The Venture Capital Law Review: Editor's Preface

I am very pleased to present this first edition of The Venture Capital Law Review, for which it has been my honour to serve as editor.

A country's economic outlook can often be gauged by the environment for start-up companies within its borders. Start-ups are key drivers of the new technologies and industries that enable economies and society to flourish. The entire start-up ecosystem is important but the financing environment is key, which is where venture capital plays a pivotal role.

Despite all the hardships of the ongoing covid-19 pandemic, the venture capital sector has remained relatively resilient. While many countries saw some slowdown in venture capital investments in 2020, many also saw generally healthy growth in new fund formation and fundraising. Many governments are also fostering the start-up ecosystem in their countries through ongoing regulatory reforms, in addition to special measures enacted to ease the economic impact of the pandemic.

This publication provides a legal and regulatory overview of VC funds, including both fund formation and management. We look at the various types of legal entities and regulatory frameworks that are available in forming a fund, as well as the key terms of the agreements that are entered into between funds and their investors. We also highlight the regulatory environment for fund managers.

Of course, we also take a look at the raising of capital from the start-up perspective. Start-ups still primarily rely on VC funds to finance the various stages of their growth. However, we are seeing a variety of new fundraising options for start-ups – including crowdfunding – although these often encounter a different set of regulatory issues and restrictions.

Ultimately, the exit from a VC investment is important both to the VC fund and also to the start-up. We take a look at various exit options, which typically entail either an initial public offering or a negotiated acquisition of the start-up. The use of a SPAC (special purpose acquisition company) has been attracting interest as a potential exit mechanism, although the degree of availability of this structure varies widely across jurisdictions.

I hope that you will find this first edition of The Venture Capital Law Review to be an interesting and informative overview of the venture capital and start-up environment in many important jurisdictions around the world. I would like to thank the many leading practitioners who have generously contributed their time and expertise to make this publication possible.

Hajime Tanahashi
Mori Hamada & Matsumoto
Tokyo
August 2021

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