You've Got Investors Interested: What Next?
Once you have investors lined up - whether it's your rich uncle Fred or experienced angel investors - the terms of the financing must be documented. Besides price, there are issues too numerous to mention here that need to get hammered out. The good news is that many angel investments can be easily set up compared with the more complex financings that you may encounter in later rounds. The bad news is that overly-aggressive lawyering on either side will drive your costs up. The even worse news is that you will be paying the legal fees of BOTH your lawyers and those of your investors out of the financing proceeds.
Cut Your Costs with Pre-Negotiated Forms
Y Combinator and Wilson Sonsini Goodrich & Rosati have recently launched a series of free angel round financing documents (see link below). Although these docs will require some slight tweaks for your situation - and you should ALWAYS have experienced business formation counsel on your side when doing a financing - the docs are very evenhanded. By introducing your investor to the concept of using these forms early in the process, you should be able to get through the documentation process fair faster and cheaper than if you had to negotiate from the starting point of one side's "standard" forms.