The Corporate Design of Investments in Startups: A European Experience

Abstract This is the first European study to conduct an extensive empirical research of startup charters. Our aim test whether significant reforms law on Italian società a responsabilità limitata (the GmbH -type limited liability company) were successful in making corporate more amicable towards startups and venture capital contracting techniques. We explain why, context, charters provide information financing deals, we analyse than 5000 startups. find almost 200 that reflect features predicted by financial theory, albeit with some variations comparison US experience. The main one convertible preferred shares are not used. report large use (non-convertible) participating but also increasing adoption functionally equivalent non-participating shares. absence convertibility mechanisms explains different structure antidilution clauses market. Hybrids used SAFE- KISS-like contractual solutions. Co-sale (tag-along drag-along) widespread highly standardized. US-like vesting schemes equally observed. Some peculiarities depend idiosyncrasies mainly product doctrinal constructions. However, practice pushing envelope its efforts adapt startuppers’ investors’ needs. From this standpoint, look, though completely, successful. Startup appears be transforming tradition.