Convertible Note

Convertible Note Convertible loans occupy a hybrid position between equity capital and debt capital. After all negotiations have been concluded, a capital increase is decided by the shareholders of the company and the share capital is increased…

Vesting

Vesting Vesting clauses offer investors protection against a part of the founder or management team leaving the company at an early stage. However, from the point of view of the founding team, a commitment to the company can also make sense,…

Trade Sale

Trade Sale The investment is sold to another company, usually to a strategic investor. The trade sale represents an alternative to an IPO as an exit channel for investors if the company is not ready for the stock exchange because the strict…

Secondary Purchase

Secondary Purchase In comparison to a trade sale, a secondary purchase is a sale of the company to another financial investor, who wants to generate a return himself through a certain holding period and a renewed exit. Usually an exit of all…

Right of first Refusal

Right of first Refusal If a shareholder wishes to sell his shares to a third party, he must offer them to the other shareholders on the terms offered by the third party. They are able to buy these shares in total or on a pro-rata basis. Only…

Price per Share

Price per Share The price per share is the ultimate measure of what investors pay for the equity that is being bought. Is is calculated after all parties agreed on the valuation and the fully diluted calculation. A possible way how the price…

Pre-Money Valuation / Post Money Valuation

Pre-Money Valuation / Post Money Valuation The valuation of young companies is defined by two different terms. On the one hand, the pre-money value of the company. This is the valuation of the company before an investment is made. The post-money…

Pay-to-Play

Pay-to-Play A Pay-to-Play provision is often negotiated within the Anti-Dilution Protection. This is a provision that will encourage investors to fully participate to the full ratio rate that is outlined in the provision in the financing of…

Milestones

Milestones Depending on the phase, the participation of investors takes place under more or less great uncertainty and usually covers a medium to long term. In the case of longer maturities, not all contingencies can be taken into account when…