Corporate & Commercial Law

Startups seeking to raise capital in Nigeria must ensure that their legal and corporate structures are properly organised before engaging potential investors. Strong legal foundations not only improve investor confidence but also reduce risks during negotiations and future funding rounds.

A key consideration is proper incorporation and shareholding structure under the Companies and Allied Matters Act (CAMA). Investors typically require clarity on ownership, authorised share capital, and the valid issuance of shares to founders, employees, and early stakeholders. Any inconsistencies in company records can significantly delay or derail investment discussions.
Another important stage is due diligence. Investors conduct detailed reviews of the startup’s intellectual property ownership, regulatory compliance status, financial obligations, and existing contractual commitments. This process helps identify potential legal or operational risks that may affect valuation or investment terms.
Equally important is the negotiation and drafting of investment documentation. Shareholders’ agreements, subscription agreements, and term sheets must clearly define valuation, governance rights, decision-making structures, investor protections, and exit mechanisms. Poorly drafted agreements often lead to disputes between founders and investors at later stages.

Startups operating in regulated industries such as fintech, healthcare, or telecommunications must also ensure compliance with sector-specific licensing and regulatory requirements. In some cases, regulatory approvals may be required before or after investment completion.
Ultimately, proper legal structuring at the early stage enhances credibility, strengthens investor trust, and positions the startup for sustainable growth and successful future funding rounds.