Understanding Legal Due Diligence by Venture Capitalists
Are you seeking venture capital funding? Venture capitalists will have their lawyers conduct a legal due diligence prior to investing in your company. For this legal due diligence, the lawyers check that the company doesn't have significant legal problems and is being properly operated. You should expect to receive a due diligence checklist from the venture capitalists' lawyers asking for a bulk of documents and information about the company.
Responding to a due diligence checklist can be time-consuming. You need to make sure that all your legal documents are in order. If they are not, financing can be delayed or even killed. So make sure that your lawyer is experienced and knows what to expect.
Here are key documents you should expect to hand over:
- Key contracts
- Employment agreements
- Minutes and consents of the board of directors and shareholders
- Confidentiality and invention assignment agreements with employees
- Corporate charter and bylaws
- Litigation-related documents
- Patents, copyrights, and other intellectual property-related documents
- Tax and financial documents
Click here to view a sample due diligence checklist. By reviewing and preparing the documents on this list, you can help expedite closing a deal.
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