Legal document templates for startup fundraising updated. Here’s a summary

“The first thing we do, let’s kill all the lawyers.” 

This line from Part 2, Act IV, Scene 2 of William Shakespeare’s Henry VI is often delivered as a joke, but it might also be an apt way to describe how founders feel about legal documents as they raise funds. For many first-time founders, fundraising is already a brutal process.  If you add the barrage of unfamiliar terms and legal jargon that  a successful founding team will encounter as part of negotiations, then the Bard’s controversial quip might make sense. 

Luckily, lawyers – and some of their friends – are here to help. 

The Singapore Academy of Law and Singapore Venture & Private Capital Association launched the Venture Capital Investment Model Agreements (VIMA 1.0) in 2018. These documents were developed to provide startups with a set of standard terms and documents for early-stage VC deals. 

Four years later, VIMA 2.0, was launched on September 23. The new version of the toolkit is available here.

Below is a summary of what you can expect from the VIMA 2.0 documents. Note that none of what you read below counts as legal advice.

VIMA 2.0 working group members / Photo credit: Singapore Venture and Private Capital Association

Reflecting the prevailing mood and market practice 

The VIMA documents were designed to be “a balanced, well-informed starting point that can be customized to suit each investment,” shortening the time needed to close an investment round and reducing transaction costs. 

With VIMA 2.0, the terms of documents provided in VIMA 1.0 have been revised, and new documents have been added. 

“The main updates made to revise VIMA 1.0 to VIMA 2.0 relate to the Subscription Agreement (SSA) and the Shareholders’ Agreement (SHA),” says Kyle Lee, partner at law firm WongPartnership, where he co-heads the startup and venture capital practice. 

One amendment to the SSA was to differentiate between the signing of the agreement and completion of the deal. 

The previous version of the SSA assumed the deal would be completed – and so required the investor to transfer funds – the moment that the agreement was signed. 

However, Lee notes that “an increasing number of investors only want to call for funds once specific conditions precedents are fulfilled” and that the deal is certain to close. 

A new model convertible note 

Leveling up venture fundraising expertise