Sector Overview
Every funding round carries terms beyond the investment amount, from liquidation preference rights to investor authority over future decisions, needing careful review to protect founder interest long-term.
As a startup grows through multiple funding rounds, it may need to convert its legal structure, a conversion carrying procedural requirements worth planning for in advance.
Regulatory Framework
These transactions fall under the Companies Law regarding ownership structure, alongside general contract provisions in drafting funding round agreements.
How We Work With This Sector
We review every term in the term sheet before signing, since it sets the framework for subsequent negotiation of the final agreement.
Who We Work With in This Sector
Startup founders negotiating new funding rounds.
Startups needing employee incentive plans structured through an equity scheme.
We notice that some founders agree to a liquidation preference term in an early funding round without fully understanding its cumulative effect across later rounds, as these preferences stack with each new round until they reach a level that substantially reduces the founder's actual share in any future exit scenario. We recommend modeling the effect of these terms across different exit scenarios before signing, not evaluating the current round in isolation from what came before it.
Related Services for This Sector
This connects directly with our private equity, venture capital and startups service.
For establishing the legal entity, this connects with our company formation service.
Common Questions
What's the most important term worth reviewing in a term sheet?
Liquidation preference rights and investor authority over future decisions, since these are the terms that most affect founder interest later.
Do you review employee equity plans?
Yes, we help structure these plans to align with the Companies Law while achieving the intended incentive goal.