Document Checklist for your Fundraise

Checklist

Let’s face it - fundraising is a slog. At its best it is a roller coaster, with highs (money in the bank) and lows (getting passed on for the unmpteenth time). At its worst, it is pushing around paperwork, trying to get all the docs in order, requesting signatures, and keeping things up to date.

As part of our mission to streamline the fundraise process, here is our checklist of the things you’ll need to complete a funding round - from start to finish.

Before the Fundraise

A lot of these things are just fundamental documents you need for legal reasons or are general good practices. They will all likely come up at some point however if an investor is doing the proper due diligence so make sure you have them, they are updated and ready to be shared.

Founders Agreement

This should be one of the first things you and your co-founder(s) do when you decide to jump into business together. A founders agreement includes things like equity vesting, roles and responsibilities, what happens when a co-founder leaves or gets fired.

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Memorandum and Articles of Association

This is a statement by all the initial shareholders agreeing to form the company and the rules for how the business will operate.

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IP Assignment

This assigns any intellectual property (trademarks, patents, copyrights, inventions) created by individuals working for the company to the actual company itself. This essentially means the company owns this IP rather than the people involved. Investors will want to see this in case a core team members decides to leave and walks out with all the IP.

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Cap Table

A capitalisation table shows who the shareholders are of a given business, including percentage ownership, equity dilution, classes of shares, options, etc.

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Pitch Deck

This is 10-15 slides essentially explaining the business proposition. It is probably the most critical component of your pitch to investors - the currency of the early stage funding world. Avoid dense business plans or long form documents.

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Financial Forecast/Model

Models are meant to paint a picture of the potential of your business. You will not be judged by its absolute accuracy. Instead, it is part of painting a picture to potential investors about the size of the opportunity and the assumptions you’ve made about the business. How realistic are they? What happens if they don’t pan out? What happens if they do? This is usually a cash flow forecast, which includes detailed cost breakdowns and revenue drivers on a monthly basis 3 to 5 years out.

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One Pager

A single page document that includes all the necessary information about your company. This could be a quick summary, the problem you are solving, amount raising/committed, and links for information on how to get further pitch materials/get in touch. You can also use your Capital Pilot profile for this.

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Pitch Video

If you are planning to raise via crowdfunding this is a necessary component of your pitch. It is nice to have one - it is easier to engage people and explain your business in a well put together video than a pitch deck. However, make sure your video is of good quality and doesn’t end up distracting from the overall proposition.

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During the Fundraise Campaign

As the fundraise goes on there are a few things you’ll want to keep in mind as you go around and talk to potential investors. Make sure everything you send around is fresh, includes the latest and greatest, and is tailored to its audience.

Potential Investor Mailing List and Updates

You should try and get every potential investor onto a single mailing list so you can send regular updates. This can include things specific to the fundraise, but also general updates on the business. Try and generate some buzz and interest with these. Show investors what they will miss out on if they don’t get involved. Additionally, this is a great place to add VCs or investors who say you are a bit too early.

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Updating the Deck and Financial Forecast

Make sure your pitch materials are up to date. This sucks because you spent so much time putting them together in the first place, and the thought of looking at them again makes you nauseous. But keep them fresh, add the latest numbers, even try to tailor them to the reader if you can. These are very much living documents.

Closing

You’ve done the heavy lifting, gone and out and gotten some commitments. Time to bring it all home and herd those cats. Make sure you are ready to close.

Notify Existing Investors that they can Exercise their Preemption Rights

This is only relevant if you have prior investors and they have preemption rights in their subscription agreements. This essentially gives them the right to purchase more shares in the current round before other investors can so as to maintain their current percentage ownership. If they waive these rights then you are free to continue the fundraise with the other identified investors. If they exercise them then they can purchase more shares at the new valuation.

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Bank account

You need somewhere to put that cash if you don’t have one already!

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Subscription Agreements

This is your agreement with your new investors for selling new shares to them at the negotiated terms.

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Board Approval to Issue Shares

Essentially the board needs to agree to issue the new shares to the new investors. You likely will need to call a special board meeting to do this, unless it happens to fall in your regular board meeting cycle.

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Issue Share Certificates

Once the transaction is completed you’ll need to issue share certificates to your new investors. This is their evidence that the shares belong to them.

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File SH01 With Companies House

This informs Companies House of the change of ownership structure with your new investors.

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What You Probably Don’t Need

NDAs

Most investors won’t sign NDAs for a variety of reasons, and you shouldn’t insist on them. In any f you are worried someone might steal your idea and outcompete you with it, then you are probably not going to be successful anyway. Unless there is some unique core technology you are protecting then skip it.

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Business Plan

For a startup a business plan is out of date the second its completed. This is partially true of a pitch deck, but at least a deck is short form. You have to lay out core parts of your business, but you also need to do it quickly and concisely for an investor - they don’t have much time. Your time is better spent doing something besides writing down aspirational strategies in long form across 70 pages.

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