Navigating Series A Financings: Securing Your Startup’s Future Success

10 May Navigating Series A Financings: Securing Your Startup’s Future Success

Series A financings represent the first significant round of funding for a company and generally aim to propel an early-stage company beyond its startup operations. Series A financings are typically completed with venture capital firms that, following the financing, provide the board of directors of the company with sophisticated and strategic support and direction.

R&D LLP helps its clients navigate through all stages of a financing transaction in order to negotiate and complete investment deals that allow a company to expand its operations without sacrificing key elements of control.

With a rolodex of contacts at over 30 Canadian Venture Capital firms, we can also assist our clients with sourcing institutional capital and strategic mentorship.

How We Help

R&D LLP recently closed a seven-figure Series A financing for a Toronto-based technology company. Our involvement began by reviewing and cleaning up the company’s corporate records and minute book in preparation for review by investors. Next, we quarterbacked the due diligence disclosure process with the lead investor’s counsel and negotiated the definitive transaction agreements. Lastly, we facilitated the closing of the financing with the lead and follow investors.

Throughout a financing transaction, it is critical to ensure that investors not only have the information they need but also that the information is presented in an organized manner so that investors are confident in the company in which they are investing.

Closing the Deal

When dealing with financing for an early-stage company, often with a somewhat limited track record from a legal documentation standpoint, every detail can carry tremendous weight. The future of the company can sometimes hang in the balance. We look at the process from every angle to ensure that our clients will walk away with the best possible terms to secure their business future.

The formal closing of a Series A transaction includes the preparation and execution of a variety of agreements including the definitive transaction agreements as well as various ancillary closing documents. The agreements and ancillary closing documents required for closing can include the following, although the actual list of closing documents varies from deal to deal depending on the complexity, structure, and parties involved: 

• Term Sheet
• Due Diligence Request List
• Pro Forma Cap Table
• Authorizing Resolutions of the Directors of the Company
• Ordinary and Special Resolutions of the Shareholders of the Company 
• Termination of Existing Unanimous Shareholders’ Agreement (if any)
• Articles of Amendment
• New Employee and Consulting Agreements
• Subscription Agreement
• Voting Agreement
• Right of First Refusal and Co-Sale Agreement
• Investors’ Rights Agreement
• Restricted Share Ownership Agreement 
• Stock Option Plan 
• Non-Competition and Non-Solicitation Agreements
• Director Indemnification Agreements
• Officer’s Certificates
• Securities Laws Certificates
• Director Consents
• Payment Direction and Receipts
• Share Certificates
• Notices of Change, etc.

The formal closing process begins after the necessary transaction documents are negotiated, drafted, and reviewed by the business parties together with their respective counsels. Following the execution of all the closing documents, the executed documents (including, importantly, the share certificates) are exchanged by the counsels for the investment funds and the deal is closed. 

Find Out What We Can Do For You

Every investment transaction offers unique opportunities to explore and maximize the benefits for our clients. That’s what makes the process so rewarding for us.

If your startup is exploring a fundraising transaction, we invite you to contact R&D LLP to discuss how we could help you obtain the financing terms your company needs in order to reach its full potential.