Venture Capital and Investment Transactions

The structure depends on the stage of the business, the parties' readiness to determine the value of the company, the intended scope of the investor's rights and the owners' future plans.

• Equity investmentThe investor provides financing and receives an interest or shares under the current transaction. The parameters of the stake and the composition of the participants are determined before it closes.
• Financing with a future equity stakeThe investor provides funds now, and the right to receive a stake in the company arises later upon the occurrence of agreed conditions. This approach allows certain parameters of the equity investment to be agreed at a later stage.
• Option structuresThe rights of the investor or the owners may be linked to the ability to buy or sell an interest upon the occurrence of predetermined circumstances.
• Combined transactionsA single structure may combine direct financing, security for obligations, option mechanisms and different terms for several investors. These elements are agreed as a single system, taking into account how they affect one another.

Investment agreement and terms of participation

For a direct equity investment, the recipient of the financing, the size of the stake and the documents for its acquisition are determined. The terms are set out in the investment agreement and related documents in accordance with the chosen model. At the same time, the investor's rights after closing and the necessary amendments to the constituent documents are agreed.

If the interest is to arise in the future, a general statement of the parties' intention is not enough. The mechanism, the conditions for obtaining the stake, the method of calculating its size and the steps to be taken when agreed events occur are determined. Convertible loans and option structures are subject to different documentation rules.

The terms of new financing are compared with the rights of earlier investors and owners. It is checked which consents are required and how interests, control and contractual restrictions will change. Negotiations conclude with the agreed terms and any outstanding disagreements being recorded in the documents.

1. Round instrumentThe form of financing is chosen: an equity investment, a future equity stake or a combined structure.
2. Term sheetThe economics of the round and the key terms are agreed in the term sheet, which distinguishes legally binding terms from preliminary understandings.
3. Due diligenceThe company's corporate history, intellectual property rights and obligations relevant to the investor are reviewed.
4. Round documentsThe investment agreement and related documents setting out the rights and obligations of the investor and the founders are prepared.
5. Corporate proceduresResolutions of the management bodies are adopted, consents are obtained, and amendments to the charter and to the company's registered details are made.
6. ClosingThe documents are signed, payments are made and the post-round ownership structure is recorded.

• Investment structureThe chosen form of financing, the parameters of the equity investment and the terms of a possible exit.
• Due diligence findingsThe risks identified and their effect on the terms of the investment.
• Terms of the investor's participationManagement and information rights, and rules on subsequent financing and the disposal of interests, as reflected in the transaction documents.
• Set of documentsDrafts of investment and constituent documents reflecting the chosen model and the outcome of negotiations.
• Closing documentsSigned documents and confirmations of participants' resolutions and registration actions received for the completed stages of the transaction.

The outcome of the service is the work performed within the scope agreed with the client.