Financing round (cloned with children)

⚡tl;dr a financing round raises funds for a company's growth, beginning with a term sheet and concluding with legal formalities to implement the capital increase key agreements , including the investment agreement (ia) and shareholders' agreement (sha), outline the rights and obligations of both parties, ensuring a legally binding commitment aligning on the exit strategy is crucial; founders and investors often use clauses like drag along with a valuation threshold or time bound exit clauses to streamline decisions and ensure shared goals book a free call with us what is it? a financing round is a strategic process designed to raise funds for a company's growth and development it involves various negotiations and legal procedures, each crucial to the fundraising efforts' success key steps in a financing round term sheet the financing round typically begins with the negotiation and signing of a term sheet a term sheet is a (mainly) non binding document between the company and the investors (or at least with the main investor) this document outlines the key terms and conditions of the investment, providing a preliminary agreement that sets the stage for later negotiations agreements following the term sheet, the parties engage in negotiations and finalize two essential documents the investment agreement (ia) and the shareholders' agreement (sha) these agreements determine the legal obligations, rights, and responsibilities of each party these documents are legally binding actual investment once the agreements are in place, investors proceed to make the actual investment the agreed on investment amount is transferred to a blocked bank account, securing the financial commitment required for the company's planned initiatives legal formalities the final steps involve legal formalities a notarized general assembly is conducted to officially implement the capital increase, solidifying the changes agreed upon in the financing round after that, an application is submitted to the cantonal commercial register to update the company's new capital structure want to learn more about the key steps in a financing round? read the following pages to learn more term sheet docid\ is6lfnwpbjia1ndftfp1 investment agreement docid\ f2iyonq upziagfacic1sshareholders' agreement (sha) docid\ klevxtla0hb4w mlgdyagcapital increase docid\ ggeqmqtannqtzw9yvxuvq what is important regarding the exit? having a harmonious and mutually beneficial relationship with investors is key to the success of any venture however, success is not always understood to mean exactly the same thing a scenario may arise where founders consider a company sale at chf 10 million as a triumph, whereas investors may deem an exit successful only if it results in a substantial return, such as 100 times profits on their initial investments these different perspectives can potentially create challenges in decision making and compromise the overall vision of the company therefore, clarify your respective definitions of success, especially regarding the future exit in practice, we see two types of clauses to align on a future exit incorporating a threshold in the drag along clause a drag along clause is a contract rule that lets majority shareholders, typically the founders, to force minority shareholders, typically the investors, to go along with a sale or a deal at set price when we talk about incorporating a threshold in the drag along clause, it means adding a specific condition in this case, founders can only exercise their right to force the investors to exit if the company's valuation reaches a specific minimum this added condition ensures that the founders and the investors align their interests more closely, as it establishes a baseline for what is considered a successful exit adding an exit clause an exit clause entails that the company will proactively engage a mergers and acquisitions advisor after a designated time period to explore and facilitate an exit by introducing a time bound exit clause, both founders and investors have a structured and predefined mechanism for initiating the process of seeking potential buyers or partners, thereby streamlining the decision making process surrounding the company's future now, you already have a good understanding of funding rounds! if you're interested in delving deeper, feel free to explore our blog posts on the subject below read more on the lexr blog https //www lexr com/en ch/blog/pre money post money valuation/ https //www lexr com/en ch/blog/pre money post money valuation/https //www lexr com/en ch/blog/antidilution protection/ https //www lexr com/en ch/blog/antidilution protection/https //www lexr com/en ch/blog/liquidation preference/ https //www lexr com/en ch/blog/liquidation preference/https //www lexr com/en ch/blog/funding round term sheet transfer restrictions/ https //www lexr com/en ch/blog/funding round term sheet transfer restrictions/https //www lexr com/en ch/blog/startup financing vc/ https //www lexr com/en ch/blog/startup financing vc/https //www lexr com/en ch/blog/liquidation preference introduction/ https //www lexr com/en ch/blog/liquidation preference introduction/ https //www lexr com/en ch/blog/liquidation preference clause/$ https //www lexr com/en ch/blog/liquidation preference clause/ how do i get this done? book a free call with us to discover our financing round package