OsbornrClarke German Law for founders 101

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Company formation | To Do & Don't
Venture Capital Terms

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OsbornrClarke German Law for founders 101

  1. 1. Venture Capital and Digital Business with Osborne Clarke German Tax and Law 101 for founders Christian Musfeldt July 10, 2013, Wooga Amphitheater, Berlin
  2. 2. osborneclarke.de Osborne Clarke Germany Locations Private & Confidential • Cologne • Hamburg • Munich Staff Practice Groups • 199 employees altogehter • Including 113 lawyers and tax consultants • Including 37 partners • Capital Markets / Banking • Commercial / Competition • Corporate • Employment • IP • IT • Property • Public Procurement / Public Commercial • Tax Osborne Clarke Köln Osborne Clarke Hamburg Osborne Clarke München Sector focus • Digital Business • Energy & Utilities • Financial Services • Life Sciences & Healthcare • Real Estate & Infrastructure • Transport & Automotive
  3. 3. osborneclarke.de Osborne Clarke international Locations Private & Confidential • Barcelona • Brescia • Bristol • Brussels • Cologne • Hamburg • London • Madrid • Milan • Munich • Padua • Palo Alto (Silicon Valley) • Reading (Thames Valley) • Rome Staff • More than 1.000 employees altogether • More than 600 lawyers and tax consultants • Including 169 partners Furthermore we offer you a global 'Best Friends' Network. For you this means: • A strong network across the globe, particularly in North America, EMEA & Asia Pacific • Short communication channels • One single contact person, who coordinates the commitment of our international partners Osborne Clarke Germany Osborne Clarke UK Osborne Clarke Spain Osborne Clarke Italy Osborne Clarke Belgium
  4. 4. osborneclarke.de To understand you and your business! Since many year our lawyers and tax advisors focus on advising clients in certain industries. That is why we understand and speak your language. Why we focus on industries? Private & Confidential Life Sciences & Healthcare Financial Services Transport & Automotive Real Estate & Infra- structure Energy & Utilities Digital Business Sector Focus Osborne Clarke
  5. 5. osborneclarke.de Venture Capital Our expertise in Germany Financing Round – RUNA Capital Financing Round – Union Square Ventures, Index Ventures (USD 12 m) Financing Round – Index Ventures, Allen X Co., T- Venture, Jerry Yang (USD 38 m) Financing Round - SevenVentures Financing Round – Tenaya Capital, Gates Ventures Financing of Ondango GmbHFinancing of Wooga GmbH (USD 24 m) Investment in SumUp
  6. 6. osborneclarke.de Digital Business
  7. 7. osborneclarke.deosborneclarke.de 7 Awards Private & Confidential
  8. 8. osborneclarke.de Formation
  9. 9. osborneclarke.de From ideation to formation • I have got an idea Private & Confidential 9
  10. 10. osborneclarke.de From ideation to formation • I have got an idea "Don’t do this alone!" Private & Confidential 10
  11. 11. osborneclarke.de From ideation to formation • I have got an idea • I shall share my idea and inspire others • Ideally I find a co-founder along the way Private & Confidential 11
  12. 12. osborneclarke.de From ideation to formation • I have got an idea • I shall share my idea and inspire others • Ideally I find a co-founder along the way "I am allowed to form a company?" Private & Confidential 12
  13. 13. osborneclarke.de From ideation to formation • I have got an idea • I shall share my idea and inspire others • Ideally I find a co-founder along the way "I am allowed to form a company?" • Check previous and current contracts of employment: notice period, concentration of business, non-compete. • Think: Could your line of business require governmental approval? Private & Confidential 13
  14. 14. osborneclarke.de From ideation to formation • I have got an idea • I shall share my idea and inspire others • Ideally I find a co-founder along the way "I am allowed to form a company?" • Check previous and current contracts of employment: notice period, concentration of business, non-compete. • Think: Could your line of business require governmental approval? Private & Confidential 14 Beware of market places! Gesetz über die Beaufsichtigung von Zahlungs- diensten
  15. 15. osborneclarke.de Got to make a choice "Why form a company?" Private & Confidential 15
  16. 16. osborneclarke.de Got to make a choice "Why form a company?" • Do it early for greater transparency regarding rights situation (in particular IP) • It is difficult to transfer assets late taxewise • Restrict personal liability Private & Confidential 16
  17. 17. osborneclarke.de Got to make a choice "Why form a company?" • Do it early for greater transparency regarding rights situation (in particular IP) • It is difficult to transfer assets late taxewise • Restrict personal liability • … by forming UG (haftungsbeschränkt) or GmbH – nothing else gets VC funding Private & Confidential 17
  18. 18. osborneclarke.de Got to make a choice "Why form a company?" • Do it early for greater transparency regarding rights situation (in particular IP) • It is difficult to transfer assets late taxewise • Restrict personal liability • … by forming UG (haftungsbeschränkt) or GmbH – nothing else gets VC funding Private & Confidential 18 If you will spend more than EUR 12,500 shortly, go for a GmbH.
  19. 19. osborneclarke.de To dos – formation • Thinking about taxes: form two companies, a holding company and an operative company • Notary, Gewerbeamt, bank, Handelsregister, bank • Ideally the process starts by talking to a lawyer. NO MUST THOUGH. Legislature has provided Musterprotokoll for fast, cheap and easy formation. However, there is no vesting and there are no VC terms. Private & Confidential 19
  20. 20. osborneclarke.de Venture Capital Terms
  21. 21. osborneclarke.de Investors' objectives • Binding the management • Protect intellectual property • Protect investment Private & Confidential 21
  22. 22. osborneclarke.de And how to achieve them • Guarantees • Veto rights • Lock-up – fight it! • Vesting – 2 to 4 years, good and bad leaver vesting • Drag-along – not in early stage rounds • Liquidation preference – 1x, non-participating Private & Confidential 22
  23. 23. osborneclarke.de Last words • The money will only last for X months => "natural" limit to deal terms • No VC investor can manage a start-up or can sell it without management • Agree on budget and get freedom to act within that budget • Be transparent. Build trust. • Don't take money from people you don't trust. Take the money at face value. Do investor due diligence on other promises. Private & Confidential 23
  24. 24. osborneclarke.de Thanks • Christian Musfeldt • + 49 151 2300 82 75 • christian.musfeldt@osborneclarke.com • www.christianmusfeldt.com Private & Confidential 24
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