If you can’t self-fund your startup company and must take on investors, keep the number of your investors as low as possible. A low number of investors will reduce your startup company’s transaction costs and headaches associated with raising funds.
I’d rather my client raise $90k from one investor than $100k collectively from ten based upon the transaction costs my client would suffer both during the fundraising process and in the future. My client might have to cut back on Aerons, but it’s much easier to keep one person happy than ten.
If you have no choice but to take on a large number of investors, request that your investors form their own LLC. Have the LLC be your startup company’s investor and therefore you only have to deal directly with one investor.
Ryan RobertsStartup Lawyer
Ryan Roberts is a startup lawyer at Roberts Zimmerman PLLC with more than two decades of experience advising startups and venture capital investors. He is the author of “Acceleration” and StartupLawyer.com.
