PIERSTONE was involved in the launch of Czech Startup Documentation
PIERSTONE has recently participated in an initiative of market-leading Czech law firms and prepared free standard investment documentation for Czech start-ups, available at https://czechstartupdocs.com/.
The Czech Startup Documentation initiative has brought together top Czech law firms with experience gained from significant investment transactions. From PIERSTONE, Jana Pattynová, Ferdinand Fořt, Dominik Vítek and Klára Burianová participated in this initiative which aim is to facilitate the way to funding for start-ups in the early stages of their development when there is usually pressure on the reduction of transaction costs.
With standard investment documentation, start-ups will be able to concentrate more on the business side of the fundraising and the preparation of transaction documentation will be cheaper, easier, and quicker. Thanks to standard investment documentation, the authors hope that the start-up environment will become more cultivated and clearer for all stakeholders, including founders, investors and their advisors.
In preparing standard investment documentation, the team was inspired from abroad, especially from the USA, UK or Estonia. For example, the model documentation published by the British Private Equity & Venture Capital Association became standard for the vast majority of early-stage investments in the UK. Similarly, the SAFE (simple agreement for future equity) introduced in 2013 by the US technology start-up accelerator Y Combinator has been widely used as the main instrument for funding emerging start-ups in the US.
The standard investment documentation is a sample documentation which should be carefully used and amended according to the needs of a start-up and an investor in each individual case ideally with the assistance of a qualified lawyer. All sample documents were prepared in English in order that they could be simply used by foreign investors.
The published standard investment documentation includes:
- Due Diligence Request List,
- Convertible Loan Term Sheet,
- Convertible Loan Agreement,
- Equity Investment Term Sheet,
- Equity Investment Agreement,
- Growth Participation Plan (ESOP), and
- Shareholders’ Agreement.
The above documents received positive feedback from the local start-up environment and hopefully become widely used in practice.