Venture capital funding in The Netherlands: The basics of term sheets
22 maart 2023
The March 2023 collapse of the Silicon Valley Bank (SVB) sent shockwaves across the global tech industry. While we know that the consequences will be far reaching for the venture industry, the full effects will not be known for a while. The failure of the SVB could not have come at a worse time. Now more than ever the big transitions that we face in energy, healthcare, food, agri and deeptech need funding. Our Van Doorne venture capital (VC) team provides legal support for the funding of these innovative companies. With our blog-series, we hope to provide guidance on venture financings in the Netherlands which will support innovation. We do so by discussing the various terms and conditions that are typically found in term sheets agreed upon by VC investors with companies attracting capital. The majority of the terminology used and the terms and conditions agreed upon in VC transactions originate from the United States (US) market. The US VC market is, in terms of funding, by far the largest VC market worldwide and therefore more mature and standardized than the European VC ecosystem. The increasing number of successful innovative companies in the Netherlands, the Netherlands' ability to attract world-class talent and serve as one of Europe's main technology hubs for innovative companies, have made the Netherlands an attractive destination for US VC investors. In these blogs, we will dive into the terms agreed upon in equity funding rounds in the Netherlands and specifically focus on the differences between the US and the Netherlands. We will be covering a range of topics, from the basics of term sheets to other more common terms agreed upon in VC financings, including liquidation preferences, anti-dilution protection, leaver provisions and drag and tag-along rights. In this first blog post, we will take you through the basics of VC financing term sheets in the Netherlands.
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