Preparing for investment deals: steps for IT companies

Steps to attract investment

Assessing the current state of the company is an important step before moving on to receiving funds. This process is usually aimed at conducting a certain internal audit, which allows you to identify the strengths and weaknesses of the business, understand its market value and prepare for negotiations.

At a minimum, without delving into the specifics of the product, several main points can be highlighted for IT companies:

• The IT product belongs to you. To do this, you should prepare agreements on the transfer of intellectual property rights from team members who were involved in development and design. Subsequently, these rights can be “secured” in the form of patents or copyright registration and transferred to others based on license agreements.
• The product name is protected. To do this, you should register a TM in those jurisdictions where you will conduct your activities. This will protect your designation from unauthorized use through blocking pages on social networks, website domains, SEO promotion, etc. In most projects, protection primarily occurs in the USA, Ukraine, the EU and Britain.
  GDPR and AI compliance. To do this, you should take care of compliance with regulatory requirements in the field of personal data protection, artificial intelligence and other features.
• Corporate structure. To do this, at the beginning of the activity, you need to determine the type of company, management structure, distribution of shares, options, setting up business processes, building financial and tax planning. Initially, an operating company with low corporate taxes (Estonia, Ukraine, etc.) and/or a company for attracting investments and flexible distribution of shares (USA, England) can be created.
• Protection of confidential information. To do this, confidential information should be transferred to all team members and contractors, partners exclusively under the terms of an NDA agreement and liability for disclosure, including trade secrets, should be established.

Having worked out all these points, you can proceed to the next stage of development and focus on choosing the type of investment.

Investment stage

At this stage, it is worth economically assessing your goals and plans, that is, what exactly you need to improve in order to improve your IT product. This will help you understand what capital will be needed to move to the first round of investment.

At the same time, investments can:

• be not only financial, but also be evaluated by equipment, technology, premises, team members, copyright or licensing rights for certain collateral;
• be attracted by searching in a narrow circle of contacts, on a grant basis and participating in certain accelerators or incubators, without limiting each other;
• be provided with certain rights to manage the company, directions or only allow to receive dividends.

We observe that projects often do not have a clear idea of ​​the amounts they need for development (for example, $ 1 million to create an MVP) and where they will be directed (development, marketing, etc.). It is important to have a certain track of the funds already used and record all current expenses after receiving investments. This will simplify both reporting to investors and future investment attraction.

What to look for in investment agreements

After determining the need for investment and finding a potential investor, the parties proceed to the preparation and approval of investment agreements. It is at this stage that the key terms of cooperation are determined, which will affect the management of the company, the distribution of profits and the further development of the business.

Investment agreements can take various forms: from direct investments in the company’s capital to convertible loans or SAFE agreements. Regardless of the chosen model, it is worth paying attention to several main aspects:

• Valuation of the company (valuation), where it is important to understand that an underestimated valuation in the early stages can lead to a significant dilution of the founders’ shares in subsequent investment rounds.
• Distribution of shares and mechanisms for their dilution (dilution), where it is necessary to take into account the possibility of subsequent rounds of financing that may change the ownership structure.
• Investor’s rights to manage the company: where the investor appoints a representative to the board of directors, where he has the right to veto strategic decisions or approval of certain transactions (for example, the sale of assets or attracting new investments).
• Investor exit conditions (exit), where the sale of the company to a strategic investor, the redemption of the share by the founders, an IPO or other options can be examples and have a pre-agreed action plan depending on the company’s plans. Drag-along or tag-along provisions can also be established, which regulate the procedure for the sale of shares.
• Vesting of founder shares (vesting), where the founder’s share can be permanently assigned to him for a certain period (for example, 3-4 years). In case of early exit from the company, part of the share can be returned to the company.
• Representations and warranties, where the investor can require confirmation that the company properly owns its assets, intellectual property rights, has no hidden debts or litigation. In the event of the unreliability of such guarantees, legal consequences may arise for the founders.

Taking into account these aspects allows not only to protect the interests of the parties, but also to create a transparent basis for the further development of the company and attracting new investors.

Special IT regimes and jurisdictions

The choice of jurisdiction for structuring investments directly depends on the target market of the product and the founders’ plans for further scaling and current residence. Where, for example, we can highlight several jurisdictions:

• USA (Delaware): if your project is focused on the American market or on global venture investors, registering a company in the state of Delaware may be a clear solution. This is where the SAFE (Simple Agreement for Future Equity) mechanism works most effectively, due to established case law, which allows you to quickly obtain financing without immediately assessing the value of the company.
• Diya.City in Ukraine: will be especially good for companies with a Ukrainian team. In addition to more centralized management, this makes it possible to apply elements of English law and tax benefits, for example, 0% personal income tax or a tax discount on the amount of investment in Ukrainian startups.
• EU countries. Portugal offers special regimes (such as NHR) that, under certain conditions, allow international income to be exempt from domestic taxation. Or Cyprus, thanks to its 0% dividend rate, makes it an ideal hub for holding companies.

Conclusion

Attracting investment for IT companies is an important stage of development that can significantly accelerate product scaling and entry into new markets. At the same time, investments are associated not only with obtaining financing, but also with the formation of a new company management structure and the distribution of rights between its participants.

That is why preparation for investment should include not only finding an investor, but also preliminary legal structuring of the business, registration of intellectual property rights, protection of confidential information and building a transparent corporate structure.

Proper preparation for negotiations and careful analysis of the terms of investment agreements allow minimizing legal risks, maintaining a balance of interests of founders and investors and creating a stable foundation for the further development of the company.

Link to the article on AIN https://ain.ua/2026/01/31/iak-zaxistiti-vlasni-prava-na-brend-poiasniuje-iurist/