Recently, Lexia’s Marko Moilanen delivered a session on Mastering Foreign Direct Investments (FDI): Navigating Legal Landscapes for International Investments together with Tech Nordic Advocates. The session highlighted a practical reality for startups: when international investors enter the cap table, fundraising becomes a cross-border legal exercise, not just a valuation discussion.

One recurring theme stood out. Investors are not afraid of risk, but they do need predictable downside. In practice, this means identifying risks early, capping them where possible, and allocating them clearly in the deal documentation.

Why international investment raises the bar

Foreign investors often bring different expectations for documentation and governance, and cross-border complexity appears earlier than founders expect: structure, tax, and control rights are no longer later-stage topics. Most deal risks are predictable and preventable, but only if it is flagged before documentation and closing mechanics are locked in.

Instrument choice must be localised

Choosing the investment instrument is not a matter of preference alone. It must work under the company’s home jurisdiction, align with local company law mechanics, and translate cleanly into enforceable rights at closing. Instruments that are standard in one market can create friction in another if the legal assumptions behind them do not carry over.

In practice, equity is straightforward and familiar, but typically more documentation-heavy. Convertible notes can offer speed, but only if the conversion terms, governance impact, and tax consequences are designed to fit the local framework. The SAFE, while common in the US, can be difficult to apply in Finland/EU without localisation, as its structure may not map neatly onto local corporate procedures and investor protection mechanisms.

What investors actually look for in due diligence

International diligence tends to follow a familiar pattern, but with sharper focus: cap table and corporate housekeeping, IP ownership and freedom to operate, material contracts and liabilities, regulatory and tax exposures, and key people.

The four pillars that determine closing certainty

The cross-border readiness is built on four pillars: compliance, tax, IP, and contracts. These are the areas founders should prioritise from the outset.

• Compliance: KYC/AML onboarding of investors, sanctions and beneficial ownership checks, and rare but relevant regulatory flags in sensitive sectors such as defence and critical infrastructure.

• Tax: withholding tax and dividend pathways, holding structures, instrument design affects taxation and early issue-spotting because fixes are hard at closing.

• IP: chain of title, open-source licensing hygiene, trademarks and ownership clarity. These are usually the biggest dealbreakers in due diligence. The rule of thumb for IP remains practical: if you cannot prove you own it, you do not own it.

• Contracts: change of control and assignment restrictions, warranties, indemnities, liability caps, and GDPR/data processing exposures, all central to “predictable downside”, which the investors focus on.

Founder checklist before raising money internationally

Before starting an international fundraising process, founders should make sure the basics are in place. A clean cap table and up-to-date corporate records reduce friction in diligence. IP assignments should be signed and complete, so ownership can be ensured without last-minute clean-up. Key commercial agreements should be reviewed for transfer and change of control restrictions, which can otherwise delay or block closing. Tax structuring should be flagged early, as late fixes are rarely simple. Finally, be ready for investor onboarding by having an investor compliance process in place.

If you are raising internationally or preparing to bring foreign investors onboard, legal readiness should be a management topic early on. At Lexia Attorneys, we help founders, boards of directors and investors structure cross-border rounds and manage key risks.

Senior Associate Marko Moilanen,

email: [email protected]

tel: +358 40 517 0002