The British Private Equity and Venture Capital Association (BVCA) hopes to save venture capital firms time and money by promoting a new set of standardized deal documents for early stage investors.
The aim is for these model documents to be used at an industry-wide level so that VC firms and their legal advisors are more familiar with common commercial terms under negotiation, an achievement the US venture capital industry has already achieved with the support of the National Venture Capital Association, said law firm King & Wood Mallesons SJ Berwin in a client memo.
A basic framework for documenting deals (set out in the model documents) will drive down “the costs of drafting and negotiating to the apparent benefit of all concerned,” the memo said.
The BVCA first campaigned for wide spread use of model VC documents in 2006, but the documents never gained significant traction. Over the past year, the BVCA’s venture and legal & technical committees have been working closely with industry representatives to re-design the model documents.
“We did feel when we looked at these [documents] last year that it was time to update them,” said Simon Witney, partner at King & Wood Mallesons SJ Berwin, who chairs the BVCA’s legal committee. “Market norms and best practices move on and we [the BVCA] wanted to make sure the documents encapsulated the very latest commercial terms and legal best practices.”
The updated model documents are currently in proposal stage, and the BVCA is inviting comment on their work.
“We [the BVCA] don’t have a monopoly of wisdom here, so we want people to let us have their views on the documents,” said Witney. “If people think there are better ways of drafting certain clauses, or feel the documents should take account of particular commercial developments, we hope they will say so over the next few weeks.”
Parties interested in submitting feedback and/or attending the seminar should contact the BVCA’s Aliya Raja at araja@bvca.co.uk. Comments are due by February 28.
On March 6, the BVCA plans to host a seminar discussing the feedback before formally publishing the templates in April.
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