This document discusses venture capital and digital business in Germany from Osborne Clarke, a law firm. It provides an overview of Osborne Clarke's locations, staff, practice groups, sector focus, and international network. It then discusses venture capital financing Osborne Clarke has been involved in for various German tech companies. The remainder of the document focuses on forming a startup business, including considerations around employment contracts, forming a company, venture capital terms investors will seek, and last words of advice for founders.

1. Venture Capital and Digital Business
with Osborne Clarke
German Tax and Law 101
for founders
Christian Musfeldt
July 10, 2013, Wooga Amphitheater,
Berlin

2. osborneclarke.de
Osborne Clarke Germany
Locations
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• Cologne • Hamburg • Munich
Staff
Practice Groups
• 199 employees altogehter
• Including 113 lawyers and tax consultants
• Including 37 partners
• Capital Markets / Banking
• Commercial / Competition
• Corporate
• Employment
• IP
• IT
• Property
• Public Procurement / Public Commercial
• Tax
Osborne Clarke Köln
Osborne Clarke Hamburg
Osborne Clarke München
Sector focus
• Digital Business
• Energy & Utilities
• Financial Services
• Life Sciences & Healthcare
• Real Estate & Infrastructure
• Transport & Automotive

3. osborneclarke.de
Osborne Clarke international
Locations
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• Barcelona
• Brescia
• Bristol
• Brussels
• Cologne
• Hamburg
• London
• Madrid
• Milan
• Munich
• Padua
• Palo Alto (Silicon Valley)
• Reading (Thames Valley)
• Rome
Staff
• More than 1.000 employees altogether
• More than 600 lawyers and tax consultants
• Including 169 partners
Furthermore we offer you a global 'Best Friends' Network. For you this
means:
• A strong network across the globe, particularly in North America, EMEA & Asia
Pacific
• Short communication channels
• One single contact person, who coordinates the commitment of our international
partners
Osborne Clarke
Germany
Osborne Clarke UK
Osborne Clarke Spain
Osborne Clarke Italy
Osborne Clarke
Belgium

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To understand you and your business!
Since many year our lawyers and tax advisors
focus on advising clients in certain industries.
That is why we understand and speak your
language.
Why we focus on industries?
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Life
Sciences &
Healthcare
Financial
Services
Transport
&
Automotive
Real
Estate &
Infra-
structure
Energy &
Utilities
Digital
Business
Sector
Focus
Osborne
Clarke

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Venture Capital
Our expertise in Germany
Financing Round – RUNA
Capital
Financing Round – Union
Square Ventures, Index
Ventures (USD 12 m)
Financing Round – Index
Ventures, Allen X Co., T-
Venture, Jerry Yang (USD 38
m)
Financing Round -
SevenVentures
Financing Round – Tenaya
Capital, Gates Ventures
Financing of Ondango GmbHFinancing of Wooga GmbH
(USD 24 m)
Investment in SumUp

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Digital Business

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Awards
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Formation

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From ideation to formation
• I have got an idea
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From ideation to formation
• I have got an idea
"Don’t do this alone!"
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From ideation to formation
• I have got an idea
• I shall share my idea and inspire others
• Ideally I find a co-founder along the way
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From ideation to formation
• I have got an idea
• I shall share my idea and inspire others
• Ideally I find a co-founder along the way
"I am allowed to form a company?"
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From ideation to formation
• I have got an idea
• I shall share my idea and inspire others
• Ideally I find a co-founder along the way
"I am allowed to form a company?"
• Check previous and current contracts of employment: notice period,
concentration of business, non-compete.
• Think: Could your line of business require governmental approval?
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From ideation to formation
• I have got an idea
• I shall share my idea and inspire others
• Ideally I find a co-founder along the way
"I am allowed to form a company?"
• Check previous and current contracts of employment: notice period,
concentration of business, non-compete.
• Think: Could your line of business require governmental approval?
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Beware of
market places!
Gesetz über die
Beaufsichtigung
von Zahlungs-
diensten

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Got to make a choice
"Why form a company?"
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Got to make a choice
"Why form a company?"
• Do it early for greater transparency regarding rights situation (in particular IP)
• It is difficult to transfer assets late taxewise
• Restrict personal liability
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Got to make a choice
"Why form a company?"
• Do it early for greater transparency regarding rights situation (in particular IP)
• It is difficult to transfer assets late taxewise
• Restrict personal liability
• … by forming UG (haftungsbeschränkt) or GmbH – nothing else gets VC
funding
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Got to make a choice
"Why form a company?"
• Do it early for greater transparency regarding rights situation (in particular IP)
• It is difficult to transfer assets late taxewise
• Restrict personal liability
• … by forming UG (haftungsbeschränkt) or GmbH – nothing else gets VC
funding
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If you will spend more
than EUR 12,500 shortly,
go for a GmbH.

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To dos – formation
• Thinking about taxes: form two companies, a holding company and an
operative company
• Notary, Gewerbeamt, bank, Handelsregister, bank
• Ideally the process starts by talking to a lawyer. NO MUST THOUGH.
Legislature has provided Musterprotokoll for fast, cheap and easy formation.
However, there is no vesting and there are no VC terms.
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Venture Capital Terms

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Investors' objectives
• Binding the management
• Protect intellectual property
• Protect investment
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And how to achieve them
• Guarantees
• Veto rights
• Lock-up – fight it!
• Vesting – 2 to 4 years, good and bad leaver vesting
• Drag-along – not in early stage rounds
• Liquidation preference – 1x, non-participating
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Last words
• The money will only last for X months => "natural" limit to deal terms
• No VC investor can manage a start-up or can sell it without management
• Agree on budget and get freedom to act within that budget
• Be transparent. Build trust.
• Don't take money from people you don't trust. Take the money at face value.
Do investor due diligence on other promises.
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Thanks
• Christian Musfeldt
• + 49 151 2300 82 75
• christian.musfeldt@osborneclarke.com
• www.christianmusfeldt.com
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