The legal steps in a seed funding round

At seed stage, legal rigour determines execution speed, investor confidence and founder protection. This operational guide sets out, step by step, the legal process for fundraising in France, incorporating the applicable frameworks (Commercial Code, Monetary and Financial Code, EU Prospectus Regulation 2017/1129) and market good practices.

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1) Lay the groundwork (T-4 to T-2 months)

Clean up the cap table and founder relationships

• Founder vesting: include vesting and good/bad leaver clauses in a shareholders' or founders' agreement (anticipate a co-founder's departure).
• Intellectual property: check assignments/licences and registrations (trademarks, patents, software). Where necessary, register with the INPI.
• Key contracts: formalise employment/services contracts and confidentiality agreements (NDAs) with sensitive providers.

GDPR-compliant data room

• Collect only necessary data; anonymise where possible; restrict access by role.
• Lawful basis, information and security: follow CNIL guidelines for data-room confidentiality and data security.

Choose the funding instrument

• Capital increase (shares): immediate dilution, with voting/governance and financial rights updated in the articles of association.
• Convertible bonds (OC) or BSA AIR/SAFE-like instruments: quick implementation, subsequent conversion; pay attention to legal classification and public-offering rules (see EUR-Lex – Prospectus Regulation 2017/1129 and the AMF).
• Public programmes: the French Tech Seed programme (co-investments through convertible bonds), managed by BPI France, has been widely used; see a practical overview on Eldorado.co.

2) Negotiate the term sheet (T-6 to T-8 weeks)

A document that is non-binding on the main economic and legal terms. Avoid blind spots and document governance and liquidity principles:

• Pre/post-money valuation, amount, drawdown schedule and any escrow account.
• Liquidation preferences, anti-dilution (often weighted average), pro rata subscription and information rights.
• Governance: board/strategic committee composition, quorum and limited, precisely defined veto rights.
• Management vesting, BSPCE pool, exit clauses (drag/tag, IPO), non-compete and confidentiality.
• Conditions precedent: investor KYC/AML-CFT, obtaining support, IP confirmations, absence of material litigation.
• Exclusivity and confidentiality: short, justified duration.

Draw on market practices documented by France Invest and, for a 2026 framework, these operational good practices from H-7.eu.

3) Due diligence (T-6 to T-3 weeks)

• Legal/corporate: articles of association, registers (securities transfers), regulated related-party agreements, litigation.
• Tax/employment: URSSAF/VAT/corporate tax compliance, management packages, BSPCE.
• IP/IT: title to software, licence/SaaS contracts, security; refer to the CNIL for compliance checks.
• Accounts and oversight: financial statements and statutory-auditor appointment thresholds where applicable; see Service Public Pro — business guidance.

Anticipate blockers: missing IP assignments, oral contracts, social-security/tax debts and latent disputes.

4) Transaction documents

Shareholders' agreement

• Governance: information rights, committees, limited and listed veto rights.
• Liquidity: preferences, drag/tag, joint or compulsory exit clauses.
• Anti-dilution and preferential subscription rights.
• Founder commitments: non-compete, non-solicitation, IP/secrecy, continued involvement.
• Reporting: KPIs, budget, limited audit.

Articles of association and instruments

• Updated articles: share classes, financial and voting/governance rights, delegations/authorisation for capital increases.
• Instruments: BSA, OC, BSA AIR; check compliance with AMF rules and the Prospectus Regulation in the event of a public offering.
• IR-PME eligibility and JEI status: prepare certificates for investors and check the criteria; see Service Public Pro — business guidance and BPI France.

5) Corporate approvals and securities issuance

• Extraordinary general meeting/shareholders: authorise the capital increase, set the price and, where applicable, waive/retain preferential subscription rights (DPS). Reference: Legifrance – Commercial Code.
• Delegations to the director: to complete the increase within a specified period.
• Contributions in kind: where applicable, appoint a contribution auditor in accordance with current thresholds/rules (see Service Public Pro — business guidance).
• Subscription/payment: subscription forms, payment evidence and updated securities transfer register.

6) Closing and formalities

• Check conditions precedent: KYC, tax/IP confirmations, absence of a MAC (material adverse change).
• Signature (often qualified electronic signature), completion of the increase, issue/allocation of securities.
• Publication and filing: update the articles; publish a legal notice and file with the registry through the single window; references and practical guides on Service Public Pro — business guidance and Justice.fr.
• Update the UBO/BO beneficial ownership register if changes occur; AML-CFT compliance under the Monetary and Financial Code (references available on Legifrance).

7) Post-closing: governance and ongoing compliance

• Governance: schedule board/committee meetings, budget timetable and information rights.
• HR/equity: implement/adjust a compliant BSPCE plan and internal communications.
• Tax: provide investors with IR-PME certificates; monitor JEI status (if applicable) with BPI France.
• AMF/Prospectus: if a public offering is contemplated, check exemption thresholds (qualified investors, < 150 persons, total amount over 12 months) and national requirements; see EUR-Lex and AMF.

Operational checklist

• Cap table cleaned up, IP secured, founder/key contracts signed.
• GDPR-compliant data room (access, logging, confidentiality).
• Term sheet negotiated: valuation, rights, governance, CPs, exclusivity.
• Due diligence completed; remediation started.
• Shareholders' agreement/articles/instruments drafted; IR-PME/JEI certificates prepared.
• Extraordinary general meeting and delegations approved; subscriptions/payments completed.
• Filings/legal notices and registry formalities completed; registers up to date.

Pitfalls to avoid

• Uncontrolled public offering: strictly comply with exemptions and information duties (see AMF and EUR-Lex – 2017/1129).
• Conflicting clauses in the articles and shareholders' agreement: align both documents, giving priority to the articles for enforceability against third parties.
• IP not assigned by founders or providers: regularise before due diligence (INPI).
• GDPR ignored in the data room: apply CNIL principles (CNIL).
• Statutory/contribution auditors: check thresholds and obligations on Service Public Pro — business guidance.

Typical timetable (indicative)

• Weeks 1-2: data-room preparation, cap-table clean-up, instrument scoping.
• Weeks 3-4: term sheet finalised and signed.
• Weeks 5-7: due diligence and remediation.
• Weeks 8-9: drafting/negotiating documents (shareholders' agreement, articles, instruments).
• Week 10: extraordinary general meeting and delegations.
• Week 11: closing, registry filings, post-closing.

Further reading

See our related guides: Term sheet: understanding and negotiating the terms, Liquidation preference clause and Shareholders' agreement: essential clauses.