When startups should consult a lawyer during fundraising
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The timing of the first call to a lawyer matters more than it seems. Many founders wait until an investment agreement arrives, but several earlier points are worth raising first.
Waiting for the agreement can be too late
Checking the company's legal history only once the agreement arrives can leave little room in the schedule. Missing records for past share issuances, an outdated shareholder register, defects in stock option procedures, or unclear IP ownership are not fixed by reviewing the investment agreement alone, and surfacing them mid-negotiation can affect investor trust.
Issues worth checking from the seed stage
Even at the seed stage, founders' equity split and IP ownership can become disputes later. Where a round uses J-KISS or preferred shares, future dilution and conversion matter as much as whether the terms are market standard. Qualified stock options (税制適格ストックオプション) should also be reviewed early, keeping timing, exercise price and the allotment agreement consistent with the issuance requirements.
What gets checked around Series A
Around Series A, review turns to the articles, register, shareholder register and history of past issuances. For SaaS and AI services, terms of use, privacy policy and data handling become important, and training data or external AI service terms may also be checked. Preparing this a few months ahead is preferable to doing it all at once before the round.
When to consult a lawyer
- before raising from an outside investor for the first time
- before receiving a draft J-KISS or investment agreement
- before designing stock options
- as investor meetings increase ahead of Series A
- before starting legal due diligence or a data room
- before signing key customer or vendor contracts
Fundraising connects the company's past procedures with its future growth plan, and consulting a lawyer early tends to leave more options open.