Helping SaaS founders draft, negotiate, and close deals

In this insightful episode of the Tekpon SaaS Podcast, host Cristian Dina welcomes Omeed Tabiei, a highly experienced corporate lawyer specializing in the SaaS industry, to discuss how he supports SaaS companies through his firm, Optimist Legal. Omeed touted as the “coolest lawyer ever for SaaS,” delves into the specifics of his role and offers priceless advice to SaaS founders aiming to navigate the complex legal landscapes of starting, scaling, fundraising, and eventually exiting their businesses.

How does Omeed help SaaS founders?

Omeed begins by outlining the four primary areas where he assists SaaS companies. Firstly, he helps founders establish their businesses, particularly setting up C-corporations in Delaware, which is known for its favorable corporate laws and investor familiarity. This initial support involves preparing essential compliance documents such as terms of service and privacy policies.

Secondly, he aids businesses in scaling, including drafting and negotiating contracts with enterprise customers. Omeed highlights the importance of having comprehensive agreements in place, especially when starting to generate revenue. Thirdly, he assists in the venture capital fundraising process, focusing on drafting and negotiating the necessary contracts. Lastly, he helps founders through the acquisition process by ensuring smooth contract negotiations, conducting due diligence, and facilitating a profitable exit.

Christian questions Omeed on the timing of starting a business. Omeed advises that founders should be fully committed and sure they want to pursue their SaaS venture for an extended period before forming an entity. He emphasizes the importance of getting agreements with co-founders in writing early on to prevent future disputes. Omeed recounts common pitfalls, such as disparities in co-founders’ commitments and the lack of formal agreements leading to legal challenges over equity distribution.

Fundraising in SaaS

Transitioning to fundraising, Omeed discusses the common misconceptions SaaS founders have. He clarifies that his role in fundraising is primarily legal—drafting and negotiating contracts—rather than connecting founders with investors. He offers critical advice on evaluating venture capital, stressing the importance of aligning values and strategies with potential investors. He further explains complex legal concepts like valuation, liquidation preferences, and anti-dilution provisions to underscore their significance in investment contracts.

Omeed shares his professional journey, starting with working at Hyperloop One—one of Elon Musk’s ideated companies—where he helped the company grow from 68 to over 300 employees and raise $150 million to launch his startups. These experiences shaped his passion for the SaaS industry and informed his transition to running his law firm, Optimist Legal.

An important takeaway from Omeed’s journey is the emphasis on passion: SaaS founders should pursue ventures they love, as the entrepreneurial path is fraught with challenges. Loving the work makes the hardships bearable and the journey worthwhile. Additionally, he highlights the value of building a team of people you enjoy working with, including your lawyer, to create a supportive and enjoyable work environment.

In summary, Omeed Tabiei provides a wealth of knowledge for SaaS founders, covering legal intricacies, fundraising tips, and personal insights from his professional journey. These are all aimed at helping SaaS founders navigate their entrepreneurial paths successfully.