Starting a new business is not an easy or inexpensive task. If you’ve decided to start your own business, the cost of getting it off the ground and running is likely at the top of your mind. This is something many small businesses and startups struggle with, but there are ways to get the capital you need to make your vision a reality. Many new businesses go through angel round financing and crowd-sourced financing to get them started. However, you do need to take precautions when getting others to help finance your next business venture.
At Tressler & Associates, we offer entrepreneurs legal support during these financing transactions. Our Tennessee entrepreneurial law attorneys will be there for you to help ensure your business starts off strong.
Angel investors are individuals who finance startups with their own funds, often in the earliest stages of the business’s creation. In some cases, angel investors have a pre-established relationship with the owner of the startup. Often, angel investors provide financing in return for ownership equity.
Financing from an individual can sometimes be preferable to working with a large institution, and they sometimes bring in other investors for the startup. However, as angel investors typically use their own money to fund the business, they often contribute smaller amounts compared to institutions.
Whereas financing from an angel investor comes from one individual, crowd-sourced financing involves receiving funding from a large group, often in small amounts from each individual. This allows business owners to expand investment opportunities to a more diverse group of people. Rather than giving investors ownership equity through crowd-sourced financing, they may receive other incentives, such as products from the business. However, crowd-sourced financing is often based on donations, so investors shouldn’t always expect something in return.
If this is your first time starting a business, you might not realize the need to have a lawyer to assist with the financing stage. In some cases, you might even be getting funding from friends and family, so you might not think you need to have legal guidance for these transactions. Even if you’re only getting a small amount of financing from another party, you need to be careful and protect yourself.
Having outside investors can complicate things for your business quickly. They may want some level of control over the company or other benefits in return for their investment that all parties need to discuss and agree on. The last thing you want after starting your business is to have investors make demands you didn’t expect or for legal issues surrounding the transactions to arise. Having a solid investment contract and other documents in place can help ensure you and outside investors understand the terms and conditions of the transactions.
An entrepreneurial law attorney can help you feel confident that everything regarding investments in your business is in order and done correctly.
As everyone knows, a business can’t get anywhere if they lack funding. The future success of your business depends on financing from other parties, so you want to ensure that this stage of your business is handled with care. If you’re looking at angel round financing or crowd-sourced financing to fund your new business, let Tressler & Associates help. Our team will review all the details regarding the transaction to protect your business from any complications.
Contact our Tennessee entrepreneurial law attorneys today to learn more about what we can do to help your new business.
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