At SGM we love to support entrepreneurs at the very early stages of building their company. This often involves advising them on the first funding rounds from external investors. This can often be daunting for early-stage entrepreneurs as it can possibly result in them losing control of their business or having it scrutinised by new investors.
We helped the owner of an up-and-coming beauty brand which had been approached by a venture capital fund that was willing to provide investment in return for a 25% stake in the company. The investor was not open to negotiate the offer but we used a term sheet to make sure our client was getting the best deal possible.
Once the term sheet was agreed we then prepared the subscription and shareholders agreement to document the ongoing relationship with the new investor. The outcome was positive for both parties. Vital funds were given to the business to help it grow. A formalised structure, including the development of a business plan, was implemented which allowed our client to run the business while giving the investor the assurance they needed that sensible controls were in place for any major decision making.
Our client handled much of the direct negotiations and made use of our advice in the background so they could be confident that the approach they were taking was as they wished and the deal was fair for both parties.
We look forward to seeing the company flourish with its new funding.