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Venture Capital Update

The National Venture Capital Association (“NVCA”) has innovated again in venture capital.

They’ve updated their standard template legal documents, a first since 2014. This refresh includes cryptocurrency and workplace conduct updates. It’s a modern twist on classic standards, aiming for progress and integrity.

  • NVCA updated five key documents and added a Confidential Disclosure Agreement. These changes tackle current challenges, including cryptocurrency and life science deals.
  • A new Anti-Harassment/Code of Conduct provision is included. It shows NVCA’s commitment to ethical, respectful workplaces. Updates also align with Delaware State Law changes.
  • The updates aim to make venture financing more efficient. They support the startup ecosystem’s growth, backed by the NVCA General Counsel Advisory Board’s expertise.

Crowley Law has deep venture capital and startup expertise. We are well-versed in the latest legal trends in documenting investment transactions for life sciences and other technology companies.  If you are considering taking your company through a financing, contact us at (908) 540-6901 or [email protected] to arrange a complimentary discussion with a member of our team.  We’re here to help.

Continuing our analysis . . .

The NVCA updates reflect an evolving venture capital landscape. They address cryptocurrencies and workplace ethics, based on the press release. The Advisory Board, with diverse legal minds, played a crucial role. Their collaboration ensures the documents are a valuable resource for the startup ecosystem.

In total five of the documents received updates, including: 1) Certificate of Incorporation, 2) Investors Rights, 3) Right of First Refusal, 4) Stock Purchase Agreement, and 5) Voting Agreement.  In addition to the updates to the existing documents, NVCA is adding a model Confidential Disclosure Agreement.  While venture investors in the technology sector generally eschew these agreements, life science investors generally will insist upon these agreements in advance of looking at proprietary and confidential information.

Some other highlights from the NVCA press release on the updates made to the documents include:

Life Science Transactions: For the first time, the documents now incorporate drafting options that are specific to the unique nature of life science transactions.  This effort was driven out of recognition of the fact that some business terms and other considerations in life science transactions are unique in certain respects from other venture capital transactions.

Crypto-Currency/Blockchain Protective Provision:  A new protective blocking right has been added to the model Certificate of Incorporation document to provide investors a veto over token, crypto-currency and block chain related offerings given that the pre-existing veto rights did not clearly apply to or cover these new types of offerings.

Anti-Harassment/Code of Conduct: A covenant has been added to the model Investor Rights Agreement document that requires the company to adopt and thereafter maintain a code of conduct governing appropriate workplace behavior and a policy prohibiting discrimination and harassment at the company.

Delaware State Law Changes: The revised model documents provide a complete set of drafting options that allow practitioners to easily modify the dispute resolution provisions to take advantage of the Delaware Rapid Arbitration Act (2015).

Drag Along Rights: A number of changes have been made to the drag along provisions in the model Voting Agreement document to ensure that the drag along can be effectively implemented and to reduce the potential for a minority stockholder claim.

Redemption Rights: The model Certificate of Incorporation document has been modified to provide for the accrual of a high rate of interest on the redemption price payable with respect to shares of stock that are subject to a redemption request that has been unfulfilled by the company.

These changes change the expectations founders and their companies should have for entering into financings with venture capital firms and will likely influence the typical terms Angel investors are likely to request as well.

Crowley Law will keep abreast of these changes.  If you’re considering a financing transaction, contact us at (908) 540-6901 or [email protected]   We’re here to help.




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