Startups, Private Equity, and Venture Capital

Raising investment is an integral part of a start-up’s growth. Every investment deal starts with a well-drafted term sheet – a preliminary agreement that serves as a roadmap for further negotiations. The expectations captured in this document are then translated into more specific investment terms in a Share Purchase Agreement (SPA). However, the real basis for cooperation between a start-up and an investor is the Shareholders’ Agreement (SHA). It defines not only the relationship between them, but also the strategic decisions that can determine the future of the company.  

In early investment rounds of a start-up, speed is of the essence to scale up smoothly. In this context, a convertible loan agreement (CLA) can be the ideal tool to align the expectations of both funds and investors.At the heart of the whole process is due diligence – an in-depth legal due diligence of the start-up that allows the investor to look behind the scenes and assess the real value of the company.  

Drawing from extensive experience, the team at Prevence will prepare the complete investment package, safeguarding the interests of both startups and investors, ensuring transparency, and facilitating a successful partnership.  

The regulatory environment in the start-up sector is like a living organism, constantly adapting to innovation and technological breakthroughs. In Lithuania, where legislation is particularly intense, compliance is becoming mandatory. Every startup needs to understand the regulatory environment in its field in order to grow, and investors need to consider this compliance dimension as an essential component of the investment. 

Fintech, health technology and other high-growth industries are particularly sensitive to regulatory subtleties. In these areas, compliance not only mitigates risk but can also be a source of competitive advantage.  

Not only do we understand these regulatory nuances, but we also have practical experience in enabling start-ups and investors optimise their compliance processes.

Unlike the public market, the sale of investments in private venture capital deals is not as easily convertible, making it crucial to have a clear exit strategy.  

In the sale process, the acquirer should pay particular attention to the insights of external experts and to the due diligence procedure, which analyses the company’s finances, intellectual property, employee contracts and shareholder liabilities.  

In addition, the valuation of a company in the private equity market is often subject to negotiation and lawyers can help to assess the real value of the investment.  

The value of the investment here becomes not just numbers, but also the art of negotiating which investment sales strategy to choose from among the many – earnouts or holdbacks (to name just a few of the instruments available) – that can balance both investor protection and start-up expectations. 

Our team not only has the necessary expertise, but also the ability to speak the language of startups and investors.