An Ounce of Prevention: Preparing for a Pre-Seed Financing Round

Benjamin Franklin famously cautioned that "an ounce of prevention is worth a pound of cure." Although Franklin was warning the people of Philadelphia that preventing a fire is better than fighting one, the same admonition holds true when seeking financing at any stage of your company's lifecycle.

Many pre-seed start-ups do not engage competent legal counsel early in the process and either use an online legal technology company that offers cookie-cutter forms not tailored to the company's business, find free forms on the internet, or copy legal documents from companies in the same general line of business. In each of these cases, you often get what you pay for, and mistakes made early on compound when you attempt to raise money from people other than friends and family. It is critical at the pre-seed stage for a company to establish a proper legal foundation on which to build and grow. Some well-directed attention at the inception of your company will set you up for your first fundraise and allow you to avoid having to put out costly fires down the road.

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