Fundraising and Equity Terms

The Key Man or Key Person refers to the most crucial member of a company, essential for the business's operation. It refers to the risk of the business if this person is unavailable for an extended length of time.

Through a “Know Your Customer” process, you can establish the customer's identity, activities, intentions and legitimacy. The demands of meeting KYC obligations are intensifying and are the foundation of a successful legal compliance and risk management program.

A knowledge qualifier limits the reach of a contractual provision so that the requirement only applies to what the relevant party "knows". For example, a buyer would prefer the seller's representations and warranties to be effective regardless of whether the seller knew a covered matter.

Startups go through different growth periods and a later-stage company is situated at the other end of the spectrum, opposed to an early-stage one.

In general, lead investors are sophisticated and experienced investors accustomed to raising capital. Key investors are deeply involved in the round and have significant responsibilities throughout the financing process.

The lean startup is a method used to start a new business or introduce a new product on behalf of an existing company. The method involves experimenting and testing the product while simultaneously developing it with test results and feedback.

Legal Technology focuses on the technology and software used by law-focused businesses to improve the efficiency of their processes. It can simplify and optimize current workflows and the management of information within these companies.

A liability is a legally binding obligation payable to another entity. Liabilities are incurred to fund the ongoing activities of a business. Examples of liabilities are accounts payable, accrued expenses, wages payable, and taxes payable. These obligations are eventually settled through the transfer of cash or other assets to the other party. They may also be written off through bankruptcy proceedings.

This means that if a Liquidity Event arises (to be detailed in the transaction documentation), the Investor shall be first (or among the first, pro-rata, in case there are more investors in the round) to get the higher of either the amount of our investment or the amount due according to Investor’s ownership percentage in the Company at the time of the Liquidity Event.

A liquidity event is a process by which an investor liquidates their investment position in a private company and exchanges it for cash. A liquidity event's primary purpose is to transfer an illiquid asset (an investment in a private company) into the most liquid asset – cash. A liquidity event can be triggered by loss prevention, legal reasons, market changes, or successfully reaching profit targets.