Attracting an Investor? Arrange This Legally First
An investor brings money.
But also influence.
And sometimes control.
What Goes Wrong?
Entrepreneurs focus on money.
Not on the terms.
👉 You only notice that later
What Do You Need to Arrange?
- shares
- voting rights
- exit
- protection
👉 Document this in:
a shareholders' agreement
Term Sheet (Important)
This is the foundation of your deal.
👉 Everything is determined here
Valuation vs Control
A high valuation looks good.
But:
👉 less say can be more expensive in the long run
Anti-Dilution
Protection against dilution of your shares.
👉 crucial during growth
Real-World Example
Investor receives extensive rights.
Conflict arises.
👉 entrepreneur loses control
Extra Risk
As a director you remain responsible.
👉 read about when you can be held personally liable as a director
Frequently Asked Question
What do you need to arrange when attracting an investor?
At minimum: shares, voting rights, exit arrangements and protective provisions. Document these in a shareholders' agreement and ensure a clear term sheet.
Conclusion
Attracting an investor is not just about money.
It is a long-term relationship.
👉 Arrange it properly from the start!
Attracting an Investor? Get Legal Guidance.
Mr. Vincent Besters assists you in drafting a shareholders' agreement and reviewing your term sheet. Contact us for a no-obligation consultation.