Securing funding for your startup is important for its growth and expansion. This process can be made easier and more successful by having appropriate legal documents in place. For a startup to obtain funding, the following five legal documents are necessary.

Incorporation Documents

Ensure that the company is legally registered before seeking funding. The incorporation documents include the Certificate of Incorporation, Memorandum of Association (MOA), and Articles of Association (AOA) for your company. These papers show that your startup exists as a lawful Indian business organization. It also states the company’s goals, policies, and guidelines. Investors will need these documents to understand your business structure and governance.

Term Sheet

The term sheet is a document that outlines the terms and conditions of the investment transaction. Even though it is not enforceable, it sets out a framework for the final contract. The term sheet contains details such as how much will be invested, what percentage of equity will be offered and the rights allowed to investors. Having a clear term sheet helps both parties understand essential terms regarding the deal.

Non-disclosure Agreement

NDA (Non-Disclosure Agreement), also known as a confidentiality agreement is a legal contract between two or more parties to protect confidential information shared between them. It states what kind of information is considered confidential as well as the terms and conditions on how the information can be shared, used or disclosed. 

When you are presenting your startup to potential investors, you have to reveal important data concerning the business plan, technologies, and market strategies. NDA guarantees that investors will not disclose or use this kind of information.

Intellectual Property

Before bringing investors it is important to protect the company’s intellectual properties such as logo, design, content, brand name, etc. Protecting IP assets assists in attracting investor’s interest. It includes registering your trademarks, patents or copyrights too. Investors require assurance of safety for their unique ideas and products. Proper IP documentation demonstrates that the startup has valuable assets and reduces the risk of conflicts over ownership.

Compliance and Disclosure

After agreeing with the terms and conditions in the term sheet, the parties share information related to their company and operations. Generally, these informations are shared only after signing the NDA (Non-Disclosure Agreement). Both the parties, ie., the startup as well as the investors should carry out compliance and disclose all available information about the company. Make sure that the startup has proper compliance and is operating within the legal boundaries. Disclosure involves providing investors with information such as financial statements, threats to businesses, business models, etc. Trust in investors can only be built by transparency and honesty.