How Startups Can Legally Prepare for Their First Funding Round
Raising your first round of funding is a huge milestone—but it can also feel overwhelming. Between pitching investors, refining your product, and planning for growth, legal preparation can easily get pushed to the side. That’s a mistake many startups regret later.
Taking the time to prepare legally before your first funding round protects you as a founder, keeps your business compliant, and helps build confidence with investors. With the right guidance—and support from a startup attorney like Atlas Legal Services—you can approach startup fundraising with clarity and avoid issues that slow deals down or create problems later.
Understanding Startup Funding Rounds
Startup funding doesn’t happen all at once. Instead, it typically happens in stages, often called startup funding rounds, each designed to support a different phase of growth.
Common early funding stages include:
Seed funding, often used to validate an idea, build a product, or gain early traction
Series A, which focuses on scaling operations and growing revenue
Early-stage investments, which may include angel investors, venture capital firms, or strategic partners
Each round of startup funding brings new legal and financial complexity. As ownership changes and investor rights are introduced, legal preparation becomes increasingly important. Understanding how startups funding rounds work—and planning for them early—sets the stage for smoother fundraising and fewer surprises.
Key Legal Steps Before Your First Funding Round
Before you ever speak to an investor, there are a few critical legal steps every startup should have in place. These basics signal professionalism and help investors feel confident in your business.
Founders should focus on:
Proper business formation, often as a C-corporation
Issuing founder equity with clear ownership and vesting terms
Maintaining an accurate cap table that reflects all equity and convertible instruments
Protecting intellectual property, including invention assignments and trademarks
Skipping or rushing these steps can create red flags for investors. Solid legal advice for startups helps ensure everything is structured correctly from the beginning—and prevents time-consuming fixes later.
Preparing Key Legal Documents for Investors
When it’s time to raise capital, investors expect certain legal documents to be ready—or at least well underway. These documents define the terms of the investment and set expectations on both sides.
Common investor documents include:
Term sheets, outlining valuation, equity, and control rights
Subscription agreements, formalizing the investment
Shareholder agreements, addressing governance and ownership issues
These documents aren’t just paperwork—they shape how your company operates after funding. Atlas Legal Services helps startups prepare, review, and negotiate these agreements so founders understand what they’re signing and how it affects future growth.
Compliance and Regulatory Considerations
Fundraising is regulated, even for early-stage startups. Securities laws apply to most investments, and failing to follow them can lead to serious legal complications.
Key compliance considerations may include:
Proper use of securities exemptions
State and federal filing requirements
Accurate disclosures to investors
This is where experienced legal advice for startups becomes essential. A startup attorney helps ensure your fundraising efforts follow the rules, protecting both your company and your investors.
Working with a Startup Attorney
Having a startup attorney involved early can make fundraising far less stressful. Instead of reacting to problems as they arise, founders get proactive guidance that supports long-term success.
A startup attorney can help with:
Structuring your company for investment
Preparing and reviewing fundraising documents
Navigating compliance requirements
Advising on investor negotiations and future funding rounds
Atlas Legal Services partners with startups at every stage, offering practical legal support tailored to growing companies. Learn more about our work in the Startups & Venture Capital practice area.
Take the Next Step: Fund Your Startup with Confidence
Your first funding round sets the tone for your startup’s future. By preparing early—through proper formation, compliance, and strong legal documentation—you put your business in the best position to succeed.
With guidance from Atlas Legal Services, startups can move into fundraising confidently, knowing their legal foundation is solid and investor-ready. If you’re preparing for your first round of startup fundraising, we’re here to help.
Visit our Contact page to connect with Atlas Legal Services and take the next step toward funding your startup with confidence.