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TL;DR: Raising venture capital is a critical milestone for many startups, and having the right legal partner can make or break your success. A great venture capital attorney brings not only deep expertise in fundraising transactions but also the judgment, modeling skills and strategic insight to protect your startup’s interests and set the stage for long-term growth. In this post, we break down what to look for in VC counsel, how to find the right fit and why your legal advisor should be a long-term partner in your company’s journey from incorporation to exit.
Consult with a venture capital attorney today!
If you are attempting to scale your startup, or if you are building a business that requires considerable upfront capital, you may be a good candidate for venture capital funding. Indeed, raising venture capital is a critical milestone for many startups in the technology and life sciences industries. In many cases, successful technology startups may require multiple financing rounds over several years, and early rounds of financing can have long-term consequences, including for future financings.
The good news is that VC funding exists to fuel technology development and growth; although it also brings legal complexities and risks that require startup experience and expert guidance. These transactions will impact the fundamental economics, control and governance of your startup; this makes the decision as to whether and how to accept venture capital funding hugely consequential, which should be made with eyes wide open.
To navigate VC funding, you should engage a skilled venture capital attorney who can help ensure that your startup’s interests are protected throughout the fundraising process and who can help you prepare and lay a foundation for future capital-raising activities.
Your corporate finance attorney should be multi-dimensional with a strong understanding of the people dynamics in play (i.e., governance and control issues) and with quantitative analytical skills that can help you master the economics of your startup (i.e., helpful excel models that can help you better understand the liquidation waterfall and pro forma capitalization table).
Here’s how to find and engage the best VC attorney for your startup.
Why a Venture Capital Attorney is Crucial
In addition to having a general background working with technology startups and helping them to scale, a VC attorney specializes in deal and legal issues related to raising early-stage capital in preferred stock financings, convertible note financings, SAFE financings, angel financings, venture debt financings and other private offerings. They can:
- Draft and review term sheets and help you understand the essential elements of the transaction;
- Prepare a financing model that helps you understand your capital structure and allows for scenario analysis during funding negotiations to simulate all the “what ifs” and calculate the final post-money capitalization table;
- Negotiate on your behalf to secure favorable financial, governance and other financing terms;
- Manage and coordinate the due diligence process;
- Strategize how the current financing will affect your startup’s ability to raise future rounds of funding;
- Comply with federal and state securities laws;
- Close the financing efficiently and manage the financing documents for future access, review and guidance; and
- Help you manage and comply with post-closing covenants to your investors.
The right VC attorney can make or break your fundraising efforts, setting the stage for long-term success. Indeed, to be most effective, a good venture capital attorney should get involved before your financing transaction in order to help you set up and organize your company with a view towards what your future investors will want and expect.
1. Understand Your Startup’s Needs
The first step is to evaluate your startup’s specific funding requirements and plans for raising capital. Are you raising a seed round (e.g., convertible debt, SAFEs or Series Seed Preferred Stock) or Series A Preferred Stock? If so, it is likely that you will need help structuring the deal terms and establishing a foundation for future capital-raising activities. You may also want help assessing equity dilution and navigating complex cap tables. Your needs and prior experience will help you identify the VC attorney with the relevant startup experience for your financing deal.
2. Look for Specialized Expertise
Not all corporate attorneys are well-versed or experienced in venture capital. Find an attorney who has:
- Years of experience working with startups at your stage;
- A deep understanding of venture capital deal structures and terms;
- Familiarity with industry-standard terms and practices; and
- A thoughtful and practical approach to managing risk and solving problems.
An expert VC attorney will have experience negotiating, structuring, documenting and closing a variety of VC deals, including financings involving the conversion of convertible debt and/or SAFES, multiple closings, milestone conditions, down rounds and anti-dilution adjustments, pay-to-play structures and successive preferred stock rounds. A great VC attorney will not only document the deal but will also model the deal’s unique terms in Excel and carry the torch through the due diligence process. Be sure to ask for references or case studies to assess legal counsel’s expertise.
Boutique transactional law firms are often staffed by VC attorneys who have extensive experience working on venture capital transactions. They know the intricacies of deal structuring, term sheet negotiation and regulatory compliance, providing you with specialized expertise in venture capital, partner-level attention, personalized service, speed and efficiency and lower billable rates and transaction costs.
3. Ping Your Professional Network
Your professional network can help identify VC attorney candidates. Reach out to:
- Fellow startup founders who have successfully raised funding;
- Mentors and advisors in your industry;
- Investors who may have preferred legal partners; and
- California Counsel Group (of course) – we are (and know) the VC attorneys that you need.
Platforms like LinkedIn, AngelList, accelerators and startup communities can also help you connect with experienced VC attorneys, but you will need to interview VC counsel candidates and do your due diligence on their capabilities and startup experience.
4. Evaluate Their Track Record
When you have identified potential VC attorneys, dig deeper into their track records. You should look for:
- A long history of representing startups similar to yours;
- Experience representing venture capital investors in their portfolio company investments so that they understand what it is like to sit on the opposite side of the table;
- Successful closings of various VC and other funding rounds; and
- Glowing client testimonials and reviews.
You will want to research their legal chops, experience and background, including their legal education and credentials, professional history, previous and current clients and success stories. Many top VC attorneys work at specialized law firms that focus on serving startups and investors.
Then, schedule an initial introductory call to review and gauge their experience, approach and expertise.
5. Assess Communication and Compatibility
Your VC attorney will be a key partner in your startup journey, so compatibility and communication matter. Over time, your legal counsel will have a broad understanding of the inner workings of your startup, and this compatibility and communication will only strengthen if the attorney-client fit is right. During your initial consultation, ask yourself:
- Do they explain deal and legal concepts clearly? Do they understand my startup’s priorities and take a practical approach to solving problems and managing risk?
- Do they like math and working with Microsoft Excel (so that they can help you understand the numbers by modeling your post-closing cap table)?
- Will they be responsive and accessible?
- Do they understand my startup’s business model, goals and challenges?
Strong communication is crucial for a smooth and effective attorney-client partnership.
6. Understand Their Fee Structure
Venture capital attorneys typically charge:
- Hourly rates;
- Fixed fees for specific services; and/or
- Deferred fees payable after your funding round closes.
Look into their fee structure details upfront and ensure that they align with your business plan. Some VC attorneys may be open to negotiation or equity-based compensation, taking into consideration your startup’s potential.
7. Verify Their Network and Connections
Well-connected VC attorneys can offer more than just legal advice. They can:
- Hear your management presentation and help you sharpen your pitch;
- Introduce you to potential investors;
- Connect you with other startups and resources, such as accountants, fractional CFOs, scientific advisors, bankers and insurance brokers;
- Provide insights into the VC ecosystem; and
- Help you understand what to expect from your venture capital investor once the deal is done.
You should select someone whose network brings added value beyond their legal expertise.
8. Prioritize Long-Term Partnership
As noted above, taking on venture capital funding will fundamentally change your startup for the long term. To do it right, you need to have a plan and your venture capital attorney should understand your long-term plans. To state the obvious, your relationship with a venture capital attorney shouldn’t end after one funding round. A good attorney can support you through future fundraising rounds, growth and scaling, acquisitions and IPOs. Prioritize venture capital counsel who you can trust for long-term collaboration.
Conclusion
Finding the best venture capital attorney is a strategic investment in your startup’s survival and long-term success. By understanding your needs, leveraging your network and thoroughly vetting VC counsel candidates, you can find a VC attorney who will guide your startup through the various complexities of venture capital funding. With the right legal partner, your startup will be well-positioned on its entrepreneurial journey to achieve its growth goals and build a thriving business. Our advice? Ask your VC counsel candidates for some references so that you can speak to some of their existing clients and gauge their level of satisfaction.
We are here to help you with your next VC financing round; and we think you would be smart to plan for venture capital and to ensure that your legal house in is order before you start engaging with VC investors. Please reach out with any questions.
Consult with a venture capital attorney today!
Clients Also Ask Us:
What does a venture capital attorney do?
A venture capital attorney guides startups through the fundraising process, helping structure, negotiate and close financing rounds. They protect your company’s interests by modeling deal economics, preparing and negotiating term sheets, managing due diligence, ensuring legal compliance and advising on governance and control issues. The right VC attorney acts as a strategic partner, not just a paper-pusher.
How do I choose a startup lawyer?
Choose someone who lives and breathes startups. Look for an attorney with deep experience advising venture-backed companies, a strong grasp of market terms, a business-minded approach and the ability to explain complex issues clearly. Ask for references, review their track record and make sure they understand your goals—not just your legal documents.
How do I manage my startup’s legal expenses?
Legal fees can add up, but smart planning helps. Start by scoping your legal needs and prioritizing essentials. Ask about fixed fees and alternative billing arrangements. Most importantly, invest in quality advice up front—it will save you from costly issues later.
