Yes, Even Angel Investors Need an Attorney

Yes, Even Angel Investors Need an Attorney

By  Dustin Rickett

Being an angel investor is an exciting journey filled with opportunities, risks, and countless decisions. As you navigate the world of startup investments, building a solid foundation for success is crucial. While you may be a savvy investor with a keen eye for potential, you should seriously consider adding an attorney to your team. Before you roll your eyes too hard at an attorney advising you to hire an attorney (I’m acutely aware of how this sounds), take a moment to consider the following. For a potentially small cost, having a reliable attorney in your corner can be the difference between a successful investment and a missed opportunity. There are three key reasons for this advice:

  1. Navigating Complex Legal Terrain: Investing in startups involves dealing with a myriad of intricacies, including negotiating terms and understanding what is market. Attorneys can also suggest ways to bridge gaps when investors and entrepreneurs do not see eye to eye on certain terms.
  1. Due Diligence and Risk Assessment: Before investing in a startup, due diligence is crucial. Though many investors are more than qualified to dig through financial diligence, evaluating legal risks can be challenging without the right expertise. Attorneys are well-versed in conducting due diligence and know where potential landmines may be hiding.
  1. Contract Drafting and Negotiation: Investment deals are typically accompanied by a plethora of legal documents, including term sheets, shareholder agreements, and subscription agreements. Having an attorney by your side ensures these documents are skillfully drafted, protecting your interests while maintaining a fair balance with the entrepreneurs. They can also help negotiate terms that meet market standards, helping you secure the best deal possible.

Building a reliable support system is crucial to your success as an angel investor. By hiring an attorney, you gain a trusted advisor who can navigate the legal intricacies, protect your interests, and provide expert guidance. They bring a wealth of legal knowledge, enabling you to make informed decisions and mitigate risks. So, speak with an attorney and set yourself up for a prosperous and legally secure investment journey.

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