Startup Investor Readiness: Considerations on the path to Capital Raise

INTRODUCTION 

Expansion and growth constantly underpin the developmental drive of startups. Nevertheless, the desire to grow must be considered within the context of access to fund or funding opportunities available. The importance of capital cannot be undermined in the lifecycle of a startup whether or not it is exploring the possibility of expansion. Also, investors will more often than not scrutinise the investor readiness of any startup seeking its capital contributions; this begs the question - What must be done for a startup up to better position itself to attract investment opportunities? This article considers some legal, corporate and structural elements needing attention by a startup on its path to raising capital.


UNDERSTANDING INVESTOR READINESS WITHIN THE CONTEXT OF FUND RAISING


While one could argue herein that capital raise is a destination, it is suggested that perhaps fund raising is better appreciated when considered as a journey within a journey or at least a part thereof. Regardless of the position adopted, what remains trite is the fact that it is critical for startups to ensure that their legal, corporate and structural status supports them on their path to raising capital.


Notwithstanding the above, it is important to understand there is no one-size- fits-all approach to look at investor readiness. Investor readiness looks and inspires investor confidence differently at the different stages of a startup’s lifecycle affecting or reflecting (depending on the stage and notwithstanding the idea being prosecuted by the startup) in the type of capital the startup attracts, the type investor, and the cost of the capital. For example, a startup with a well- structured organisational and business plan, a legal and regulatory compliant business, and well documented policies guiding its business operations, particularly as it relates to its interactions with customer, will likely inspire a higher level of confidence in an investor. This is not to say that a startup that does not possess the aforementioned elements will not inspire any sort of investor confidence, however it will not do as well as the startup earlier described; and this will be reflected in the type of investors that choose to invest, their decision and the cost which will typically be higher due to the risk associated with non or low investor readiness. 


Again, we must bear in mind that the aforementioned will depend on the stage at which the company is looking to raise and the type of funding opportunity it desires to exploit. Typically, the requirements become stricter as the startup grows and moves to later stages in its lifecycle. However, it does not mean that early staged startups should neglect their preparations for investment as they will likely pay for this by the high cost of capital raise amongst others. We will now comment on some legal, corporate and structural elements necessary to be considered by startups, particularly, earlier staged startups while on their path to capital raise. 


SOME LEGAL, CORPORATE AND STRUCTURAL ELEMENTS NECESSARY TO BE CONSIDERED BY STARTUPS


Shepherd, Douglas, and Shanley (2002), posit that investors, especially VCs, look out for three major things before investing in a startup – the technology readiness, market readiness, and management readiness. While investors are often drawn to the innovative, technological and marketable elements of a product – which to a large point are measurable. However, that is not the case for management readiness which anchors itself on the quality of the people and organisational structure and which is also very important to investor readiness of a startup. For example, I. Macmillan posits that investors are drawn to entrepreneur’s personality and experience, the characteristics of the product, and the characteristics of the market in relation to the financial consideration.


Organisational structure goes beyond internal reporting lines in the startup. It encompasses the nature and legal status of the startup. Essentially, while an investor invests in the startup’s idea, vision, and projections, the investment must be housed within a legal entity in which the said investor shall advance either debt or equity capital to. Thus, a startup looking to raise must preferably be incorporated or at least be in the process of formalising its legal status by incorporation as recognised and suitable legal entity. 


A further area to consider is corporate governance. While this is a broad subject matter which is continuous in nature, the founders need to ensure that polices that reflect proper corporate governance is put in place. This may look like the appointment of directors which should typically include independent directors, employee and contract staff engagements, proper organising of shareholder meetings, filing of returns, compliance with necessary corporate approvals, ensuring adequate internal and external policies etc.


Again, startups more often than not tend to neglect the importance of intellectual property (IP) and the need to carefully manage it. They are more focused on the exploitation of their IP that they forget to develop and adopt protection strategies thereon. It is never advisable for a startup to be dormant when it comes to the ownership of its IP; rather, they should have a protective posture ensuing that all contracts and engagements with employees and third- parties concede all IP rights to it as the scenario allows. 


On the issue of contracts, it is not unusual for startups to enter into contracts, whether at an exploratory or operational level. A part of the due diligence exercise conducted by investors at the point of capital raise will typically include the review of material contracts entered into by the startups. The goal is to see how the terms of the said agreement affects the company’s position and by extension their interest in the company if they choose to invest in it. Thus, a part of investment preparation is to ensure that all contracts with 3rd parties are properly vetted by a legal expert and with the possibility of future investment in mind. For example, a share purchase or subscription agreement between an early staged startup and a “friends and family” round investor wherein 50% of the equity in the company is granted to a single investor in that round does not give enough room for future investors to invest in the company at relatively fair cost. The cost of investment in that company will likely be high and the element of share dilution will likely arise.


Lastly but in no way the least, startups must ensure that their books are clean and their financial practices are in line with international best practices at each stage. This will impact their tax obligations as well as clearly aid in attaining the true valuation of the startup at a capital raise round. 


CONCLUSION


Overall, investor readiness is a journey that must be embarked on by any serious startup looking to raise substantial capital towards the advancement of its expansion or sustenance. This requires more than just a great business idea, but a well-structured approach to positioning the startup’s legal, corporate and structural aspects towards building investor trust on their path to capital raise. Startup founders looking to raise capital may seek advice from experts on how to go about this.



REFERENCES


Shepherd, Dean A, Douglas, Evan J, & Shanley, Mark. (2000). New venture survival: Ignorance, external shocks, and risk reduction strategies. Journal of Business Venturing, 15(5), 393-410. https://vincaps.com/4-different-stages-of-fundraising-in-a-start-up-lifecycle/ https://en.wikipedia.org/wiki/Fundraising https://essay.utwente.nl/64605/1/Westerik_MA_MB.pdf 





July 23, 2025
INTRODUCTION The second quarter of 2025 was marked by significant regulatory and legal developments impacting commercial activities across several key sectors in Nigeria. Notable advancements include progressive measures in maritime financing, heightened regulatory scrutiny within the capital markets, and emerging legal frameworks governing digital content. These developments reflect the ongoing evolutions of Nigeria's business and regulatory environments. In this edition of our Business Intelligence and Commercial Awareness (BICA) Report, we examine some of the most consequential developments from Q2 2025 and assess their practical implications for businesses currently operating in, or considering entry into the Nigerian market. To continue reading kindly click the link below: https://www.linkedin.com/posts/f-a-garrick-co_bica-q2-2025-activity-7346127668028846082-8PZA?utm_source=share&utm_medium=member_desktop&rcm=ACoAABAUkK4BLHDJ9A6wqUm8xCgnbKpUOotgd94
July 22, 2025
INTRODUCTION: Filmmaking in Nigeria, often celebrated for its creative brilliance —the storytelling, cinematography, and emotional impact, is much more than the pre-production, production and post-production process. What many do not see is the intricate legal framework that this creative process rests on; while the spotlight often shines on the talent in front of the camera, the real backbone of any successful production lies in the legal groundwork behind the scenes. From script to screen, every successful film is underpinned by a web of legal arrangements that secure intellectual property, define contractual relationships, manage risk, and ensure regulatory compliance. This comments on the key legal touch-points that every filmmaker, producer, screenwriter, and investor should know and would navigate to ensure their creative visions are compliantly created and exploited. The Ideation: Securing the Right to Tell the Story. Every film begins with an idea, but ideas alone are not protected by law. Under Nigerian and international copyright law, ideas are not protected; only a tangible expression such as a written script, can be protected under copyright [1] . The establishment of ownership via the authorship of a comprehensive documentation represents the foundational legal procedure in the filmmaking industry. Where screenwriters or creators adapt existing works, whether novels, news articles or real-life events, they must go a step further to secure adaptation rights. This often involves the execution of a rights acquisition agreement, usually in the form of an option contract. This contract grants temporary rights to adapt a work, often subject to clearly defined timelines and payment terms. A widely publicized example of the above is the controversy surrounding Òlòtūré, a 2020 Netflix original produced by Ebonylife Studios. Shortly after its release, the film drew criticism when investigative journalist Tobore Ovuorie claimed it closely mirrored her 2014 undercover exposé on human trafficking in Nigeria, originally published by Premium Times Newspaper. While the producers claimed to have obtained rights from Premium Times, the publisher of her story, Ovuorie contended that no one had the authority to license her life experience without her permission. Her claims sparked a wider conversation and spotlighted not only copyright considerations, but also moral rights and the ethical obligations filmmakers have especially when telling personal stories. In the end, the Òlòtūré case is a strong reminder that legal compliance is only the floor and not the ceiling. In matters involving real people and sensitive narratives, meaningful engagement is often as important as formal rights acquisition. Confidentiality is another concern at this stage. In practice, many filmmakers use Non-Disclosure Agreements (NDAs) to protect concepts when collaborating with potential partners or investors [2] . NDAs while not infallible, remain a useful tool for safeguarding ideas during the ideation stage. Pre-Production: Building the Legal Foundation Once the creative direction is set, the focus shifts to establishing the film’s legal and operational structure. The corporate set-up and structuring is usually the first box to tick during the pre-production phase. Filmmakers and producers typically incorporate a special purpose vehicle (SPV), usually a limited liability company [3] . This is to ring-fence the project, provide personal liability protection, as well as clear management of tax, accounting and contractual obligations. Financing would typically follow corporate set up and this requires extensive legal overview and diligence. Amongst others, investor agreements remain relevant hereunder. They address the issues surrounding the investment and finance framework including but not limited to; return on investment, ownership rights, and profit-sharing. Although rarely, capital may be raised from the public; where this is the case, securities regulations will apply. Again, there is an attention to human resource as such talent and crew contracts remain relevant to the film making industry and architecture. There contracts must and should clearly outline obligations around responsibilities, compensation, credit entitlement, and dispute resolution mechanisms etc. This helps reduce ambiguity and mitigate the risk of post-production dispute. Another area of concern will be the permits and licensing right relating to locations and filming. Permission must be obtained for filming on private and public property. In many countries, including Nigeria, filming in a location without authorization can lead to lawsuits, equipment seizure, or production shutdown [4] . Production: The Legalities surrounding “Action!” “Cameras, Lights, Action!”. As cameras begin to roll, legal stakes begin to materialize in real time. A plethora of legal considerations ranging from consent to regulatory compliance come to life during this phase. Whilst preparing for on-screen appearance by actors, extras or general members of the public, consent must be gotten, and filmmakers are encouraged to obtain release forms from individuals appearing onscreen. This is especially important for documentary projects or public footage, where lack of consent can expose the production to privacy or defamation claims. Production must comply with applicable labour laws [5] , regarding working hours, wages, health and safety regulations. Where personnel are unionized, compliance with the terms of collective bargaining agreements is important as non-adherence may attract regulatory sanctions or litigation. Insurance is also a consideration that must be at the top of the list as it acts a shield in the face of liability. Two major forms of insurance; Errors & Omissions (E&O) insurance- which covers legal risks like defamation, copyright infringement, or invasion of privacy [6] and general liability insurance which covers accidents or injuries on-set. Lack of adequate insurance could jeopardize production as a single legal claim could bankrupt the entire project. Also, Brand logos, artwork, music, or even incidental background visuals must be cleared or licensed. Failure to do so can trigger infringement actions and post-production delays. Post-Production: Finalising Rights and Risks The editing room may feel far from legal issues, but this stage is where creative and legal threads converge. In the editing room, attention turns to licensing, credit, compliance, and final clearances. First, proper documentation around the use of music must be in place. Music requires two licenses- a synchronization license for the composition, and a master use licence for the specific recording. The use of unlicensed music, even for a few seconds, could lead to copyright infringement [7] . A failure in this area can be costly, as demonstrated in the case of Multichoice Nigeria Ltd. v. Musical Copyright Society of Nigeria Ltd./Gte [8] where a ₦5.9 billion judgment was awarded against Multichoice for unauthorised use of 18 musical works by the Federal High Court in Lagos. The Court of Appeal upheld the decision, affirming that unauthorised use—whether recorded or performed—constitutes actionable infringement. Comprehensive legal audit and risk assessment are important during the post-production phase. Films that incorporate third-party footage, interviews, or controversial subjects may also face defamation or privacy claims. A legal audit ensures that all rights have been secured and that no defamatory, unlicensed, or private material remains. Before a film can be distributed, streaming platforms and broadcasters require a full chain of title—a documented trail of ownership from idea to final production. If any ownership rights are unclear, this may present a block to distribution or broadcasting of the film. Distribution: Protecting Value and Enforcing Rights Distribution is the final legal frontier—and often the most consequential for revenue generation. Distribution agreements define who can distribute the film, in what territories, for how long, formats (e.g., cinema, streaming, DVD). The agreements also govern revenue sharing, exclusivity and language or subtitle terms. Streaming platforms like Netflix or Prime often require exclusivity periods and specific licensing agreements. Additionally, films must comply with censorship and classification laws. In Nigeria, for instance, the National Film and Video Censors Board (NFVCB) [9] must review and approve films before public release. Non-compliance can attract fines or bans. Finally, legal counsel is needed to manage royalty agreements. Where, cast, writers, or financiers are entitled to royalties or profit share, well-drafted backend agreements are essential to avoid future disputes and ensure fair compensation. CONCLUSION Filmmaking is art, but beneath the artistry lies an elaborate legal system without which no film can be safely made or commercially exploited. From the ideation through post-production and distribution, legal considerations shape every stage of the creation process. The law and legal counsel are not a postscript to the filmmaking process; it is the quiet but crucial backbone behind every frame and a necessary consideration for Nigerian filmmakers aiming to compliantly penetrate both local and international markets. [1 ] Copyright Act, 2022 [2] Non-Disclosure Agreement (NDAs) For Film And TV Executives In Nigeria [3] Section 21, Companies and Allied Matters Act 2020 [4] Section 17, National Film and Video Censor Board Act 1993 [5] Labour Act, 1971 [6] Olisa Agbakoba Legal, S.E.T Guide to Entertainment Law, (2022), 20 [7] Section 15 (1) of the Nigerian Copyright Act, CAP C28, LFN 2004 [8] (2020) 13 NWLR (Pt. 1742) 415. [9] Section 17, National Film and Video Censor Board Act 1993
May 30, 2025
1.0. INTRODUCTION Over the years, sports have evolved beyond the receptive games to be played for either leisure or regional competition to global commercial enterprises. With events such as the FIFA World Cup, the UEFA Champions League, and the Olympics, one could argue for the gradual globalisation of sports. However, a deeper review of this process reveals the step-by-step adoption on technology and media in the said globalisation; and this in turn opens a whole world of issues around intricate productions involving intellectual property, sponsorships, media rights, and extensive contractual framework. What appears onscreen on-demand, is underpinned by meticulously crafted legal and business arrangements that enable cross border entertainment, while also embracing innovation, and advancement of commercial value as well as the mechanism for its protection. This article will comment on lifecycle of sports media and branding rights, providing a legal and commercial roadmap for international stakeholders, with a core mention of Nigerian legal framework. 1.1. The Games Before The Game: Where Rights Begin A sporting event seen on screen represents a combination and intersection of rights, agreements, and negotiations established long before the game itself. Elements such as match footage, player imagery, and pitch-side ads are meticulously claimed, licensed, or sold by stakeholders ranging from governing bodies like FIFA and CAF to individual clubs and players. Governing bodies like Fédération Internationale de Football Association (FIFA) or Confederation of African Football (CAF) often control broadcasting rights and official branding; Clubs handle their trademarks and merchandising, while players, depending on the jurisdiction and their contracts, may retain significant control over image use. In Nigeria, these rights are governed primarily by the Copyright Act 2022, the Trademarks Act, and general contract law. Globally, the WIPO Draft Broadcasting Organizations Treaty seeks to provide unified protection against transnational piracy, though its implementation remains pending. While legislation is germane, the allocation of rights determines visibility, which in turn dictates commercial value. For example, a sponsor may invest significant resources for their brand to appear prominently on a player’s jersey; if the broadcaster’s camera angles fail to display this placement effectively, disputes may arise over liability, highlighting the complexity of coordinating rights and visibility. 1.2. Broadcasting: The Soul of Sports Economics Broadcasting rights, legal licenses, which grant entities the authority to record, transmit, and distribute sporting events across television, radio, and digital plat- forms, form the backbone of the sports economy. These rights influence how and where sports are consumed, and more importantly, who profits from them. Broadcasting deals often determine the visibility of a sport or league. A single contract can propel a domestic competition to international fame or render it virtually invisible. Broadcasting contracts typically divide rights by territory, impose exclusivity, and adhere to strict timeline. SuperSport’s exclusive broadcasting rights for the English Premier League in Nigeria exemplify how market power and legal exclusivity intersect and give an indication of the high stakes involved. The high stakes of these deals invite fierce legal battles. Unauthorised broadcasting — even a short clip aired by a local station — can trigger swift legal action: injunctions, takedown notices, and litigation under intellectual property and broadcasting regulations. Nigerian courts are increasingly proactive in addressing violations, issuing in- junctions and damages to safeguard broadcasting rights. This was clear in the cases of Nigerian Copyright Commission v. Joseph Daomi (1) and Nigerian Copyright Commission v. Stanley Nwankwo (2) where the accused were both convict- ed for the illegal distribution of a broadcast signal. Notwithstanding these strides, the digital age has further complicated enforcement. Pirated content spreads rapidly through social media and messaging apps, outpacing legal remedies. Even the most robust broadcasting contracts may falter when faced with jurisdictional challenges or technological barriers. 1.3. The Screen as a Billboard-Sponsorship Rights and Deals Sponsorships are where legal rights and commercial branding meet. Imagine a football match with no logos, branded kits, or digital billboards — it would look almost unfamiliar. Sponsorships transform the broadcast screen into prime advertising opportunities. Sponsors don’t pay to support the game per se; they pay for visibility — to have their brand appear on screen, in post-match highlights, and across social media. Consequently, sponsorship contracts are heavily negotiated, and often include exclusivity clauses- preventing rival brands from sharing screen space-, morality clauses- allowing termination if an athlete damages the brand’s reputation- and 0n-screen guarantee clauses- ensuring brand visibility during key moments. Legal disputes may arise when a player’s personal sponsorship conflicts with the team or league’s official sponsors. These cases often require arbitration or court intervention to interpret competing contractual obligations. 1.4. Protection and exploitation of Image Rights: An Athlete’s Brand As athletes gain popularity, their image rights become valuable assets, especially when it comes to sports broadcasting and sponsorship deals. Athletes are no longer just competitors; they are influencer, brands, and public figures. Image rights — the legal right to control the commercial use of one’s identity — encompass name, likeness, signature, voice, and other personal at- tributes. 1. Trademark Registration Athletes can register their name, logo, or signature as trademarks under the Nigerian Trademarks Act.(3) This grants them exclusive commercial rights and legal recourse against unauthorised use. 2. Passing Off Under Nigerian common law, an athlete can sue for “passing off” where their image is used without consent in a way that causes reputational or financial harm. However, for such claim to succeed, they must show goodwill, misrepresentation, and damage (see NOKIA Corp v. Intercellular Nigeria Ltd ).(4) 3. Contractual Protections Image rights agreements which are sophisticated in nature often accompany endorsement and sponsorship deals, setting out the way and manner in which an athlete’s likeness can be used, as well as the duration. 2.0 Challenges and Emerging Legal Questions As the sports industry evolves, so do legal challenges. Key recurring questions include: Who owns broadcast footage — the league, broadcaster, or athlete? And to what extent does this ownership lie? How should courts resolve conflicts between personal image rights and league broadcasting rules? What remedies exist for athletes whose images are exploited online with- out consent? A limitation to image rights still lingers, while copyright under the Copyright Act 2022 protects original works like photographs and videos, it does not ex- tend to personal identity. For example, a photo of an athlete is owned by the photographer, not the athlete — unless transferred. 3.0 Conclusion In Nigeria and beyond, sports are no longer just about goals and glory, it has mutated into a high-stakes legal arena involving complex rights, cross-border contracts, and millions in sponsorship and broadcasting revenue. Whether it’s a shaky Facebook Live stream, a branded jersey, or a player’s endorsement deal, every piece of the game is backed by a legal contract. For stakeholders — athletes, sponsors, broadcasters, and regulators — under- standing and enforcing these rights is critical. While Nigeria’s legal framework is still evolving, robust use of intellectual property law, contract law, and com- mon law principles can offer meaningful protection. 55 NIPJD [FHC, 2012] MKD/CR/38 55 NIPJD [FHC, 2012] ABJ/CR/14/2011 Cap T13, Laws of the Federation of Nigeria 2004 (2003) 12 v Pt 836, 22