business law experts at Gouchev Law are here to help you decide which approach is best for you, so you can turn your startup dreams into reality.
How we helped vlada
“Gouchev Law has a very unique, hard to find blend of skills that every entrepreneur wants in a law firm: legal acumen, business savvy and a great attitude. Definitely will be working with them as we grow our business!”
Vlada Lotkina, Classtag
the nitty gritty
We know that understanding what legal documents and protections you need is not your jam. Relax: we’ve got you covered.
- Strategic Entity Formation (Corporation, S-Corporation or LLC)
- Customized corporate bylaws and LLC operating agreements
- Founder and Partnership Agreements
- Angel Round Financing
- Crowd Sourced Financing
- Shareholder and Stock Purchase Agreements
- Private Placement Memorandum
- Equity Compensations Review & Negotiation
- Intellectual Property Protection
- Dissolving or Converting Entities
- Separation Agreements
- Confidentiality Agreements
- Commercial Leases
- Buying and Selling a Business
- Joint Venture Agreements
- Loan Promissory Notes
- Independent Contractor, Consulting & Client Service Agreements
- Partner Disputes and Forced Buyouts
Packages to Fit Your Needs
If you’re like most startups, you can’t break the bank on legal fees. Our interest is helping you grow your empire, and so we offer a range of affordable flat-fee packages for startups, beginning with our Entrepreneur Start-Up Package, which includes forming your company, drafting your operating agreement and more. We can custom create a package that is the perfect fit for your startup needs.
Trusted Counsel At Your Side
As your startup grows, we’ll be right there with you, providing continuing counsel to you and your company as you face new opportunities and challenges. Every great journey comes with its fair share of tests and growing pains, but with Gouchev Law at your side, you can face them all. We will help you to create partnerships that maximize your growth while protecting your interests, develop and defend trademarks and patents, and scale your business into new markets.
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