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Take Five With Trish: Preparing To Raise Money From Investors For Your Business

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(In this article Trish shows you how to raise money for your business by properly preparing for investment. For other important business information check out this article on important business legal tips you must know in 2022! ) 

If you’re planning to raise money for your business or start looking for investors for your company, it’s important to get your business in order first. The last thing you want is to be unprepared once you find an interested investor, and you certainly do not want to look sloppy – it could jeopardize your chances of getting investment!

The first thing you need to do when preparing to raise money for your business is go through your company information and get it organized in a data room. A data room is simply where you will store your files in an organized manner, such as corporate documents, financials, human resources, and customer contracts. You’ll want to make sure that you can easily share your data room, as your legal team, and your potential investors and their legal team, will need access to go through the due diligence process. 

Due diligence is basically a review of your business information to confirm that your business is what it appears to be, identify any risks, liabilities or issues that may come up, and determine whether everything has been done properly.

During this process both the business owners and potential investors can ask questions, exchange ideas, identify challenges, and develop solutions, with the hope of coming together to form a mutually beneficial business relationship.

Unfortunately, many investment deals collapse during the due diligence process. This can happen for a variety of reasons. It could be that the investor discovers too much risk with the business, or that the company did not protect its intellectual property and really does not own the intellectual property it thought it owned.

Sometimes things don’t work because the business owners don’t have everything together and look unprepared to the investor. This is why it is so important to be prepared! 

If you want to raise money for your business and are seeking investors, now is the time to start preparing. Don’t wait! 

Business owners often underestimate the time it takes to secure an investment deal and get prepared on the back end. It is a long process, but the best way to speed up the process and show investors that you are a good bet is to be prepared.

Not only do you want to make sure all of your documents are in order, but you will also want to make sure that corporate formalities are being followed. This includes making sure your company is properly filed with the state where the business is established, your company minutes are up-to-date and all important decisions are documented, you have a complete list of licenses and permits (including foreign qualifications), and your capitalization (cap) table accurately lists all equity holders. You also want to make sure you have a solid founders’ agreement in place so that potential investors have a clear picture of current company operational procedures, and the rights and responsibilities of each owner. 

Other important steps are assessing intellectual property ownership, evaluating customer and vendor contracts, and cleaning up equity or stock grants.

It is also important to assess the intellectual property that you use within your business – not only the intellectual property your company owns, but also any other third party products or services you use to run your business. You should create a list of any domains, trademarks, patents and copyrights, along with a list of any open source used within your product or service, and any third-party products or services.  Protecting your intellectual property (IP) is a critical step – it is one of the most important assets of your business. Both the company’s founders and potential investors have a stake in ensuring that the company owns the IP it thinks it owns and it is protected.

Cleaning up equity grants is another crucial step. Many startups, especially in the tech space, decide to share the wealth by compensating third parties such as service providers (developers, designers, etc.), employees and advisors with equity in their company. If you fail to do this right, it can jeopardize your chances of getting funding. Potential investors will want to make sure if you gave any equity away that it was done correctly and  properly documented.

It is equally important for business owners to thoroughly investigate their potential investors. The owners need to determine if the investors would be a good fit for the business, and understand the value they will provide in addition to the capital. Having investors is like being “married”, so make sure you know who you are partnering with before accepting their investment.

Well, as you can see, when looking to raise money for your business, preparation is key! Finding investors and going through the due diligence process can be a long drawn-out, and daunting process, so if you’re unsure where to start or what to do, feel free to reach out! We are always here to help! 

Tricia Meyer 301

Tricia Meyer is Founder + Managing Attorney of Meyer Law, one of the fastest growing law firms in the United States. Meyer helps entrepreneurs and technology companies from startups to large corporations with day-to-day matters and notable clients include companies that have appeared on Shark Tank to companies gracing the Inc. 500 to some of the largest companies in the world.

Tricia has been named on the Forbes Next 1000 list, is one of the Most Influential Female Lawyers in Chicago according to Crain’s Chicago Business and been recognized as a top 10 technology lawyer.

As an entrepreneur and a lawyer, Meyer has a unique perspective and has mentored thousands of startups and scaling companies at tech incubators and accelerators across the United States such as 1871, WeWork Labs and Techstars. Tricia has been featured in Inc., Crain’s, Chicago Tribune, NBC Chicago, American Express OPEN Forum, and more. Learn more at and follow Meyer Law’s story on Instagram @loveyourlawyer.