What Legal Checks Should a Company Complete Before Approaching Investors?

Have qualified legal counsel review the fundraising plan and materials before you approach investors. The right checks depend on the company, the offering, the investors, and where the solicitation occurs, so include legal review in your preparation from the start.

Review the Offering and Outreach Plan

Ask counsel to assess the proposed security or financing structure, who may be approached, how the company may communicate, and what filings or other steps could apply. Review email campaigns, websites, social posts, pitch decks, one-pagers, and verbal scripts. Presentations also need review. Do not assume that a private conversation or password-protected page removes legal requirements.

Richard's Capital Raising guidance is direct: do not send pitch books or marketing materials before speaking with qualified compliance or legal counsel. Build in enough time for review and approval, then use the approved versions consistently. If the terms, audience, or outreach method changes, ask counsel whether the review needs to be revisited.

Confirm the Company Can Make the Offer

Check that ownership records, governing documents, and internal approvals support the proposed raise. Confirm who has authority to speak for the company and sign documents. Review existing investor agreements, debt arrangements, and other commitments for restrictions or consent requirements that could affect the transaction. Resolve discrepancies in the cap table and confirm that key company records are organized.

Make sure statements about the business, team, financial performance, customers, intellectual property, and projected use of funds are accurate and supportable. Separate historical results from forecasts, disclose material assumptions, and identify information that still needs verification. Counsel can help assess required disclosures and whether the wording creates a legal issue.

Set up Document and Record Controls

Prepare a controlled process for distributing materials, tracking versions, and recording investor communications. Keep copies of what was sent, when it was sent, and to whom. Organize diligence documents and limit access to sensitive information. Have counsel review confidentiality language and any restrictions on forwarding or reuse.

A master diligence response document can help your team answer repeated questions consistently. As I wrote in Capital Raising, investor materials should contain concise answers that are transparent and supported. See what financial information to prepare and how to organize a secure data room.

Get Specific Advice for Your Situation

Securities requirements vary by jurisdiction and transaction structure. Privacy and tax requirements can vary too, as can corporate requirements. Talk with your attorney about legal specifics and your CPA about tax treatment. If an intermediary will help solicit investors or receive transaction-based compensation, ask counsel to review that role and its requirements before agreeing to terms. Related preparation includes checking offering compliance and retaining fundraising communications.

Once counsel has reviewed the plan, appoint an owner for compliance questions and make sure the team knows not to improvise claims or distribute unapproved materials. That simple discipline helps keep investor conversations accurate and organized.

Do not send any pitch book or marketing material out before speaking with a qualified compliance or legal counsel on your team.

Sources: Capital Raising. Informational only, not financial, legal or tax advice.