Making your startup easier to be invested in
Published by:
Salem Washeely
Making your startup easier to be invested in
By: Salem Washeely
Any one who is interested in entrepreneurship and the startups world in Saudi Arabia can see that there is a movement from the investors towards establishing financing venues for startups “VC funds, angel investors networks, incubators & accelerators”. So far, government and family offices are leading these initiatives. Although we are still in the beginning of the cycle and we still need some time until we reach the maturity and get equipped with the proper mindset to make successful investments.
Given this fact, entrepreneurs need to prepare themselves to be in par with this movement and get themselves properly organized internally from legal, accounting and governance aspects to make it easier for investors to make the investment call and wire them the money quicker.
Entrepreneurs once they close their seed round, or even before, they need all the above mentioned aspects to be organized, well documented and kept so when they make the transition successfully to series A, by then, they would be ready and make the due diligence and all legality easier and quicker to be conducted and finalized.
One of these issues, although small but need to be kept in mind, is transferring the legal entity of your startup to a joint stock company. Most of the startups in Saudi Arabia either established as Sole Proprietorship “if sole owner” or as LLC “if multiple founders”. Investors in Series A & beyond most probably will be asking for Preferred Stocks and these can be issued only by a Joint Stock company. So, as soon as you start seriously thinking about raising Series A money, get the change of legal entity in place in addition to other aspects mentioned above.
Although this might look trivial, but it is quite a time saving if you do it beforehand.
By: Salem Washeely
Any one who is interested in entrepreneurship and the startups world in Saudi Arabia can see that there is a movement from the investors towards establishing financing venues for startups “VC funds, angel investors networks, incubators & accelerators”. So far, government and family offices are leading these initiatives. Although we are still in the beginning of the cycle and we still need some time until we reach the maturity and get equipped with the proper mindset to make successful investments.
Given this fact, entrepreneurs need to prepare themselves to be in par with this movement and get themselves properly organized internally from legal, accounting and governance aspects to make it easier for investors to make the investment call and wire them the money quicker.
Entrepreneurs once they close their seed round, or even before, they need all the above mentioned aspects to be organized, well documented and kept so when they make the transition successfully to series A, by then, they would be ready and make the due diligence and all legality easier and quicker to be conducted and finalized.
One of these issues, although small but need to be kept in mind, is transferring the legal entity of your startup to a joint stock company. Most of the startups in Saudi Arabia either established as Sole Proprietorship “if sole owner” or as LLC “if multiple founders”. Investors in Series A & beyond most probably will be asking for Preferred Stocks and these can be issued only by a Joint Stock company. So, as soon as you start seriously thinking about raising Series A money, get the change of legal entity in place in addition to other aspects mentioned above.
Although this might look trivial, but it is quite a time saving if you do it beforehand.
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Salem Washeely