These companies need big money to grow fast, right now, but don't want to give up the store to get it. As with many things, finding the middle ground is often the best solution for the eBusiness and its owners. The First Step A core hurdle in attracting investment in a business is investor confidence in the quality of the management team, its product, its prospects, its business plan and its vision. Management and a few loyal employees do, and those are the people who may provide the initial financing. The first outside financing is a critical point in the life of your nascent company, one where lawyers need to play a role.
Money is tight, but the legal needs of the business are ramping up quickly.
In order to grow, a sound legal framework is essential. This includes appropriate corporate formation documentation, tax planning and structuring, appropriate employee benefit and stock option plans to provide the necessary incentives and staying power for employees, and ensuring that the intellectual property of the business is adequately protected. Shortcomings in any of these areas may haunt the eBusiness later, or stop it in its tracks. Many law firms will work creatively during this period with standardized documents, flat fees, and when cash is at a premium, even investing in the eBusiness. This can have its advantages, since VCs can not be expected to make their investments without taking equity and some measure of control from the new business.