Corporate venturing

Written on 15 Nov 2018

Larger companies are increasingly looking at equity investment as a way of partnering with and learning from disruptive, fast-growth start-ups. In this session, we looked at some of the key terms and legal considerations when making corporate venture capital investments.

Share rights

What are the typical rights attaching to a corporate investor’s shares?

What are the rights of the other shareholders?

We focussed on rights to income, capital and voting, as well as pre-emption, transfer, “drag along” “tag along”, and “co-sale” rights.

Board governance

What rights do corporate investors, as well as founders and other shareholders, have to appoint directors or nominate observers to the board?

Have you considered board composition, quorum and directors’ conflicts?

Information rights

What information about the company and its business is an investor entitled to?

What are the reporting obligations, and what are the confidentiality issues around information sharing?

Consent matters

Are there any company actions which will require the consent of the corporate investor or its appointed representative director in the future?

How are those rights shared with other investors?

What are the typical reserved matters, and what about the specific veto rights often sought by corporate venturers?

Commercial arrangements

What are some of the challenges of implementing a commercial arrangement with a smaller business at the same time as an investment?

Exits

What are the issues relating to an eventual sale of the company, from “paths to control” to blocking rights?

Download the slides.