Choosing the type of capital
Debt keeps ownership intact but adds repayment obligations, covenants, and, for smaller companies, often personal guarantees from the owners. Equity brings in investors who share ownership and may want governance rights. Convertible instruments such as SAFEs and convertible notes postpone the valuation question but can lead to surprising dilution later. Revenue-based financing and asset-based lending are other options, each with its own terms. Comparing the real cost of each source, including control, timing, and legal obligations, helps a company choose a sensible mix. Some companies may also qualify for grants or government-backed loan programs, whose eligibility rules should be checked before planning around them.
Securities rules for any raise
Selling ownership interests or convertible instruments is generally an offering of securities, so it must be registered or fit within an exemption. Most private companies rely on private placement exemptions, which may limit who can invest and whether the offering can be advertised publicly. Crowdfunding and smaller public offerings under other exemptions carry their own disclosure and filing requirements. State securities laws may require notice filings as well. Missteps can give investors a right to undo their investment, so getting the structure right early is worth the effort. Pitch decks and other materials shown to prospective investors can create liability if they overstate the business, so review them before they circulate.
Getting the company ready to raise
Clean corporate records help before any raise: an accurate cap table, properly approved past issuances, and intellectual property assigned to the company. Investors will review these, and gaps can delay a closing. Think about how much to raise now, what terms you can accept, and how this round will affect the next one. We look at your current structure, your funding goals, and the investors you have in mind, and lay out a legal path for the raise.
