Finding an investor for your business is only the starting point. After the pitch comes the process of due diligence and negotiating terms and conditions. Quickly the joy of finding investment can turn into frustration as the cost and difficulty of the investment process begins to hit home. So the news that a group of leading European investors have agreed on two standard term sheets for start-ups is bound to be welcome news.
The organisers, Seedsummit, commented: “We hope these documents help bring coherence to the fragmentation of the European market. By bringing the players to reach a common agreement for the benefit of the entrepreneur we hope to save entrepreneurs time and money and to ensure that the limited funds they are raising are used for the most important thing: building products for their customers”.
The initiative has been backed by some of Europe’s leading early stage venture capital investors, including 360 Capital, Doughty Hanson Technology Ventures, Eden Ventures, Index, Nesta, Passion Capital and Wellington Partners.
Commenting on the term sheets, Toby Austin, one of the founders of BusinessFunding.co.uk, said: “This is an encouraging move. Simplifying, standardising and allowing advance sight of documents relating to investment rounds can only assist startups and small businesses in securing funding. It’s as much about education as time and cost saving. However, businesses must still ensure that they receive appropriate legal advice to ensure potentially expensive pitfalls are avoided”.