VC , Corporate & Tech Law for Entrepreneurs Flashcards
Corporate & VC
founding a company
GmbH - predominant by far
UG - not attractive to investors
AG - occasionally, especially in regulated areas
GmbH & Co.KG - not acceptable for investors
Corporate & VC
finding an investor
- crowdfunding, Business Angel, VC investor
- make a research + find investors to approach
- present yourself to investors
- strategy of investment negotiations
strengths & weaknesses
competitiveness (USP), growth opportunities, quality of
management, business plan - choose your investor
Corporate & VC
financing options
equity
- new shares via capital increase
- participation rights of the investors
- no repayment and interest requirement
- setting a valuation is required
- more expensive and time consuming as debt
debt
- venture loans and convertibles
- no participations rights for investors
- repayment and interest requirement
- setting a valuation is not required
- in case of conversation to equity -> discount
Corporate & VC
Due Diligence
Legal Due Diligence
- Review of company´slegas status, foundation
documentation and agreements
Financial Due Diligence
- Verification of completeness and accuracy of balance
sheet, profit, loss and valuations
Business Due Diligence
- Review of economic outlook of the investment and
innovative capability of the company
Founder
-> discovering own weaknesses to shorten negotiations
Investor
-> protection for bad investment
Corporate & VC
structure and material terms
Investment agreement
- valuation and investment amount
- due date (milestones)
- reps and warranties
shareholders agreement
- anti dilution / down round protection
- extension of investors information and approval rights
- exit mechanism
- management commitment (non compete)
- liquidation preference (last in, first out)
Techlaw for Entrepreneurs
What investors are looking for
- ROI & Value
- proper protection of relevant assets
(safe IP & Business Model)
questions
- what is your relevant IP?
- who owns your relevant IP?
- do you have all licences you need to run the business?
- reliable relationships with suppliers?
- proper know how protection?
- business model bullet proof?
all kinds of terms and law: Commercial, eCommerce,
telemedia, completion, data protection, it security - regulations?
healthcare, profession, banking, insurance
