Debt & Equity Finance
This area of law goes to the heart of the most exciting part of the corporate lifecycle, namely where the founders have been successful in creating a product or service that meets a need better than other options that are out there, has begun to pull in more and more customers, and now needs capital to ramp up its productive facilities to meet the increasing demand.
When an investor is looking to put in money into a company, the the best approach depends on which stage the company is at and the type of company it is. If the company is one that is less prone to experiencing rapid growth, it is possible that a bank or other lender might be willing to extend capital to the company in the form of debt (i.e. via promissory note and often security agreement).
If, on the other hand, the corporation is one that has the potential for scaling at a rapid pace, then the best option for the company would be to embark on the typical financing pattern of a startup company. This pattern includes, first, the intake of investment via convertible note when the value of the company is more difficult to determine, and then continuing with one or more series rounds before an exit or IPO occurs. There are also other ways such investments may be structured, and it always depends of the capital needs of the company projected forward into the future.
In each case of such financing transactions, securities, tax, and other relevant laws both at the state and federal level need to be reviewed and the relevant filings made, and the transaction must be structured so that future funding rounds, if necessary, may be smoothly executed.