11 minute read | March.30.2023
Orrick's Founder Series offers monthly top tips for UK startups on key considerations at each stage of their lifecycle, from incorporating a company through to possible exit strategies. The Series is written by members of our market-leading London Technology Companies Group (TCG), with contributions from other practice members. Our Band 1 ranked London TCG team closed over 320 growth financings and tech M&A deals totalling US$9.76bn in 2022 and has dominated the European venture capital tech market for 7 years in a row (PitchBook, FY 2022). In our previous instalments, we have guided founders through the process of incorporating a private limited company, building their team, how to use share options to attract and incentivise their employees, protect their ideas, identified key compliance considerations, what to consider when raising their round, and how to navigate the evolving cyber threat landscape, how to flip to a Delaware corporation and how to steer a company through financial difficulties.
Convertible securities such as simple agreements for future equity (SAFEs), advance subscription agreements (ASAs) and conventional convertible loan notes (CLNs) are increasingly used as agile and flexible funding instruments, as they can provide companies with short-term, quick-access capital that only converts into equity based on future events and/or valuations. Our Deal Flow 3.0 data shows a 47% increase in the number of convertible debt financings in 2022 as compared to 2021.
In the tenth instalment of Orrick's Founder Series, our Technology Companies Group offer key guidance for UK founders looking to this alternative financing option while they set up for their next equity round and explore some of the key terms found in these instruments.
Our London TCG practice reflects London’s role as one of the world’s leading financial markets and a centre for international commerce. Nothing inspires us more than helping tech companies develop novel strategies and push boundaries. Through our extensive client portfolio, deal volume, and relationships in the tech ecosystem, we provide commercial and legal insight to each company’s strategy. We work with tech companies on all aspects of their business plans, financing strategies, protecting intellectual assets, retaining talent, securing and monetising data, and advocating for innovation-friendly public policy.
If you would like more details on any of the issues above, please contact Jamie Moore.