What is Startup Legal? Seed to Series A Roadmap in Japan
Hello, this is Legal Agent.
"Startup legal" covers a wide range of work: founder agreements, everyday contract review, J-KISS, stock options, the Series A investment documents. What a company actually needs, and how much of it should go to outside counsel, changes with the stage. A company that only reacts to the contract in front of it can find, right before a fundraising round, that a gap in old board minutes or the shareholder register is now squeezing the closing timeline. This article walks through what to have in place ahead of time at founding, at seed, in the run-up to Series A, and at Series A execution. For ongoing contract review or fundraising support handled by outside counsel, the scope and pricing are described on the Startup Legal and Fundraising Support page.
Founding stage: fix what cannot be fixed later
The priority at founding is equity and the arrangements between founders, since these are the hardest to revise later. For a co-founded company, the shareholding ratios, what happens to a departing founder's shares (vesting or buy-back), and how decisions get made should all be put in writing while the relationship is still good. An agreement reached after a falling-out rarely holds. See Founder agreements can only be drafted while the founders are still aligned for more. The articles of incorporation can run on a standard template at first, but share transfer restrictions, how shareholder meetings are run, and director terms are worth checking early with the next fundraising round in mind. Basic contract templates, including NDAs, service agreements and employment agreements, are also worth having ready from the start, since they set the pace for every deal that follows.
Seed stage: J-KISS and the first outside capital
The seed stage centers on the first outside round, and Japanese seed rounds commonly use J-KISS convertible equity. It is often described as a simple way to raise, but the valuation cap and discount effectively fix the future dilution formula at the moment of issuance. See What founders should check when fundraising with J-KISS for the mechanics, and the pre-signing checklist for what to confirm before signing. The conversion procedure is also easy to overlook: exercise notices, consents and registration filings tend to land in parallel with the Series A closing. This is also when purchase orders, terms of service and other business-side contracts start to multiply; before hiring dedicated legal staff, legal outsourcing is one way to hold that function externally.
Series A preparation: stock options and legal due diligence
Six to twelve months before Series A, founders should design the stock option pool. A stock option grant is a capital-policy decision, not a hiring perk. The pool size becomes a negotiating point with investors, and the tax treatment, including whether the grant qualifies as a qualified stock option (税制適格ストックオプション), depends on timing. See Stock options are capital policy, not merely a hiring incentive and avoiding stock option mistakes before Series A. This is also when investor legal due diligence enters the picture: whether shareholder meeting minutes, share-related documents, key contracts and labor records are in order affects both the speed of the round and investor confidence. See what investors look for in legal due diligence around Series A and the Series A legal checklist.
Series A execution: preferred shares and the investment documents
A Japanese Series A typically issues preferred (class) shares and runs on a set of four documents: the investment agreement, the shareholders agreement, the distribution agreement (with deemed-liquidation provisions) and the terms of the class shares themselves, covering matters such as liquidation preference, conversion and down-round adjustment. The part that trips founders up most in practice runs alongside the contract negotiation itself: the procedural steps of corporate approvals, document collection and registration. Even once the contract terms are settled, the funds cannot be received until the resolutions are in place.
Using outside counsel: it changes with the stage
What a startup should ask a lawyer for changes with the stage. At founding, that means spot help on founder agreements and contract templates. At seed, it means reviewing the J-KISS terms and handling the issuance procedure deal by deal. From Series A preparation onward, legal due diligence readiness and the volume of everyday contracts both increase, and moving to a retainer or outsourcing arrangement for continuous support tends to be faster and cheaper in the end.
LegalAgent supports this entire timeline as a single engagement, built around generative AI, through Startup Legal and Fundraising Support, covering fundraising document review as well as shareholder meeting minutes and registration filings, generally responding within one business day.
The legal record to carry into the next round
Startup legal work is easier to picture as a timeline: fix the equity arrangements at founding, use J-KISS correctly at seed, get stock options and DD readiness in place ahead of Series A, and get through the four-document set of preferred shares at Series A itself. Use this article and its linked guides to check where your company currently stands and what needs to be in place before the next stage. For a specific question, reach out through the Startup Legal contact form.
Frequently asked questions
What does startup legal cover in Japan?
Founder agreements and equity arrangements at founding, J-KISS convertible equity at seed, stock option design and legal due diligence preparation before Series A, and the preferred stock document set at Series A.
When should founders first consult a lawyer?
When splitting equity among co-founders. Those arrangements are difficult to fix later and affect the terms of the first outside financing.
Do we need an in-house legal team before Series A?
Usually not. Spot advice covers the early stage, and once contract volume grows, legal outsourcing typically stands up a legal function faster than hiring.