This is an interview from our quarterly, community-led publication, The Bundle. Download volume two, issue #1 now to hear from legal leaders at Klarna, Paddle, Omnipresent, and more.
Thirdfort’s Series A was a demanding but rewarding experience for our small but mighty legal team. I also think it was a baptism of fire for our paralegal who started at Thirdfort six weeks before she was pulled into fundraising work!
There are certain points in the funding round that I would highlight if I were to give advice to in-house lawyers taking on a similar project, such as:
1. Building out a data room - sooner is better 🤖
You wouldn’t scale a mountain without the right gear, and similarly, you wouldn’t dive into a funding round without having your records in place, in a data room.
Legal invested a lot of time in the early stages towards building this out - and I think that time was well spent and saved us hours of work in the long run.
To any legal teams about to embark on this Series A journey, I would highly recommend dedicating serious time towards this workload. I was fortunate that the workload was split between myself and our paralegal, Sydney Liao, which also made it easier to manage alongside daily responsibilities.
“It was great for legal to act as the bridge between outside counsel and co-founders. We were fortunate that our co-founders understood how the comms would play out”
2. Addressing the issues at the right time ⏰
Make sure you include all the issues you’re aware of in your data room, and actively set out to fix them. At Thirdfort, this included open-ended questions around our subsidiaries that had been sitting around, waiting to be resolved at the right time.
Sometimes, things in the normal course of business are low urgency but important and can take a while to address. The urgency of them increases as due diligence approaches.
For us, this involved engaging with local advisers, making various corporate authorisations and filing the appropriate paperwork in relation to an overseas subsidiary company. This meant we had total peace of mind during due diligence and knew it would not be a distraction later down the line.
3. Keeping founders in the know 💡
You’ll either have founders who are super involved and want to understand the ins and outs of the whole process, or you won’t. Either way, it’s important to make sure you communicate as much as possible, as early as possible, with founders and the c-suite - so they know what to expect.
Both our co-founders were, fortunately, deeply invested in the process - it was our first institutional raise, so it was a big deal, and they wanted to be as involved as possible.
It was a great experience for legal to act as the bridge between outside counsel and the co-founders, and we were fortunate that our co-founders understood how the comms would play out.
“From the investors’ point of view, the earlier you can get hands-on with the project, the better - you want to know as much about your investment”
4. Being as transparent as possible with existing investors 🤝
Our co-founders brought existing investors into the picture months before we signed the term sheet. This level of trust and transparency definitely helped us strengthen our relationship with them and receive their backing for the next stage.
From the investors’ point of view, the earlier you can get hands-on with the project, the better - you want to know as much about your investment, after all!
The transparency also reduced the risk of back-and-forth Q&A later.
5. Acknowledging cultural differences 🗺️
One point I found really interesting during the Series A was around the cultural nuances. Our lead investor is not a US or UK headquartered fund and there were subtle differences in how they approached the fundraise, compared to UK and US investors.
There were points in which legal had insightful discussions with them around differences in approach, the separation of founder and company, and explaining how these deals play out. This helped broaden our understanding of other investors and also make sure we knew our lead investor well from the off.
Overall, I think our funding round couldn’t have gone better, and this was down to an incredible collaboration with founders; a solid legal function; and plenty of preparation to make the round a sure-fire success.
This is a chapter from our quarterly, community-led publication, The Bundle. Download volume two, issue #1 for the latest need-to-know insights, by and for scaleup lawyers.