Growing companies
Many start-ups and scale-ups know the phase when the company's product or service gains prominence and the company grows. Great news! Soon, however, the question arises of how to finance the new production line, hiring of employees, marketing campaign or relocation. The bank is often unwilling because there is too little previous history to present a good business case. The capital in the company is almost never sufficient to cover costs. Liquidity may then soon come under pressure. Fortunately, good companies can often find a (venture capital or private equity) investor who can make the necessary investments in exchange for participating in the capital.
Negotiations
But that's only where the negotiation begins. After all, there are quite a few choices to be made, both for the investor and the company. For instance, will the investment be entirely in capital or primarily by taking out a (convertible) loan? What is actually the value of the company and what share will an investor obtain? Does the investor want to be intensively involved in the management and day-to-day business? And what do you agree if a new investor wants to join, or if some of the shareholders want to sell the company? And who gets their money first in the event of an exit?
These and many other questions inevitably come up for target founders, but funds will also need to look into these important topics. Many interests initially run parallel in an investment process, but sooner or later they become further apart. The investment agreement is the time to anticipate this, also to avoid nasty surprises in the future.
Both targets and investors are regularly assisted by our experts. Do you have questions about the investment trajectory or investment agreement, or do you need help drafting or reviewing an investment agreement? Our specialists will be happy to help you!