Clean Docs, Clean Raise: Audrey Wessel on the Legal Side of Fundraising

Raising capital isn’t just about pitch decks and financial models; it’s also about paperwork. And not just any paperwork, but contracts that can shape your company’s future.

In the final session of the Fundraising Workshop, Audrey Wessel, Partner at Gutwein Law, took the mic to guide founders through the technical, legal, and structural nuances that can make or break a raise.

 

“Too many founders treat legal work like a fire drill; the best ones build clean systems before investors ask.” — Audrey Wessel

 

What followed was a deeply practical and founder-focused walkthrough of term sheets, fundraising instruments, and the red flags hidden in the fine print.

Term Sheets 101: Read Between the Lines

Audrey began by making something very clear: “A term sheet is not just about valuation. It’s about control.” She encouraged founders to slow down and look beyond the headline number. While valuation grabs attention, the other terms, liquidation preferences, participation rights, board composition, etc., shape who controls what, and when. A few key terms she flagged:

• Liquidation Preference: How investors get paid first (and how much).
• Participation Rights: Whether investors get a second bite after their preference is paid.
• Protective Provisions: Clauses that require investor approval before you make key decisions.
• Anti-dilution: How future down rounds could impact your ownership. 

 

Her advice? Work with a lawyer early, not when you’re already under pressure. And understand that “standard” doesn’t always mean “fair.”

Choosing the Right Instrument

Not every raise needs a priced equity round. In fact, Audrey walked through several tools early-stage founders often use:

SAFEs (Simple Agreement for Future Equity)

• Pros: Quick, cheap, founder-friendly.
• Cons: Deferred valuation, unclear ownership until conversion, potential stacking issues in later rounds. 

Convertible Notes

• Pros: Offers investor downside protection via interest and maturity date.
• Cons: Adds debt to your books, can trigger complexity at conversion. 

Priced Rounds

• Pros: Clean cap table, clarity on valuation, more structured governance.
• Cons: Legal/administrative cost, complexity, potential board oversight from day one. 

Her point: there’s no “one right answer”. The best choice depends on your stage, investors, timing, and desired control. But whatever you pick, document it clearly and know what you’re agreeing to.

 

“Don’t just Google the SAFE template. Tailor it to your raise, your company, and your investors.” —Audrey Wessel

Red Flags to Watch For

Audrey shared a few contract terms and conditions that often trip up founders, especially first-timers:

• Missing IP Assignment Agreements: If your contractors or early team members haven’t signed proper IP docs, your company may not own its core tech.
• Overpromising Equity: Offering too much too soon, or issuing without board approval, can cause cap table chaos.
• Untracked Convertible Instruments: Founders lose sight of how many SAFEs or notes are out there, especially across multiple raise cycles.
• Messy Org Docs: Outdated bylaws, unsigned board consents, and missing stock ledgers all signal disorganization to investors. 

She called this the “investor audit test”: “If an investor opened your Google Drive right now, would they be impressed or scared?”

Clean Books, Clean Cap Tables

Beyond legal docs, Audrey emphasized how financial hygiene and organizational discipline matter. She urged founders to:

• Maintain a clean, updated cap table
• Centralize all fundraising docs and legal agreements
• Use naming conventions and version control (hint: “Final_FINAL_v2” is not a naming convention)
• Store everything in one secure, accessible location — preferably organized by diligence category 

One founder asked, “What tools do you recommend?” Audrey’s answer was refreshingly simple:

• Google Drive or Dropbox, properly structured
• Carta or Pulley for cap table management
• A working relationship with your lawyer and accountant 

You don’t need fancy software; you need consistency and clarity.

Founder-Friendly Doesn’t Mean Founder-Only

A key theme Audrey returned to was transparency. Trying to “outmaneuver” investors, hide mistakes, or delay paperwork may work short-term, but it will always come back around. Investors respect founders who:

• Are up front about risks
• Proactively clean up their books and docs
• Push back (professionally) on terms that don’t serve the company 

In fact, a few well-placed “no’s” in the negotiation process can actually build investor confidence.

“You don’t have to accept everything as-is. Push for clarity. Push for alignment. You are allowed to protect your company.”

Q&A: The Legal Lightning Round

Audrey’s Q&A was one of the most engaged of the day. A few of the questions included:

 

Q: Should I use the YC SAFE template or something else?

A: YC is a good starting point, but always customize. One-size-fits-all isn’t real in legal.

 

Q: When should I create a board of directors?

A: Likely at your first priced round. But you may need a board earlier depending on investor asks or debt instruments.

 

Q: What happens if I screwed something up in a previous round?

A: Disclose it. Lawyers and investors can fix things. Surprises are worse than mistakes.

Tactical Takeaways from Audrey’s Session

✅ Don’t just negotiate valuation,  focus on control terms

✅ Choose a fundraising instrument that fits your stage and goals

✅ Tailor, track, and store every fundraising document

✅ Keep your IP, cap table, and org docs squeaky clean

✅ Work with a lawyer early, not when it’s urgent

✅ Transparency and prep = founder power

Closing the Day: The Spirit of Preparation

Audrey’s session wrapped the workshop on a perfect note: clarity, intention, and respect for the fundraising process — and the people in it. If the earlier sessions were about planning and storytelling, Audrey’s was a reminder that structure and stewardship matter just as much. Clean documents aren’t just about compliance. They’re about signaling that you’re building something enduring.