Инвестиции в стартиращи компании | Адвокатска кантора "KGK"

In this era of technological boom, ideas, access to different markets, spheres of influence, opportunities for creating, developing, and growing a successful business seem endless, and their implementation increasingly accessible.
Докато преди, най-честите варианти за финансиране на стартиращ бизнес у нас бяха с лични средства или посредством по-консервативни подходи, като банкови кредити, заеми, финансова подкрепа по държавни програми за малкия и средния бизнес и пр., сега достъпът до различни форми на финансиране и гъвкави модели на структуриране на бизнес модела стават естествен етап от изграждането на бизнеса и плана за неговото развитие.

Today, investments provided by investment funds or angel investors are becoming an increasingly preferred and accessible form of financing for start-ups.

What are investments by investment funds or angel investors?

This is a form of company financing whereby an investment fund or angel investor (private investor) acquires a stake in a company in exchange for an investment in the form of a cash sum that goes directly into the company's capital. The investment can also be made in the form of a loan (convertible loan), whereby the investor provides funds without acquiring a percentage stake in the company's capital at the time of investment, but in exchange for the right to subscribe for shares in the company at a future date, when the company reaches a certain valuation, in a subsequent investment round, or upon the occurrence of other conditions agreed between the parties.

What are investors' preferences?

However, investors are increasingly profiling their investments. Years ago, virtually any business idea with an innovative element and good prospects for profit was an attractive investment opportunity. now the interest of funds and private investors is focused on companies and business ideas with a specific subject and purpose, with a clearly expressed innovative element, with an emphasis on supporting and facilitating a particular activity, business direction, or group of people. Thus, a new trend can be observed in targeting companies with a pronounced social element, green-tech, and self-care. Of course, technology companies and ideas coming from this sector remain the undisputed favorite in the investor community.

If you think this is an opportunity for financing and support for your start-up business, it is good to know from the outset that not everything ends with receiving the investment. Your obligation usually does not end with accepting the investor (whether a fund or a private investor) as a partner or shareholder in your company. This is a long-term commitment that comes with responsibilities, both on the part of the company's founders and on the part of the company itself, as an independent legal entity developing a particular product or service.

What does the investor usually receive in return for the investment made?

Usually, along with the acquired stake in the company's capital, the investor also receives a number of rights and advantages that place him in a privileged position compared to the other partners or shareholders in the company. Typically, the investor receives (he list is approximate)):

Preferential rights over other participants in the capital to acquire shares or stocks that are subject to sale or transfer, as well as the right to transfer their shares or stocks with priority in the event of an offer for sale.
The right to preferential satisfaction over the other partners or shareholders in the event of a sale of the entire company or its termination.
Right to a larger liquidation share.
Right to veto certain decisions within the competence of the company's decision-making body, which may only be taken in the future if the investor has expressly given their consent.
Right to a quick exit from the company if the investor does not wish to continue their participation in the company.
Right to review the company's business plan, request information about customers, contracts, expenses, etc.

Even though the perks seem pretty sweet, keep in mind that the investor is actually there to help your business, not to "steal" it. They bring with them a serious network of contacts, provide mentoring and support, share guidelines and established business models to implement in your business and support its development. In practice, the investor becomes a partner on the path to the successful development of your company, the growth of your business, and the achievement of more successful sales, more revenue, and your establishment as the preferred supplier of the relevant product or service.

Risk financing and structuring successful business models—from the very inception of the idea, through the initial stages of business development, to the next investment round or a successful, profitable exit of the investor from a start-up company—is now a clearly structured process. With well-negotiated investment terms from the outset, this is a mutually beneficial deal, often exceeding the initial financing received.

Today, investments in business ideas are an asset that provides a multifaceted resource, and the presence of one or more investors in the shareholding structure of your company is a kind of guarantee for your interesting idea and successful business plan.

KGK Law Firm is a trusted partner to many start-ups. We provide assistance from the very beginning of the relationship between a start-up and a potential investor – in negotiations, drafting the necessary documentation, implementing the investment, and providing follow-up legal services. For more information or assistance, please contact us.