BANDakademie “Silent partnerships and profit participation rights – The investment alternative for business angels?” in cooperation with Osborne Clarke
Early-stage investments often take place via convertible loans to avoid the complex contractual frameworks and associated costs of a financing round. As a lender, the business angel initially has no direct influence or say. The conversion usually doesn’t change that. By the time of the first major financing round, business angels typically lose significant influence, whether through loss of veto rights, board mandates, or pooling of their voting rights. And it’s not just influence that decreases with each financing round – the risk to your own investment also increases through dilution and senior liquidation preferences.
The workshop explores whether and to what extent silent partnerships and profit participation rights represent alternatives to traditional financing instruments for business angels, in which cases they can be used effectively, and how they must be structured to address the above issues and ensure the business angel’s interest in fair participation in the startup’s success.
