Venture capital and venture debt – lawyer in Frankfurt am Main

Growth companies raise money in several rounds and increasingly also through venture debt. Each round changes the shareholding structure, the investors' rights and the founders' room for manoeuvre. My aim is to structure financings in a way that moves the company forward while reflecting the interests of all parties in a transparent manner.

I know this market from my work at commercial law firms and now from my own practice. I have been involved in financing more than 150 start-ups with a total volume of approximately EUR 900 million and drafted the documentation required.

Venture capital: financing rounds

In equity financings, I support founders and investors through every stage of the round:

• Negotiating the term sheet and the key commercial terms
• Investment agreement including warranties and investment conditions
• Shareholders' agreement with anti-dilution protection, liquidation preferences, pre-emption, tag-along and drag-along rights
• Amendments to the articles of association, capital increase and notarisation
• Convertible loans and bridge financing between rounds

Founders need to understand the long-term effect of individual clauses. I explain which provisions are customary in the market and where there is room for negotiation.

Venture debt

Venture debt complements equity with debt capital that is typically provided to fast-growing companies, often ones that are already VC-backed. The documentation is complex and frequently follows international standards. I advise lenders and borrowers on:

• Facility agreements including covenants and termination rights
• Security packages such as share pledges, security assignments and transfers of title by way of security
• Warrants and equity kickers and how they fit with the shareholders' agreement
• Conditions precedent and legal opinions
• Intercreditor issues in relation to existing financings

Loan and security agreements, legal opinions and conditions precedent were already part of my work in banking & finance at Taylor Wessing.

Employee participation

Employee participation programmes are often introduced or adjusted in connection with financing rounds. I design ESOP and VSOP programmes so that they are consistent with the investors' rights and the capital structure. Details can be found under corporate law.

From pre-seed to exit

The requirements change with each stage. In the early stage, the priorities are a clean incorporation structure and a fair split between the founders. In later rounds, the focus shifts to balanced investor rights and documentation that stands up to due diligence. On exit – for example through a sale to a strategic buyer or a financial investor – the provisions from all previous rounds come together. For the exit stage, see also M&A and company acquisitions.

Frequently asked questions

When is venture debt an alternative to another equity round?

Venture debt can make sense to extend the runway to the next round or to finance specific projects without giving up further equity. On the other hand, there are interest and repayment obligations and security to be provided. Whether this is worthwhile depends on the individual case.

Do you advise founders or investors?

Both – but of course never on the same transaction. I check for potential conflicts of interest before accepting any engagement.

Which documents should be in place before a financing round?

Investors usually expect an up-to-date shareholder list, the articles of association, existing shareholder agreements, an overview of employee participation programmes and the key commercial contracts. A prepared data room shortens the due diligence process.