Top Ten Forms for Raising Capital
Part of the Raising Capital For Dummies Cheat Sheet
Like anything else in business, if you want to raise capital, you need to fill out plenty of forms — red tape must be cut — before you can get much done. The following list contains the more important forms when it comes to raising capital:
1. Articles of Incorporation provide the overall capital structure and set bounds on the equity classes — especially for classes other than common stock.
2. Stock Subscription Agreement can have a few important angles on defining the rights of the class of shares being solicited.
3. Preferred Stock Designation further defines the rights and benefits of a preferred shareholder — beyond what is contained in numbers 1 and 2.
4. Convertible Preferred Stock Designation like the preferred stock designation (in number 3) but for a convertible.
5. Unsecured Loan may apply to bank and other loans.
6. Secured Loan more typical loan secured by your assets or a portion of them such as receivables.
7. Agency or Underwriter’s Agreement agreements used to engage a placement agent or underwriter.
8. Confidentiality Agreement a wide range of terms is included in a confidentiality agreement; a restrictive example would be good to see and is especially appropriate for a sale or merger transactions.
9. Letter of Intent (LOI or term sheet) is the key agreement that outlines the general terms for a sale or merger.
10. Due Diligence Checklist is the outline of what a buyer can expect to be able to inspect to assure him- or herself that the price and terms in the LOI are satisfactory so that the transaction can proceed.