Structuring Venture Capital Financing: Amended NVCA Model Agreements and Special Issues Faced by Certain Industries, Strategic Investors, and Foreign Investors

A live 90-minute premium CLE webinar with interactive Q&A


Wednesday, December 9, 2020

1:00pm-2:30pm EST, 10:00am-11:30am PST

or call 1-800-926-7926

This CLE webinar will discuss structuring, negotiating, and documenting venture capital investments from term sheet to closing. The panel will also discuss recent changes to the National Venture Capital Association (NVCA) Agreements and the extent to which model provisions may deviate from what is considered "market" in venture capital transactions. The presentation will include cutting edge issues faced by investors in certain industries, strategic investors, and foreign investors, including the impact of recent CFIUS amendments.

Description

Venture capital financing has remained active during the pandemic, but deal terms continue to evolve. When documenting and closing a venture capital transaction, counsel must have a thorough understanding of the deal terms, market differences in early- or late-stage financing, industry-specific factors to consider, and investor-specific factors to consider.

Early stage deal structure may take the form of a convertible promissory note, simple agreement for future equity (SAFE), preferred stock (corporations) or preferred units (LLCs). Counsel must consider the functional pros and cons as well as the tax ramifications of each. Negotiated provisions include the composition of the board of directors, protective provisions/veto rights, anti-dilution, and other market investor protections.

On July 28, 2020, the NVCA released updates to its model documents for use in venture capital transactions. Perhaps most noteworthy is the inclusion of the provisions reflecting new final regulations implementing the Foreign Investment Risk Review Modernization Act of 2018, which expanded the review of foreign investments by CFIUS. However, there are also significant changes unrelated to CFIUS.

Listen as our experienced panel will discuss the following issues relating to structuring and documentation of venture capital transactions.

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Outline

  1. Venture capital deal structures
    1. Convertible note financing
    2. SAFE
    3. Convertible equity
  2. Issues to consider in documenting a venture capital financing
    1. Certificate of incorporation (charter)
    2. Stock purchase agreement (SPA)
    3. Investors' rights agreement (IRA)
    4. Voting agreement (VA)
    5. Right of first refusal and co-sale agreement (ROFR)
    6. Management rights letter (MRL)
    7. Director Indemnification agreement
    8. New insert language regarding CFIUS
  3. Takeaways from the latest revisions to NVCA forms
  4. Special issues when dealing with strategic investors/corporate venture capital
  5. Special issues when dealing with foreign investors
  6. Growing trend of impact investors

Benefits

The panel will review these and other challenging issues:

  • How do deal terms differ in early versus late-stage venture capital investment?
  • What are the advantages and disadvantages of convertible notes, SAFEs, and convertible stock structures?
  • What “optional” NVCA clauses are important in what situations?
  • How do differing interests of strategic investors and impact investors impact deal terms?
  • How can you include attractive foreign investors in U.S. company VC financings?

Faculty

Chapman, James
James C. Chapman

Partner
Rimon

Mr. Chapman focuses his practice on securities law, venture capital, mergers and acquisitions, and international...  |  Read More

Cohen, Steven
Steven M. Cohen

Partner
Morgan, Lewis & Bockius

Chair of the firm’s emerging business and technology practice, Mr. Cohen represents entrepreneurs, private equity...  |  Read More

Futter, Dror
Dror Futter

Partner
Rimon

Mr. Futter focuses his practice on startup companies and their investors and has worked with a wide range of technology...  |  Read More

Valenstein, Carl
Carl A. Valenstein

Partner
Morgan, Lewis & Bockius

Mr. Valenstein focuses his practice on domestic and international corporate and securities matters, M&As, project...  |  Read More

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