What is the difference between the Shareholders Agreement and the Articles of Association?
Articles of Association: Public document registered at the Companies Registry that governs the general and legal operation of the company with regard to third parties.
What is a “Term Sheet” and what is its legal validity?
It is a preliminary document that summarises the key financial and policy conditions under which a venture capital fund is willing
What is “Vesting” for founders and key employees?
It is a contractual mechanism by which founders or key employees do not receive full ownership of their shares
What is a “Participatory Loan” and why is it so widely used in the entrepreneurial ecosystem?
It is a medium-to-long-term financial instrument that features a mixed interest rate (a minimum fixed tranche and a variable tranche
What is the “SAFE” instrument (Simple Agreement for Future Equity)?
It is a contract similar to the convertible note but not structured as debt. It is a financial agreement whereby the investor provides capital
What is the “Cap Table” (Capitalization Table) and why should it be managed carefully?
It is a spreadsheet or record that shows the detailed distribution of company ownership, identifying who the shareholders are
How is the “Market Multiples” valuation method (Comparable Companies) used?
It consists of valuing your company by applying a multiplier (revenue multiple, EBITDA multiple) based on recent transactions
How does the post-money valuation affect the founders’ dilution percentage?
Dilution determines the percentage of the company that founders give up to new investors. It is calculated by dividing the invested capital…
What is the difference between “Pre-money” and “Post-money” valuation?
Pre-money valuation: The value of the company agreed upon between founders and investors before the new capital injection is formalised and introduced
What does the concept of “Smart Money” refer to?
It refers to investment that provides added value that goes far beyond a simple capital injection into a bank account.
