Equity Financing

Use Equity Financing to exchange shares in your company for an investment with no repayment obligations

Overview

Equity financing is a method of raising capital by issuing stock in your company to investors. In exchange for the investment, the shareholders receive ownership interests in the company. If you’re starting a business, and are looking for an alternative to taking out a loan, equity financing is a solid option. Stock is a type of equity that’s commonly referred to as an equity investment. When investors buys stock as an equity investment, they’re expecting its value to increase and to derive income from its dividends or the profit you make from its sale (called capital gains). Common investors of equity include friends and family, venture capitalists, and angel investors.

Equity financing is a useful way to fund your business, provided you have the right type of business. Although it can be an alternative to bootstrapping or debt financing, there’s more to it than that. Be sure to consult a qualified financing attorney before entering into equity financing.

How legal advice can help

Hiring a good lawyer will provide vital assistance in almost every aspect of your business. 
Confirm the best form of funding
There are other attractive options for companies - such as convertible notes - and a lawyer can assess if those sources suit your business better.
Avoid problems down the road
By handling fundraising on your own, there’s a much greater chance of messing it up. Using an attorney alleviates that concern.
Learn about useful terms
An experienced lawyer has assisted startups with this process already and can suggest terms that have worked in the past.
Prevent future issues
Receive proactive legal risk management that will help you avoid problems before they arise by tapping into senior attorneys with considerable business experience.

What’s included

Consultation with an experienced equity compensation attorney
Investors’ rights agreement
Stock purchase agreement
Custom drafted term sheet

Average Costs

The cost can vary based on a number of different things.
To get an exact price for your business click here.

$5,000 - $12,000

*figure show is an average. costs may vary.

Common Questions

Do I need an attorney to help my company with equity financing?
Equity financing is complex stuff. The documents used are typically filled with legal and investing terminology, making it hard for regular people to understand. Working with an experienced business lawyer will enable you to understand the financing agreements your company enters into and assure that the deal makes sense for your business.
Should my company raise funds by equity financing or convertible notes?
Both forms of fundraising have pros and cons and a skilled attorney is the best to gauge which route is most appropriate for your company. Equity financing allows you to raise funds without tying yourself down with the obligation to pay back a specific amount of money to investors at a specific time in the future. On the other hand, convertible notes allow you to retain control and ownership of your business, but require repayment. In terms of ease, a convertible note is certainly preferred over equity financing as it can be written in just a few pages whereas drafting an equity agreement requires due diligence, valuation assessment, SEC compliance, and negotiation.
What is a term sheet?
A term sheet is a document which outlines the general terms of a financing agreement between a business and an investor. It essentially serves as a blueprint for the final agreement between the parties, as well as a formal investment contract that documents the arrangement. The key offerings include amount raised, price per share, pre-money valuation, liquidation preference and more. 
What is an angel investor? A venture capitalist?
An angel investor is typically a high net worth individual who provides an emerging company with capital, in exchange for equity (ownership) or convertible debt. On average, angel investors receive about a 15% post-seed equity position in startup companies. This percentage can be a bit higher or lower depending on the circumstances and negotiations. Venture capitalists (“VCs”) are individuals or firms that manage funds set aside to invest in new businesses. Modern VCs tend to focus on young, high-growth companies, which are usually tech startups. This type of equity investor differs from friends and family and angel investors in that they are usually only interested in high value investments.
Do I have to report equity financing to the U.S. Securities and Exchange Commission (SEC)?
Certain forms of equity financing are required to be registered with the SEC. A lawyer can help you with this potential reporting requirement.
Is it possible for an attorney to review a term sheet on LawTrades? 
Yes - the financing attorneys on LawTrades routinely review term sheets for both investors and founders.

HOW OUR PROCESS WORKS

Describe need.
We’ll have a brief but detailed discussion to understand your needs and provide you with an upfront price quote.
Meet attorney.
To match you with the best lawyer, we tailor our search to the specific skills you’re looking for. It's simple and easy.
Review & accept.
We hold your funds and only release it to the attorney when you’re 100% satisfied with the work product.

LawTrades Business Attorneys

Discover our invite-only network of senior attorneys. Great companies
depend on our expertise for critical legal work. 
Jonathan Hood
New York, NY
⭐️⭐️⭐️⭐️⭐️ 
(39 Reviews)


"From my initial contact with Jon and with each successive correspondence we've had, Jon has been detailed, patient, and easy to talk to. Most importantly, he understood the startup space and knew right away what needed to be taken care of."





-Billy S.
Philip Heller
San Francisco, CA
⭐️⭐️⭐️⭐️⭐️ 
(19 Reviews)


"Philip designed a thorough Terms of Service and Privacy Policy for my website that was directly tailored to my business. The project was completed on time and to my expectations. I will definitely use this service again." 


  



-Virginia A.
Jared Stark
Boca Raton, FL
⭐️⭐️⭐️⭐️⭐️
(23 Reviews)


"Jared was very knowledgeable and an overall pleasure to work with. He provided very quick turnaround and made sure all of our legal needs were satisfied. I would highly recommend his services to anyone else in the internet industry."




-David N.
Adam Bloom
Los Angeles, CA
⭐️⭐️⭐️⭐️⭐️
(12 Reviews)


"Adam is excellent at what he does, has fair pricing, and is as excited to work with our company as we are to build it. LawTrades also has excellent customer support, and I've enjoyed using the interface as well to track invoices."






-Abhi H.

What people are saying..

Focused heavily on customer experience, we believe what you think and say matters most.
After helping thousands, here's what just a few people had to say.
"LawTrades is a great service for entrepreneurs. We're partnered with them and we recommend their platform to our readership of 100k plus."
Sam Parr
Hustle
"We are thrilled with the pricing and overall experience of using LawTrades.We have used LawTrades nearly a dozen times and will continue to do so in the future."

David Nelson
Motion Ai
"LawTrades makes the process of getting the legal assistance super straightforward."
Paval Tiunov
Statsbot
"LawTrades offered great, efficient service at the price point we wanted. We were very happy with their ability to connect us with a top attorney, and would use them again for ad-hoc legal projects. Recommend!"
Sarah Kettler
SeatGeek
"Very fast and responsive, saved us $4000 instantly comparing to other quotes we received. Thanks LawTrades!"

Quan MT
Beeketing
"LawTrades helped connect us with the right legal professional for our project within minutes - we obtained a quote and started working within hours. Our experience couldn't have been better."
Brandon Foo
PolyMail
Ready for a Lawyer to Draft an Equity Financing Agreement?