When you’re gearing up for your first investor pitch, having a brilliant idea and a strong team is just the beginning. Securing startup funding means getting your paperwork in order. Legal and financial documents build trust, lay out how your company is structured, and demonstrate that you’re following the rules. Investors don’t just trust your idea; they check the risks of putting money in your startup. Good paperwork is key!
This guide shows you the key legal and finance papers you need to handle the funding like a pro.
1. Business Plan and Executive Summary
Your business plan is the key to your funding process. It needs to have:
- Business model
- Target market and size
- Go-to-market strategy
- Revenue projections
- Competitive landscape
- Founding team bios
Your executive summary (typically 1–2 pages) is a summary of this plan — its generally what investors see first before digging in.
2. Pitch Deck
Although not a legal document, a formal pitch deck is an essential financing communication device. It graphically encapsulates your startup’s mission, problem/solution fit, traction, finances, and funding request. Ensure your deck:
- Tell a good story
- Has clean, clear visuals
- Emphasizes milestones and achievements
Tip: It should be 10–15 slides. Investors like conciseness.
3. Cap Table (Capitalization Table)
A cap table summarizes your startup’s equity ownership — who has how much. It comprises:
- Founders
- Employees (with stock options)
- Advisors
- Old investors (if any)
This is what investors reference to calculate dilution and where their shares would fit in the ownership puzzle.
4. Financial Statements
Whether pre-revenue or making money, you need to demonstrate:
Income Statement (P&L): What your revenue, expenses, and profit are like.
Cash Flow Statement: Where money comes in and goes out of your company.
Balance Sheet: What you have vs. what you owe.
Financial projections (3–5 years) are also crucial for early-stage startups. Make assumptions behind numbers — investors would rather see transparency than exaggerated optimism.
5. Incorporation Documents
Investors want to be sure that your company is officially recognized. Here’s what you need to have ready:
– Your incorporation papers
– Your business license (if you need one)
– Your Employer ID Number (EIN)
– Proof your business is registered as a legal entity (usually a C-Corp if you want to get money from investors)
If you’re a US startup trying to get venture capital, setting up in Delaware is usually the best bet because of its good laws and taxes for businesses.
6. Founder’s Agreement
This agreement spells out each founder’s job, what they’re in charge of, how much of the company they own, how decisions are made, and when they get their stock. It’s helpful to:
– Keep fights from happening later
– Show investors that your team is on the same page and that there’s not much risk of founders fighting
7. NDAs and IP Assignment Agreements
Protect your company’s ideas before you look for outside money.
Two documents of high importance:
Non-Disclosure Agreement (NDA): Not required for VC meetings, but useful in initial talks or with non-institutional investors.
IP Assignment Agreement: Shows that your startup, not individual founders or freelancers, owns the code, trademarks, or inventions.
8. Employee Offer Letters and ESOP Plan
If you’ve already hired employees or contractors, ensure you have clear and tidy employment agreements.
If you’re looking to offer equity incentives, it’s a good idea to set up an Employee Stock Option Plan (ESOP) and get it approved by your board. A well-crafted ESOP shows investors that you’re committed to attracting and keeping top talent, which is a key factor for growth.
9. Term Sheet (If Already in Discussions)
A term sheet is a binding agreement that describes the general terms and conditions of an investment agreement. If you are already in talks with an investor, be ready to negotiate:
- Valuation
- Amount of investment
- Equity interest
- Liquidation preferences
- Board seats
A startup attorney should always go through your term sheet prior to signing.
10. Data Room Setup
All these files need to be kept in a secure data room (Google Drive, Dropbox, DocSend, or a special platform like Carta or Capshare). A clean, intuitive folder system displays professionalism and preparedness.
Final Thoughts
The process of raising startup capital is not merely a matter of selling your idea — it’s de-risking that idea to future investors. Having these legal and financial documents in hand, you’re sending one message: “We’re ready, structured, and investment ready.”
It may seem daunting, but it’s worth it. A documented startup will be more likely to build investor confidence, reduce the funding process timeline, and secure terms on your terms.
