Raising your first round while running a company is hard. The process surfaces problems you did not know existed, at the worst possible time. Fix them before anyone comes looking.

Get Organised

Investors don’t just look at your story, they scrutinise your documentation, and disorganisation at this stage can slow momentum or undermine investor confidence. Having all of your legal documentation structured, complete, and easy to navigate signals that you run a tight operation and reduces friction once diligence begins.

In practice, that means clearly categorising and maintaining up-to-date versions of core materials: company incorporation, shareholdings, complete and accurate statutory registers, financials (annual accounts and current management figures), details of any debt or loans, and all IP ownership documentation, especially assignment agreements from founders or contractors who contributed before incorporation. You’ll also want clean, accessible copies of customer and supplier contracts (make sure these have been fully signed and dated!), as well as employment agreements for key employees, option grants, and anonymised workforce data.

When these documents aren’t in order, problems tend to surface at the worst possible time. For example, if your Register of Members is incomplete or inconsistent, investors may question whether such ownership structure has been properly documented - something that can delay legal diligence or even pause the round.

Missing or unsigned IP assignments can raise doubts about whether your company actually owns its core product, which is a major red flag and can lead to renegotiation on valuation. Disorganised financials can erode trust in your reporting and force investors to spend extra time validating numbers, slowing decision-making. Even something as simple as not having contracts readily available can drag out diligence timelines, giving investors more opportunity to lose conviction or shift attention elsewhere.

Issues like these are usually fixable but fixing them mid-round is far more costly. It often means legal back-and-forth, rushed document recovery, and uncomfortable conversations with investors who may already be reassessing risk, or with that contractor who built your MVP but never signed an IP assignment!

Getting organised upfront keeps the process moving, preserves leverage, and helps ensure the focus stays on the opportunity rather than the cleanup.

Know who owns what

Your cap table shows investors exactly who owns what before and after the round, accounting for any option pool increase, convertibles, and rolling closes. They use it to calculate their percentage, board appointment rights, and whether any shareholder carries a veto they did not negotiate for.

Know who is actually on it. If money came through a syndicate or angel network, are the shares held by the fund entity or by individual investors personally? Misidentifying a controller matters if your company is regulated. An incorrect company register, the common downstream consequence of cap table errors, can delay completion by weeks.

Structure the raise before you negotiate anything

Three decisions to lock in first.

The option pool. If you are increasing it as part of this round, where it sits determines who absorbs the dilution. Pre-money placement means founders and existing shareholders take the hit. Post-money means new investors share it. Investors push for pre-money. The options fund hires that benefit everyone at the table. There is no justification for founders absorbing the cost alone. Push back.

SEIS and EIS. If any investor plans to claim SEIS relief, tell your lawyer before a single document gets drafted. The gross assets limit is £250,000. SEIS money must arrive first, shares issued immediately, before any other funds land. Wrong sequencing means investors lose their tax relief. They will not forget that.

Rolling closes. Your round may not fill on day one. Build in a 30 to 90 day window for late investors. Get all board and shareholder consents at the initial close. Chasing separate approvals for each new investor is slow and your lawyers charge by the hour.

If any investor values the company in USD and your existing liquidation stack is priced in GBP, factor in FX risk. It adds complexity at exit that nobody wants to deal with then.

Timing

A clean deal takes 6 to 8 weeks from signed term sheet to money in the bank. Budget 12 if your cap table has complications or diligence surfaces problems. If you will need cash before that process closes, an advance subscription agreement or convertible loan note from existing or incoming investors bridges the gap. Both convert when the equity round completes but be sure to run this proposal past the lead investor first so they can calculate the impact on the cap table.

Warranties

A warranty is a factual statement which forms a contractual promise to investors about the state of your business. A warranty claim can arise when , for example, you tell investors your business has no outstanding legal disputes but a few months later they find that one existed at the time they made their investment. . They sue the company for the loss they’ve suffered. That is what warranties are for and why disclosure matters.

Two things to negotiate. Scope: do warranties cover converting investors or just new money? New money only is the cleaner position. Liability cap: set it at the aggregate amount invested in the round. For seed, the warranty claim window settles between 9 and 18 months.

Founder’s have the opportunity to protect themselves if the reality of the business on the ground level does not match the claim of the warranty in an investment document. Founders will have the opportunity to make disclosures against the warranties via the disclosure letter. Making a disclosure against a warranty means that, provided the disclosure provides sufficient detail, investors cannot make a claim against the correlated warranty. . An undisclosed problem found post-investment creates a claim. A disclosed one gives investors the choice to proceed knowing the risk.

Founder vesting

Investors put your equity at risk to limit the impact of a founder leaving early. Standard schedule: 4-year monthly vesting with a 1-year cliff. Nothing vests in months 1 to 11. 25% vests at month 12. The remaining 75% vests monthly over the following 36 months.

Good leaver: you keep what vested. Bad leaver: you lose everything. The definition of bad leaver is where founders get hurt. "Contentious circumstances" without further definition is not good enough. Negotiate exactly what it means before you sign.

If vesting resets on this round, push for credit for time already served. Investors call it upfront vesting. A founder who built the company for two years should not restart a 4-year clock from zero. It is a reasonable ask and most investors will accept it.

Board and consent rights

Before you sign anything, list every decision you expect to make in the next 18 months. New hires, new markets, debt, a potential acquisition. Make sure none of them sit behind a consent threshold you cannot clear quickly.

Investors want a board seat. Tie that right to an equity floor, typically 5%. An investor who dilutes to 1% across subsequent rounds should not retain the right to appoint a director. Too many investor directors with immaterial stakes slow down every decision that matters. Consent rights split into two types. Investor majority consents cover the big economic decisions: changes to share capital, new articles of association. Investor director consents cover operational matters: new markets, annual budget, material expenditure. Set the investor majority threshold carefully. Too low creates deadlock. Too high gives a single investor a veto over decisions the company needs to make to function.

Push to require founder approval alongside investor majority consents on the decisions that matter most. In later rounds your percentage will be lower and your vote will carry less weight. Build the protection in now.

Drag, liquidation preference, anti-dilution

Drag along lets a majority of shareholders force minorities to sell in an exit. Market standard moved to a 75% threshold rather than simple majority. Earlier-stage deals often include a founder veto, meaning you can block a sale even if investors want to proceed. That right disappears in later rounds. Protect it while you have leverage to ask.

Liquidation preference determines who gets paid first in an exit. A 1x non-participating preference means investors get their money back, then stop. In a harder market, investors push for a participating preference: they get their money back and then take a share of remaining proceeds. This hits hardest in smaller exits, which is where most startups end up. Push back hard.

Anti-dilution protects investors if you raise a subsequent round at a lower valuation. If an investor insists, push for broad-based weighted average anti-dilution. Avoid full ratchet. Full ratchet resets the investor's entry price to the down round price. Founders absorb the entire cost of the markdown.

Prepare before you raise

Use Aether to prepare ahead of your raise and fix what's broken before you're in a live process. Every problem you find now costs an hour to resolve. The same problem surfaced mid-round costs a week, an increase in legal fees, and sometimes the deal.