Raising investment is an exciting milestone for any business, it means you’re growing, you’ve caught the attention of investors, and you’re ready to take things to the next level. But, as any business owner who’s been through it will tell you, securing investment isn’t just about pitching well. The investment process comes with a hefty dose of legal due diligence, and if your legal house isn’t in order, it can slow things down, or worse, put investors off entirely.

To help you prepare, here’s a practical legal checklist to keep your investment journey smooth and (dare we say it!) stress free.

1. Nail down your corporate structure

Before any investor puts money into your business, they’ll want to know exactly what they’re buying into. That means your corporate structure must be clear, legally sound, and investment-ready.

Is your business legally incorporated?
Most UK investors will expect to invest in a private limited company (Ltd) rather than a sole trader or partnership. If you haven’t incorporated yet, it’s time to do so.

Are your shareholdings properly documented?
Investors will want to know who owns what. Make sure your cap table (capitalisation table) is up-to-date and correctly reflects all current shareholders, share classes, and options issued.

Do you have an articles of association that support investment?
Your articles of association are the company’s constitutional documents. If they’re outdated or restrictive, they may need amending before investment can proceed.

Are your shareholder agreements clear?
If you’ve already taken on investment and so have existing investors or co-founders, make sure your shareholder agreement reflects how decisions are made, how disputes are handled, and what happens if someone exits the company. Investors will scrutinise this.

2. Get your contracts in order

Messy or missing contracts are one of the biggest red flags for investors. They want to see a business that operates professionally and minimises risk.

Are your customer and supplier contracts watertight?
If you have contracts that aren’t signed, contain vague terms, or don’t protect your business properly, now’s the time to fix them. Investors will want to see that you’re not exposed to unnecessary legal risks.

Do you have solid employment agreements?
Investors will check that you have properly documented employment contracts for all staff, especially key team members. If you’re relying on verbal agreements or outdated contracts, it’s time to update them.

Are your contractor agreements clear on IP ownership?
If you use freelancers or contractors, their contracts should clearly state that any intellectual property (IP) they create belongs to your company. Otherwise, you could face IP disputes later, something that makes investors nervous.

3. Protect your Intellectual Property (IP)

If your business is built on innovation, branding, or tech, your IP is one of your most valuable assets. Investors will want to see that it’s properly protected.

Have you trademarked your brand?
If your business name, logo, or product name is central to your success, consider registering a UK trademark to stop competitors from using it.

Do you own your software/code?
If your business involves SaaS or software development, make sure you legally own the code, especially if third parties helped develop it.

Are patents or copyrights relevant to your business?
If you’ve developed a unique product or process, consider whether patents or copyrights could protect it.

4. Ensure financial and compliance readiness

Investors want to see that your financial and regulatory affairs are in order before they commit their funds.

Are your financial records clean and accurate?
Messy finances can be a deal breaker. Make sure your management accounts, tax returns, and forecasts are up-to-date and accurate. Finances are always a part of a due diligence process and you’ll want to be prepared for this even before you start investor conversations.

Are you compliant with GDPR?
If you collect or process customer data, ensure you’re fully compliant with UK GDPR. This includes having a privacy policy, data processing agreements, and clear processes for handling personal data.

Do you meet industry-specific regulations?
If you’re in fintech, health tech, or any regulated industry, you must ensure you have the correct licences and compliance documents in place.

5. Prepare for the due diligence process

Once you’ve secured an interested investor, they’ll conduct due diligence to check everything is in order before finalising the deal. The smoother this process, the quicker you’ll get your funds.

Do you have a data room ready?
A data room (typically a secure cloud folder) should hold all key legal, financial, and business documents in an organised way, so investors can review them easily. Do not underestimate the value of making documents easy to find and understand.

Can you quickly respond to investor questions?
If an investor asks for additional documents, missing paperwork shouldn’t hold up the deal. Prepare everything in advance to keep things moving.

Have you reviewed your legal position?
Working with a corporate lawyer before due diligence begins can flag potential issues early and give you time to resolve them before investors get involved.

Final thoughts

Raising investment is exciting, but the investment process can be complex. Having your legal affairs in order before approaching investors not only speeds up the process but also strengthens your position in negotiations.

At Jamieson Law, we specialise in helping scaling businesses prepare for investment. From reviewing contracts to setting up shareholder agreements, we provide clear, fixed fee legal support to make sure you’re investment ready.

Need help with your investment process? Book a free discovery call today to discuss your legal checklist and ensure your business is prepared.