Fundraising is a key milestone for growing companies. Whether you are a start-up or a small to medium-sized business, it is essential to have the right legal support to efficiently structure your fundraising operations.
Discover the fundraising legal services offered by Whitefield, our law firm based in Paris. We assist you at every stage of your project — from legal preparation to deal finalization — including negotiation and risk management.
Why Is Fundraising Important for Your Business in France?
Fundraising is a strategic tool to finance your projects, support growth, and enhance your competitiveness. Whether you are planning a capital increase, share issuance, or private investor financing, it is vital to understand the legal and financial mechanisms involved under French corporate law.
What Are the Different Types of Fundraising Under French Law?
There are several forms of fundraising available, tailored to your business needs and structure. Each option comes with specific legal advantages and challenges:
Capital Increase Through Share Issuance
A capital increase via share issuance allows a company to raise funds by issuing new shares. This brings in external investors while maintaining the existing legal structure — particularly useful for growth-stage companies under French commercial law.
Business Angel Financing
Business Angels are individual investors providing capital and strategic expertise. Often used by early-stage start-ups, this model involves equity exchanges and must adhere to French legal compliance for investor participation.
Venture Capital (Capital-Risque)
Venture capital funding comes from specialized investment firms. Ideal for innovative start-ups, this option typically involves giving equity stakes and governance rights in accordance with French business law.
Crowdfunding (Participatory Financing Platforms)
Crowdfunding lets businesses raise money from many small investors via online platforms. Success depends on legal structuring under French regulation, particularly for fund handling and campaign compliance.
Convertible Debt or Bond Issuance
This method offers financing through convertible bonds or debt instruments. These avoid immediate equity dilution and can later convert into shares — all governed by French financial law.
Participative Loans: A Flexible Funding Solution
Participative loans allow investors to earn variable returns based on company performance. It's a solution for businesses that want to preserve equity while attracting capital.
What Are the Key Steps in a Fundraising Process in France?
Fundraising under French law requires careful preparation. Below are the key legal and strategic phases of a successful operation:
1. Preparing and Planning a Fundraising Operation under French Law
- Assessment of Financial and Legal Needs: Define how much funding is needed, how it will be used, and what legal changes are required.
- Reassessment of Legal Structure: May involve converting SARL to SAS for better fundraising adaptability.
- Drafting Shareholders' Agreement: Clarifies shareholder relationships, rights, and governance rules.
- Restructuring Company (if needed): Can include new entities, debt adjustments, or updated governance.
- Updating Financial Documents: Ensure your business plan, financial forecasts, and reports meet French standards.
2. Finding Investors and Preparing Pitch Decks under French Law
- Targeting Investors: Business Angels, VCs, or crowdfunding platforms, all under French financial regulation.
- Pitch Deck Preparation: Create compelling, compliant presentations tailored for French and international audiences.
3. Due Diligence: In-depth Analysis of Your Business
- Legal Review: Company bylaws, contracts, shareholder agreements.
- Tax and Regulatory Analysis: Examine exposure and risks under French tax and commercial law.
- Financial Audit: Examine solvency, revenue models, and growth potential.
4. Negotiating the Terms and Structuring the Fundraising
- Financial Terms: Valuation, capital allocation, payment conditions.
- Governance Provisions: Board seats, veto rights, management participation.
- Investor Protections: Asset warranties, non-compete clauses, confidentiality under French law.
5. Drafting Legal Documents and Finalizing the Fundraising Deal
- Financing Agreements: Outline terms, obligations, exit strategies.
- Shareholders' Agreement: Defines operational rules and power-sharing.
- Share/Asset Transfer Deeds: Executed according to French corporate regulations.
What Specific Clauses Should You Negotiate in a Fundraising Shareholders' Agreement?
A shareholders' agreement signed as part of a fundraising round differs significantly from a standard founders' agreement. It includes mechanisms specific to venture capital transactions, designed to protect the investor while preserving the company's ability to raise further rounds:
- Liquidation preference: gives the investor a priority repayment rank on the proceeds of a sale or liquidation, before the proceeds are shared with other shareholders.
- Anti-dilution clause: protects the investor in the event of a "down round" (a raise at a lower valuation) by adjusting their number of securities or reference price.
- Tag-along and drag-along rights: govern the conditions under which a minority shareholder may follow — or is forced to follow — a sale initiated by a majority shareholder or the founders.
- BSPCE and other dilutive instruments: the agreement must anticipate the impact of BSPCE or stock-option plans on the capital split in subsequent rounds.
- Reporting and enhanced governance clauses: the investor's right to periodic information, and veto rights over certain strategic decisions (significant borrowing, sale of key assets, change of business activity).
Poorly calibrated negotiation of these clauses can either discourage future investors or deprive the founders of a significant share of the value created at exit. Whitefield negotiates and drafts these agreements with an eye on future financing rounds, not just the transaction at hand.
Why Does Following Proper Meeting and Voting Procedures Matter During a Fundraising Round?
Every shareholder's right to take part in the company's collective decisions is a matter of public policy under French law (Article 1844, first paragraph, of the Civil Code). A capital increase carried out for a fundraising round — whether by general meeting, board decision, or written consultation, depending on the company's bylaws — must strictly respect the applicable notice periods, quorum, and majority rules.
Since a reform that took effect on 1 October 2025, the nullity of a corporate decision can only result from the violation of a mandatory provision of company law (Article 1844-10 of the Civil Code, as reformed) — a stricter, more unified standard than the previous regime. In practice, this means a capital increase, a change to the bylaws, or the creation of preferred shares carried out in breach of these rules can still be challenged and annulled, which would call the entire fundraising operation into question. Verifying that the company's governing bodies and procedures are properly followed is therefore a preliminary step Whitefield always carries out before any capital increase, not an afterthought.
Why Choose Whitefield for Your Fundraising in France?
At Whitefield, we provide comprehensive legal support throughout your fundraising journey — from legal audits and investor negotiations to document drafting and compliance.
Our Paris-based business law team ensures your fundraising is legally sound, investor-ready, and aligned with French corporate law standards.
Contact Us Today to schedule a legal audit and discuss your fundraising needs in France.