Home Blog Venture Capital Raise: Pros and Cons, Pitching, Stages

Venture Capital Raise: Pros and Cons, Pitching, Stages

Jump to Section

What is a Venture Capital Raise?

A venture capital (VC) raise is the process of startups selling a percentage of their business to venture capital investors in exchange for capital. This helps them to grow and expand.

VC investors usually have certain requirements companies need to meet before the investment can go through.

Read the rest of this article to explore aspects of a VC capital raise, such as:

  • Their pros and cons.
  • How to pitch to a VC investor.
  • How to know if a company can raise VC.
  • The typical stages of the VC raise process.
  • How a lawyer can help you with a VC raise.
  • Where to find a professional lawyer for assistance.

What are Pros and Cons of VC Raise?

There are advantages and potential drawbacks of raising money with venture capital.

Pros

  • VC firms provide significant funding. This enables the company to access more capital they need, which is particularly appealing to startups.
  • VCs are experienced investors. This means that they can offer companies their expertise and skills to help them grow.
  • VCs have strong networks. It’s common for VC companies to be connected with valuable people who could help the company in the future, such as by acquiring other investors.
  • VCs can enhance a company’s reputation. If you’re backed by a specialized, reputable VC firm, this can make your company more appealing to other investors.

Cons

  • VCs might seek greater control. This could cause companies to have to surrender control, such as in the form of voting rights or board seats.
  • VC funding can include strong pressure. It’s common for startup companies supported by VCs to be expected to grow very rapidly. This could result in misaligned goals.
  • VCs want a medium-term exit. They might put pressure on companies to go public or sell.
  • VCs aren’t right for every company. For example, if you want to grow fast, a VC’s capital and expertise can be beneficial. If you don’t want to expand quickly, other types of investors might be more suitable.

How Should a Company Pitch to a Venture Capital Investor?

Since many VC investors are specialized with expertise, a company wanting to pitch to them should provide evidence that their company has growth potential and a team who is skilled to help it achieve its goals.

During discussions or pitches, it's important to be clear and concise, while discussing the business vision with data which supports it.

You should also have all your financial and other documents in order. If these are missing or they’re unclear, it can ruin the deal. Having everything you need prepared early on can also ensure that the investor’s due diligence phase later on will be successful.

How Do You Know if You Can Raise Venture Capital?

To increase your success with VC investors, there are some boxes to tick.

  • Your business should be a corporation. VCs prefer corporation structures because of their ability to scale.
  • You should have a strong business story. During your pitch to VC investors, you want to have an exciting, passionate story that appeals to them.
  • You should be ready for growth. You need to ensure that your business goals include expanding in a rapid way.

What are the Common Venture Capital Raise Stages?

There are various steps involved in the venture capital raise process. These include the following:

  • Conducting due diligence. It’s not just VC investors who should conduct due diligence. Companies should take the time to research the VC firms and check that their goals are aligned.
  • Networking. If your contacts have worked with a VC firm before, this is beneficial as it helps you to connect with them.
  • Building a pitch deck. This is a crucial element of your VC raise process. Include information about your company team, strategy, and how you plan on solving a problem with your product/service.
  • Screening. Once you have sent your pitch deck, the VC firm might screen your company. This could include asking you questions.
  • In-depth screening process. If the VC investor wants to conduct due diligence, this is a sign that they are interested in your company. They will do a deeper dive in your business financials, legal documents, and more.
  • Negotiations. The VC investor creates a term sheet with key terms of the investment, its valuation, anti-dilution provisions, and more. You can, and should, negotiate this.
  • Finalizing the agreement. When you and the investor agree on all terms, you will draft legal documents, such as a purchase agreement.
  • Transferring the funds. When documents have been drafted, funds are transferred so that the investment can close.

How Can a Lawyer Help You with a Venture Capital Raise?

Working with a lawyer is advantageous if you’re interested in a VC capital raise. Here are some ways in which they will help you.

  • They’ll draft important documents to ensure all protections and clauses are balanced.
  • They’ll collect essential legal documents you will need for the due diligence phase, to prevent delays.
  • They’ll check that the investment and all its documents are legally compliant.
  • They’ll help you negotiate terms, such as in the term sheet, so that it’s balanced and fair.
  • They’ll coordinate the closing process.

Where to Find a Lawyer for a Venture Capital Raise

If you need a lawyer to guide you with the complexities of a venture capital raise, you can find one on ContractsCounsel. As one of the largest online legal marketplaces connecting clients with vetted lawyers, you can easily find a professional lawyer to help you.

To streamline the process, you can search for lawyers according to data provided on the ContractsCounsel platform, such as their expertise, education, years of experience, previous completed projects, and client ratings.

You can also request a lawyer on the platform to draft or review your venture capital raise documents. Here’s how:

  1. Go to the ContractsCounsel marketplace.
  2. Post your request for an agreement drafting or review.
  3. Receive lawyer bids. Lawyers on the platform will send you multiple bids you can review.
  4. Review lawyer profiles. You can research the lawyers according to data on the platform, such as their expertise, years of experience, client reviews, and previous projects they’ve completed.
  5. Choose a lawyer who matches your requirements and hire them for the project.

ContractsCounsel is not a law firm, and this post should not be considered and does not contain legal advice. To ensure the information and advice in this post are correct, sufficient, and appropriate for your situation, please consult a licensed attorney. Also, using or accessing ContractsCounsel's site does not create an attorney-client relationship between you and ContractsCounsel.


How ContractsCounsel Works
Hiring a lawyer on ContractsCounsel is easy, transparent and affordable.
1. Post a Free Project
Complete our 4-step process to provide info on what you need done.
2. Get Bids to Review
Receive flat-fee bids from lawyers in our marketplace to compare.
3. Start Your Project
Securely pay to start working with the lawyer you select.

Meet some of our Lawyers

Valerie L. on ContractsCounsel
View Valerie
5.0 (48)
Member Since:
September 21, 2022

Valerie L.

Attorney
Free Consultation
Vacaville, CA
5 Yrs Experience
Licensed in CA

Valerie is a passionate attorney specializing in Employment Law, Family Law, Personal Injury, and Business. With a strong foundation in the legal field, she is committed to helping individuals navigate the intricacies of their legal agreements. Valerie prioritizes open communication, ensuring her clients feel seen, understood, and confident as they make important decisions for their future. She is committed to empowering clients to become the best version of themselves while addressing their unique needs throughout the process.

Recent  ContractsCounsel Client  Review:
5.0

"I had an excellent experience working with Valerie on my prenup. She was knowledgeable and thorough. She took time to answer my questions and explain items in detail. I felt completely supported throughout the entire process. Thank you for your professionalism and for making an otherwise stressful task feel more manageable. Highly recommend!"

Adalbert M. on ContractsCounsel
View Adalbert
5.0 (6)
Member Since:
October 26, 2022

Adalbert M.

Managing Partner
Free Consultation
Port Saint Lucie, Florida
5 Yrs Experience
Licensed in FL
Western Michigan University Thomas M. Cooley Law School

Dynamic Attorney helping people and small business owners protect their assets. Managing Partner at Apfelbaum Martinez Law, in Port Saint Lucie, Florida. Offering a wide range of legal services including: Business Law, Commercial Transactions, Estate Planning, Living Trusts and Wills, POA and Advanced Directives, Business Formation, Contract drafting, Business Counsel, Prenuptials and Postnuptials, and more. **Licensed in Florida and fluent in English and Spanish.

Recent  ContractsCounsel Client  Review:
5.0

"Super professional, punctual and with great personality! I am happy with our work!"

Justin K. on ContractsCounsel
View Justin
4.9 (42)
Member Since:
September 22, 2022

Justin K.

Freelance Attorney
Free Consultation
Valencia, CA
23 Yrs Experience
Licensed in CA
University of Southern California School of Law

I have been practicing law exclusively in the areas of business and real estate transactions since joining the profession in 2003. I began my career in the Corporate/Finance department of Sidley's Los Angeles office. I am presently a solo practitioner/freelancer, and service both business- and attorney-clients in those roles.

Recent  ContractsCounsel Client  Review:
5.0

"Justin was great to work with, we hope to work with him again in future."

Ryenne S. on ContractsCounsel
View Ryenne
4.9 (610)
Member Since:
October 11, 2022

Ryenne S.

Principal Attorney
Free Consultation
Chicago, Illinois
16 Yrs Experience
Licensed in IL
DePaul University College of Law

My name is Ryenne Shaw and I help business owners build businesses that operate as assets instead of liabilities, increase in value over time and build wealth. My areas of expertise include corporate formation and business structure, contract law, employment/labor law, business risk and compliance and intellectual property. I also serve as outside general counsel to several businesses across various industries nationally. I spent most of my early legal career assisting C.E.O.s, General Counsel, and in-house legal counsel of both large and smaller corporations in minimizing liability, protecting business assets and maximizing profits. While working with many of these entities, I realized that smaller entities are often underserved. I saw that smaller business owners weren’t receiving the same level of legal support larger corporations relied upon to grow and sustain. I knew this was a major contributor to the ceiling that most small businesses hit before they’ve even scratched the surface of their potential. And I knew at that moment that all of this lack of knowledge and support was creating a huge wealth gap. After over ten years of legal experience, I started my law firm to provide the legal support small to mid-sized business owners and entrepreneurs need to grow and protect their brands, businesses, and assets. I have a passion for helping small to mid-sized businesses and startups grow into wealth-building assets by leveraging the same legal strategies large corporations have used for years to create real wealth. I enjoy connecting with my clients, learning about their visions and identifying ways to protect and maximize the reach, value and impact of their businesses. I am a strong legal writer with extensive litigation experience, including both federal and state (and administratively), which brings another element to every contract I prepare and the overall counsel and value I provide. Some of my recent projects include: - Negotiating & Drafting Commercial Lease Agreements - Drafting Trademark Licensing Agreements - Drafting Ambassador and Influencer Agreements - Drafting Collaboration Agreements - Drafting Service Agreements for service-providers, coaches and consultants - Drafting Master Service Agreements and SOWs - Drafting Terms of Service and Privacy Policies - Preparing policies and procedures for businesses in highly regulated industries - Drafting Employee Handbooks, Standard Operations and Procedures (SOPs) manuals, employment agreements - Creating Employer-employee infrastructure to ensure business compliance with employment and labor laws - Drafting Independent Contractor Agreements and Non-Disclosure/Non-Competition/Non-Solicitation Agreements - Conducting Federal Trademark Searches and filing trademark applications - Preparing Trademark Opinion Letters after conducting appropriate legal research - Drafting Letters of Opinion for Small Business Loans - Drafting and Responding to Cease and Desist Letters I service clients throughout the United States across a broad range of industries.

Recent  ContractsCounsel Client  Review:
5.0

"Ryenne was wonderful to work with! She went through each section of my contract line by line with me and made sure I understood every aspect."

Danny J. on ContractsCounsel
View Danny
4.9 (14)
Member Since:
October 17, 2022

Danny J.

Attorney
Free Consultation
New York, NY
12 Yrs Experience
Licensed in NY
New York Law School

I have had my own law practice since 2014 and I enjoy solving my clients’ problems. That’s why I constantly stay on top of the latest developments in the law and business of startups, entertainment, art, intellectual property, and commercial enterprise. I constantly keep learning because everything I learn helps me make my client’s life better. I assist clients in all aspects of copyright, trademark, contract, trade secret, business, nonprofit, employment, mediation, art, fashion, and entertainment law. Even though I am licensed to practice law in NY, I have worked for clients all over the country and even in Europe, Africa, and Latin America. No matter the client, I always look for ways to protect their assets, artworks, businesses, and brands with strategies to help them grow. I am a fluent bilingual legal professional who can analyze complex legal and business problems and solve them creatively for the benefit of my clients. I am detail-oriented and attentive which makes me excellent at negotiating, drafting, and revising all types of agreements and deals. I advise creatives and companies on intellectual property issues, risk management, and strategic planning. My clients love what I do for them because I employ a practical, client-tailored, and results-oriented approach to their case, no matter how small.

Recent  ContractsCounsel Client  Review:
4.0

"Solid substantive work on a B2B services agreement review. Danny strengthened the data rights, IP, and liability sections with precise definitions and useful statutory references, delivered ahead of schedule, and his cover memo was clear and well-organized. Would hire again."

Brent W. on ContractsCounsel
View Brent
Member Since:
December 27, 2022

Brent W.

Attorney
Free Consultation
Atlanta, GA
19 Yrs Experience
Licensed in GA
Cumberland School of Law

Brent has been in practice since 2007 and been the principal attorney and owner of The Walker Firm, LLC since 2014. Brent focuses on providing an array of general counsel services to individuals and companies in a variety of industries.

Sarah S. on ContractsCounsel
View Sarah
Member Since:
September 22, 2022

Sarah S.

Attorney
Free Consultation
Oklahoma
6 Yrs Experience
Licensed in OK
University of Tulsa College of Law

I have a background in Criminal Law, Family Law, Contract Law, and Environmental Law. I also have five (5) degrees in the following: Here are my degrees and background: 1) B.S. in Environmental, Soil, and Water Sciences 2) A.S. in Pre-Medical Sciences (anatomy, physiology, medical terminology) 3) A.S. in Aircraft Non-Destructive Inspection (science of x-rays, cracks in metal, liquid penetrant, magnetic particle inspections, ultrasonic inspections, and spectrophotometric oil analysis) 4) Master's in Natural Resources Law Studies (1 year focus in the environmental and pollution laws (Hazardous Waste Laws such as RCRA, CERCLA, FIFRA, Natural Resource laws such as ESA, CWA, CAA, FWPCA, Environmental Law, Sustainable Development, and Global Climate Change issues) 5) Juris Doctor and certificate in Native American Law

James G. on ContractsCounsel
View James
Member Since:
September 22, 2022

James G.

Attorney
Free Consultation
Glendale, Arizona
11 Yrs Experience
Licensed in AZ
Arizona Summit School of Law

I am a lawyer in Glendale, Arizona. I have practiced in contract work including buy/sell agreements, contracts for the purchase of goods and services and real estate. I also practice in bankruptcy law and sports and entertainment law.

Gregory D. on ContractsCounsel
View Gregory
Member Since:
September 30, 2022

Gregory D.

Attorney at Law
Free Consultation
Wake Forest, NC
6 Yrs Experience
Licensed in NC
Norman Adrian Wiggins School of Law at Campbell University

Gregory S. Davis is a native of New York and is a graduate of the Norman Adrian Wiggins School of Law at Campbell University. He also holds an undergraduate degree in Economics from the Wharton School at the University of Pennsylvania and an MBA from Bowie State University. Prior to entering the practice of law, Greg was a Trust officer for one of the largest U.S. Banks, an adjunct professor of finance at Meredith College and a Series 7 licensed financial advisor. Greg is currently the owner of The Law Office of Gregory S. Davis, PLLC (gsdavislaw.com) focusing on Estate Planning, Real Estate and Business Law. Greg is also an adjunct professor of Business Law at Wake Tech.

Jingjing L. on ContractsCounsel
View Jingjing
Member Since:
October 14, 2022

Jingjing L.

Attorney
Free Consultation
London, UK
9 Yrs Experience
Licensed in IL
University of Chicago Law School

I am a dual qualified (Illinois; England & Wales) transactional lawyer with about 6 years of legal experience. I'm very commercial and pragmatic in my approach, and I provide clear and timely service. I have worked in two of the top international "big law" firms focusing on corporate, private equity, insurance and financial services work. I'm now working in-house at a Fortune 500 company and have a wide range of experience with commercial and corporate contracts as well as legal and regulatory research.

Craig C. on ContractsCounsel
View Craig
Member Since:
October 19, 2022

Craig C.

Attorney
Free Consultation
Fort Worth, Texas
32 Yrs Experience
Licensed in TX
UNIVERSITY OF HOUSTON LAW CENTER

I have 31 years of experience with drafting, editing, revising, reviewing and amending business and commercial contracts and agreements of all kinds. I have an extensive commercial/civil litigation background as well as years of healthcare regulatory experience.

Find the best lawyer for your project

Browse Lawyers Now

Quick, user friendly and one of the better ways I've come across to get ahold of lawyers willing to take new clients.

View Trustpilot Review

Need help with a legal contract?

Post Your Project

Get Free Bids to Compare

Hire Your Lawyer

CONTRACT LAWYERS BY TOP CITIES
See All Venture Capital Lawyers
VENTURE CAPITAL RAISE LAWYERS BY CITY
See All Venture Capital Raise Lawyers

Contracts Counsel was incredibly helpful and easy to use. I submitted a project for a lawyer's help within a day I had received over 6 proposals from qualified lawyers. I submitted a bid that works best for my business and we went forward with the project.

View Trustpilot Review

I never knew how difficult it was to obtain representation or a lawyer, and ContractsCounsel was EXACTLY the type of service I was hoping for when I was in a pinch. Working with their service was efficient, effective and made me feel in control. Thank you so much and should I ever need attorney services down the road, I'll certainly be a repeat customer.

View Trustpilot Review

I got 5 bids within 24h of posting my project. I choose the person who provided the most detailed and relevant intro letter, highlighting their experience relevant to my project. I am very satisfied with the outcome and quality of the two agreements that were produced, they actually far exceed my expectations.

View Trustpilot Review

How It Works

Post Your Project

Get Free Bids to Compare

Hire Your Lawyer

Want to speak to someone?

Get in touch below and we will schedule a time to connect!

Request a call

Find lawyers and attorneys by city