The definition of a startup is not easy to formulate, due to the lack of a single definition, and in some cases any definition at the legislative level of individual countries, the European Union as a whole.
The term “startup” means a young company founded by one or more entrepreneurs who have a business idea and want to bring unique products or services to the market.
To come to a common understanding of a startup, it is worth taking into account the presence and/or absence of the attributes of a startup, which can be divided into the following:
The peculiarities of these or those conditions differ from country to country.
1. “Startup company-any legal entity, including technology companies, created in accordance with Law 14/2011 of June 1 on Science, Technology and Innovation (Draft Law on the Promotion of the Startup Ecosystem).
1. “Start-ups must have as their sole or predominant purpose the production, development and commercialization of innovative goods or services of high technological value.
Draw up Term Sheet, Investment agreement, shareholders agreement. Develop financing schemes for the startup, including the legal registration of contributions by investors, participants of the company.
Investigate whether you are infringing on third party domain names, trademarks, or other intellectual property rights.
Choice of jurisdiction
Determine the company's activities and main markets, analyze the possibility of applying special tax regimes
Register a company
Develop partnership and investor agreements, get tax numbers
Ensure business compliance with legislation on personal data protection
Open an account
Open an account at a suitable bank or alternative financial institution
Formalize relationships with employees and contractors
Conclude civil or employment contracts, develop a package of contracts to work with clients
Accounting and filing reports
Submitting monthly and annual reports
Our experience allows us to be creative and suggest a proper corporate structure of the business organization, a way to regulate the relationship between owners, investors in the business, support of all registration procedures on the way to business creation.
Startups face many problems on the way of their development. Despite the fact that support for such entities is growing rapidly in the European Union and beyond, startups still face a lot of fluctuations and competition in the market.
One of the most demanding and challenging of the issues that can arise is the protection of intellectual property. New businesses must decide on intellectual property management strategies, and those strategies must be effective, attractive to buyers, investors and affordable.
We will conduct a full due diligence before the transaction begins, to mitigate the potential risks of buying assets with legal flaws.
Compilation of a financial business model, choice of tax system, legal formalization of relations with investors, co-owners on issue of financial instruments, attraction of loans, launch of ICO, optimization of tax burden.
Lining of activities, legal formalization of sales of goods, provision of services, including via the Internet, protection of personal data and confidential information.
We will help you to gather the necessary documents for registration of the company in another jurisdiction, legal assistance in employment of foreign employees, obtaining work permits and citizenship.
Each expert will easily listen to you to best structure your growth and help you make the best decision for you.
Estonia has now created a comfortable environment for the implementation of startup projects, including for non-residents of Estonia, which includes the provision of a special kind of visa and other benefits.
According to § 624 of the Aliens Act, a startup is a business entity registered in Estonia, which operates to develop and launch a business model with high innovative, reproductive potential, which will make a significant contribution to the development of Estonian business environment.
To be eligible for the Startup Visa as a founder, you need:
– A tech-savvy, innovative and scalable business with growth potential, solving big problems, serving millions of people.
– Approval from the Startup Committee stating that you meet the definition of a startup and qualify for the Startup Visa.
– At least 200 euros for each month you want to spend in Estonia. This means €2400 for an annual visa. This is the minimum required by law.
How to apply for a startup visa?
There are two ways to start your startup in Estonia:
– If you do not have an Estonian company yet, you can apply for a long-term startup visa (up to 12 months) or a short-term visa (up to 3 months)
– If you have already established an Estonian company, you can apply for either a startup visa (both short-term and long-term) or a residence permit for a startup business (up to five years).
Investing in a startup is a risky business, so before providing funds, you should understand all the legal consequences associated with ownership of the investor’s share, potential liability in case something goes wrong with the investment and what rights you have in the future activities of the company.
Before making any investment you must:
Different types of startup financing:
A venture fund is an alternative investment fund that focuses on startups and early-stage companies. Small businesses need to raise capital from outside sources because they do not have their own capital or cannot access credit. Companies typically use venture capital to expand, enter new markets and accelerate growth.
According to the European Union’s Venture Capital Funds Directive, a venture capital fund means a collective investment enterprise that:
“Qualified investments” means any of the following instruments:
1. equity or quasi-capital instruments that are issued by:
– by a qualified portfolio company and acquired directly by a qualified venture capital fund from a qualified portfolio company,
– by a qualified portfolio company in exchange for an equity security issued by a qualified portfolio company, or
– An entity in which a qualified portfolio company is the majority shareholder and which is acquired by a qualified venture fund in exchange for an equity instrument issued by a qualified portfolio company;
2. secured or unsecured loans made by a qualified venture capital fund to a qualified portfolio company in which the qualified venture capital fund already has qualified investments, provided that not more than 30% of the aggregate capital contributions and uncommitted committed capital in the qualified venture capital fund is used for such loans;
3. shares of stock in a qualifying portfolio company acquired from existing shareholders of that company;
4. units or shares of one or more other qualified venture capital funds, provided that those qualified venture capital funds have not themselves invested more than 10% of their aggregate capital contributions and unclaimed committed capital in qualified venture capital funds;
“Qualified portfolio enterprise” means an enterprise that:
1. at the time of investment by a qualified venture capital fund
– Is not admitted to trading on a regulated market or multilateral trading facility (MTF) as defined in Article 4(1)(14) and (15) of Directive 2004/39/EC
– employs fewer than 250 persons, and
– Has an annual turnover not exceeding EUR 50 million or an annual balance sheet total not exceeding EUR 43 million;
2. is not a collective investment undertaking;
3. is not one or more of the following:
– a credit institution as defined in paragraph (1) of Article 4 of Directive 2006/48/EC of 14 June 2006 relating to the conduct and operation of credit institutions,
– an investment company as defined in Article 4(1)(1) of Directive 2004/39/EC
– an insurance undertaking as defined in Article 13(1) of Directive 2009/138/EC of 25 November 2009 on the commencement and continuation of the business of insurance and reinsurance (Solvency II)
– a financial holding company as defined in Article 4(19) of Directive 2006/48/EC, or
– a holding company of a mixed business, as defined in Article 4 (20) of Directive 2006/48/EC;
4. established in the territory of a Member State or in a third country, provided that the third country
– is not on the list of countries and territories not cooperating with the Financial Action Task Force on Money Laundering and Terrorist Financing,
– has signed an agreement with the country of origin of the manager of the qualifying venture capital fund and with each other member state in which the sale of units or shares of the qualifying venture capital fund is contemplated, to ensure that the third country fully meets the standards set forth in Article 26 of the OECD Model Tax Convention on Income and Capital, and to ensure effective information exchange on tax matters, including any multilateral tax agreements;
Establishment of a venture capital fund:
1. Registration of the venture fund in the appropriate legal form (associations, partnerships, etc.).
2. choice of jurisdiction (some of the criteria for an appropriate choice are political and economic stability, availability of legal preferences, existence of double taxation treaties, reputation of the jurisdiction, lower taxation).
3. organization of the activity structure, management of the venture fund. Drafting and conclusion of corporate agreements, founding agreements, and other types of internal documents of the venture fund.