ARQIS develops industry standard for founders and investors

20. March 2019

Under the legal leadership of ARQIS, the German Standards Setting Institute (GESSI) has published the “Term Sheet”, another standard document for startups and investors, especially business angels. The GESSI is a joint project of the Business Angels Network Germany e.V. (BAND) and the Federal Association of German Startups e.V. (Startup Association). The “term sheet” is a detailed letter of intent, in which the parties define the key points of a transaction.

“Business angels are an important pillar not only in the US and Europe, but now also in Germany, in order to set up business start-ups and finance the first two rounds,” says Professor Christoph v. Einem, partner of ARQIS Rechtsanwälte and member of the GESSI working group “Term Sheet”. However, both the founders and the business angels are usually legal laymen. Therefore, GESSI gradually provides the typical contracts and documents required in a start-up process in the form of standard documents. “Of course, these documents should not replace legal advice. They should provide the parties with clues as to what the transaction might look like, what points are to be negotiated and what to look for,” continued Einem.

The standard document “Term Sheet” consists of three individual documents: introductory instructions for use, the Term Sheet itself together with an annex listing transactions requiring approval and a “Standard Cap Table” (Excel sheet). This is a tabular list of the shareholdings in a startup and the valuation and assets of the company. “Capitalization Tables” are often used as an analysis and calculation basis for further financing rounds. To enable the participation of international investors, the documents – like all texts of the GESSI – are held in German and English.

The first two GESSI standard documents “Convertible Loan” and “Term Sheet” will be followed by other documents, e.g. for employment contracts / executive contracts, participation agreements and employee stock ownership plans.

The GESSI standard documents are available for free download on the website .

Advisors to German Standards Setting Institute:

ARQIS Rechtsanwälte (Munich): Professor Dr. Christoph v. Einem, Dr. Christof Schneider, Elisabeth Falterer and Gebhard David


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