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Seed Round Legal Services

What is the difference between Pre-Seed and Seed legal work?

Pre-Seed often uses simple SAFEs. Seed rounds usually involve priced equity, issuing actual shares, creating a board of directors, and extensive shareholders' agreements.

Does Georgia recognize vesting schedules?

Yes, vesting can be structured through contractual obligations and conditional share transfers under the Civil Code and Law on Entrepreneurs, often held in escrow or subject to buy-back rights.

What are "Preferred Shares" in Georgia?

Georgian law allows for shares with special rights (dividends, liquidation preference) and restricted voting rights, commonly used to protect investors.

How much does Seed Round legal counsel cost?

Costs vary based on complexity and deal size. On Legal.ge, you can find specialists offering fixed fees or hourly rates tailored to startup budgets.

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Seed Round Legal Services: The Foundation for Your Startup's Growth

The Seed Round is one of the most critical stages in a startup's development, where the company raises its first official equity funding. Unlike early-stage "angel" investments, which are often structured via SAFE or convertible notes, a Seed Round typically involves the direct sale of company shares, fixing the company's valuation, and registering new shareholders. This process requires complex legal work, as it lays the groundwork for corporate governance, shareholder rights, and future investment relationships. Mistakes made during the Seed Round can create serious problems for founders regarding company control or raising future rounds (Series A).

Legal.ge offers comprehensive legal support for Seed Rounds, including documentation preparation, negotiations, and closing the deal, taking into account Georgian legislation and international best practices.

What Does Seed Round Legal Service Cover?

Seed Round service is a multi-component process that ensures the structuring and execution of the deal. The main components are:

  • Term Sheet Analysis and Negotiation: Agreeing on key commercial and legal terms with investors before drafting final agreements.
  • Shareholders' Agreement (SHA) Preparation: This is the central document regulating shareholder relationships, voting rights, board composition, and share transfer rules.
  • Share Subscription Agreement: The document by which the investor purchases, and the company issues, new shares.
  • Charter Modification: Amending the existing charter to reflect the rights of new investors and the governance structure.
  • Due Diligence Preparation: Organizing the company's legal documentation so that investors can assess risks (IP rights, contracts, corporate history).
  • Disclosure Schedule Preparation: A document where the company discloses all existing legal or financial risks to the investor to avoid future liability.

Common Scenarios When You Need This Service

Legal support for a Seed Round is essential in the following situations:

  • Venture Capital (VC) Entry: When an institutional investor invests money and demands Preferred Shares and a seat on the Board of Directors.
  • SAFE Conversion: When the Seed Round triggers the conversion of previously issued SAFEs or convertible loans into shares, requiring mathematical and legal precision.
  • Syndicate Deals: When multiple investors invest together, and their interests need to be coordinated in a single document.
  • Foreign Investment in a Georgian Company: When foreign investors demand the integration of English law principles (e.g., Drag-along, Tag-along) into the Georgian charter.

Georgian Legal Framework

The primary regulatory act when structuring a Seed Round is the Law of Georgia on Entrepreneurs. This law details the capital structure of Joint Stock Companies and LLCs, the competence of the partners' meeting, and classes of shares. The law allows for the creation of different classes of shares (common and preferred), which is essential for venture deals.

Also important is the Civil Code of Georgia, which regulates contractual relationships, and the Tax Code of Georgia, which determines the tax regime for capital increases and investments. Competition legislation should also be considered if the investor is a major player in the market to avoid violating concentration rules. Georgian legislation is increasingly aligning with European and international standards, simplifying the implementation of complex investment mechanisms (e.g., Liquidation Preference).

Service Process Stages

Cooperation with specialists on Legal.ge includes the following stages:

  1. Readiness Assessment: Auditing the Cap Table and existing documentation to ensure the company is ready for investment.
  2. Term Sheet Stage: Reviewing the investor's offer and providing strategic advice on terms.
  3. Drafting Full Documentation: Preparing the SHA, Subscription Agreement, and new Charter.
  4. Disclosure Process: Working with the investor's lawyers to answer Due Diligence questions.
  5. Signing and Registration: Closing the deal, monitoring the transfer of funds, and registering changes in the Public Registry.

Why Legal.ge?

A Seed Round is a "marriage" between an investor and a company that lasts for years. Legal.ge gives you access to lawyers who understand not only the law but also the logic of startup business. Specialists on our platform have experience working with both local and international investors. They will help ensure your interests are not lost behind complex legal terms and that the deal closes on time and effectively. Find your trusted partner on Legal.ge.

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