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Startup Financing Advisory

What is due diligence for a startup?

Due diligence is a comprehensive audit conducted by investors to verify the startup's financial, legal, and operational health before investing.

Can a foreign investor invest in my Georgian LLC?

Yes, Georgia has very open foreign investment laws. Foreign individuals and entities can easily own shares in Georgian companies.

Should I form a Delaware C-Corp to raise money?

It depends on your investors. Many US-based VCs prefer Delaware C-Corps, but for local or European grants, a Georgian LLC might be sufficient or even required.

How much equity should I give to an advisor?

Typical advisor equity ranges from 0.25% to 1%, vesting over 1-2 years, depending on their level of involvement and expertise.

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3 min

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Startup Financing Advisory is a complex legal and strategic service vital for any early-stage company aiming for growth and development. Raising capital is not just about finding an investor; it is a complicated process that requires proper assessment of legal risks, preparing the company structure for investment, and skillfully conducting negotiations. With the development of the startup ecosystem in Georgia, funding sources have diversified — ranging from state grants (e.g., GITA) to angel investors and venture capital funds. Each source has its specific legal requirements. An improperly structured deal can lead to excessive dilution of founders' equity, loss of control over the company, or the failure of subsequent rounds. Qualified legal advice at this stage is an investment that protects your business's future.

What Does Startup Financing Advisory Service Cover?

Specialists represented on the Legal.ge platform offer full-cycle services in the fundraising process. This service includes:

  • Developing a Funding Strategy: Analyzing which type of financing (equity, debt, grant, SAFE) suits the company's development stage and goals.
  • Preparing for Legal Due Diligence: Organizing the company's internal documentation, intellectual property rights, and contracts so that the investor's audit concludes successfully.
  • Regulatory Compliance Check: Navigating AML (Anti-Money Laundering) and KYC (Know Your Customer) procedures regarding investors.
  • Tax Planning: Analyzing the tax effects of receiving investment for both the company and the founders.
  • Leading Negotiations: Communicating with investors regarding the Term Sheet and conditions of the main agreements.

Real-World Scenarios When You Need This Service

Professional lawyer involvement is necessary in the following scenarios:

  • Obtaining a GITA Grant: Receiving a state grant requires adherence to strict bureaucratic procedures, correct expense allocation, and compliance with contract terms, for which a lawyer can assist.
  • Entry of a Foreign Investor: Foreign venture funds often require changes to the company structure or specific guarantees, necessitating adaptation to Georgian legislation.
  • Planning a Crowdfunding Campaign: If you plan to raise funds from many small investors, it is essential to consider the requirements of the Law on Securities Market.
  • Multi-Round Financing: When a company goes through Seed and Series A rounds, relationships between old and new investors become complicated. A consultant helps maintain a balance of interests.

Georgian Legal Framework and Regulations

Startup financing issues are regulated by the Law of Georgia on Entrepreneurs, which defines mechanisms for capital increase, share issuance, and protection of shareholder rights. It is important to consider the Civil Code of Georgia regarding contractual aspects. If the matter involves a public offer, the Law of Georgia on Securities Market is relevant. Also, when checking the origin of investment funds, the Law of Georgia on Facilitating the Prevention of Money Laundering and the Financing of Terrorism must be taken into account. A professional lawyer ensures that the financing process fully complies with these regulations and does not create legal problems for the company in the future.

Service Process

Working with Legal.ge specialists on financing issues involves several stages:

  1. Initial Audit: The lawyer reviews the company's current state, Capitalization Table (Cap Table), and financial needs.
  2. Strategy Development: Determining the optimal funding source and legal instrument (e.g., SAFE, Convertible Note, Equity).
  3. Documentation Preparation: Creating or refining all necessary documents (from investment presentations to legal contracts).
  4. Support Until Closing: The lawyer actively participates in negotiations and ensures the final, legally sound execution of the deal.

Why Choose Legal.ge?

Legal.ge is a platform that connects startups with experienced corporate lawyers. Our specialists are well-versed in both local legislation and international venture deal standards. On Legal.ge, you will find an advisor who will not only prepare documents but become your strategic partner on the difficult path of raising capital.

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Specialists for this service

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