Legal Documents Every Startup Needs Before Its First Funding Round

This article is general information only, not legal advice, and not solicitation of work. It should not be relied upon as a substitute for advice on your specific facts.

Foundational Documents

Before approaching investors, a startup should have its incorporation documents in order, a certificate of incorporation, memorandum and articles of association, and a founders’ agreement that clearly sets out equity split, vesting, roles, and what happens if a founder exits early. Investors treat the absence of a founders’ agreement as a red flag, since it signals unresolved risk within the team itself.

Intellectual Property and Employment Documentation

Ownership of core intellectual property, code, brand assets, product designs, needs to be clearly assigned to the company, not left resting with individual founders or early contributors. Standard employment agreements and consultant agreements with IP assignment and confidentiality clauses should be in place for the whole team, not drafted only once diligence begins.

What a Funding Round Actually Adds

A term sheet sets out the commercial terms investors expect, valuation, board rights, liquidation preference, and anti-dilution protection, before the definitive agreements are drafted. The definitive documents typically include a share subscription agreement and a shareholders’ agreement, which govern the ongoing relationship between founders and investors well beyond the transaction itself.

Compliance Housekeeping That Gets Overlooked

Statutory registers, past board and shareholder resolutions, ESOP documentation if any options have been granted, and timely regulatory filings are all reviewed during investor due diligence. Gaps here rarely kill a deal outright, but they slow it down and can affect valuation, so addressing them well before a funding conversation starts is worth the effort.

This note is prepared by our Corporate & Startups team. If you are dealing with a related situation, get in touch with us.