Together with the Maastricht University, the House of Startups offers a free spot for a Luxembourgish startup in an educational online simulation game concerning the negotiation of a shareholder agreement for startups.
Photo: Philippe Linster, CEO of the House of Startups / Credits © Kaori Anne Jolliffe / Silicon Luxembourg
You launched a new initiative together with Maastricht University. Can you tell us more about it?
The Maastricht University is known worldwide for their academic studies, especially their European Corporate Finance Law Excellence Course. The Excellence Course focuses on corporate finance law from a practical perspective and is supported by a Jean Monnet grant from the European Commission. Most speakers providing the workshops are leading practitioners or leading academics. Maastricht University ranks 6th in the worldwide Times Higher Education ranking for young universities.
Part of the Excellence Course – taking place in April 2021 – is a one-week interim simulation game about the negotiation of a shareholder agreement for a startup company. The students represent different founders and investors of the startup and have to first negotiate a term-sheet and thereafter draft and further negotiate the full shareholder agreement. The last two years, professors have organized the simulation game based on a fictitious startup. However, because the course takes place entirely online this year due to Covid-19, they wanted to attempt to do the simulation with an actual startup.
This would be very effective, as it makes the game much more tangible for the students, as it will be based on real-life facts. As for the startup, it could have the added value of allowing the founders to get a shareholder agreement and see how certain scenarios would play out.
“Setting up a thorough shareholder agreement is very costly and most startups have no idea, whatsoever, how to go about it.”
In November, I was approached by one of the professors of this course, with whom I’ve already worked on other startup projects, to see whether the House of Startups could help him find such a startup that would be willing to participate in the simulation.
As federator of the Luxembourgish startup ecosystem and having excellent relationships with every incubator, this would be a cake walk. It took us only a few weeks to work out the concept of this new initiative and we decided the criteria for participation would be:
- You are a startup incorporated in Luxembourg
- You have not participated in a fundraising round before
- You have foreseen the possibility of a potential fundraising round in 2021 or the beginning of 2022
More information here: Opportunity for Founders – Research – Maastricht University
The negotiation of a shareholder agreement seems to be a recurring question that comes up for startups. What are the common fears and expectations?
When launching their first fundraising campaign, startups often think about the perfect pitch deck, where and how to approach investors, pitching the story, etcetera. But they underestimate the importance of the part when the investor is really interested to invest in the startup and are often unclear about where to go from there.
Then questions arise about how to negotiate with an investor, which clauses are important to the investor or the startup, where are the possible pitfalls, how to insure future funding rounds, valuation methods, what happens when it goes well or doesn’t go as expected, etcetera. The list is endless.
“Understanding which do’s and don’ts are essential when negotiating a shareholder agreement with investors.”
Setting up a thorough shareholder agreement is very costly and most startups have no idea, whatsoever, how to go about it. This experience with the students and the discussions with the professors will allow startups to acquire a lot of practical knowledge, that too only in a week’s time. This could save them a lot of money in their future professional endeavours.
The benefits for the founders are the following :
- Gaining deep insights regarding the negotiation of shareholder agreements, based on your fundraising campaign.
- Learning to prepare a first funding round or a follow-up funding round.
- Understanding which do’s and don’ts are essential when negotiating a shareholder agreement with investors.
- Receive the final template of a shareholder agreement, free of charge, presented at the end of the simulation .
The House of Startups is growing at a fast pace. Can you tell us about your planned activities for this year and what goals you’ve set out to achieve?
We have a three pillar plan, where each pillar is an area we would like to strengthen and develop in the future :
- Live up to our mission as federator of the startup ecosystem and support it as much as possible through different formats (events, hackathons, promotion, podcast, Startup Guide, etcetera).
- Strengthening and developing our role as a facilitator of open innovation in established-companies through the Luxembourg Open Innovation Club (LOIC).
- Accompanying and supporting startups in the Luxembourg-City Incubator (which belongs to the House of Startups).
