This year marked the 4th consecutive year that Mäkitalo had the pleasure of participating in Slush as the exclusive partner for legal services. Finally last Thursday and Friday Mäkitalo’s Slush 2016 crew was unleashed – and what a time we had! Slush 2016 was bigger than ever, full of great pitches, speeches, roundtable discussions and obviously interesting one-on-one discussions.
As was expected, Slush 2016 was once again successfully organized. The foggy visual implementation with the amazing bonfire at the main stage created an exciting atmosphere that was almost palpable. Mäkitalo’s stand at the venue this year was a corner bar with an á la carte menu for legal services crafted for the specific needs of early-stage startups.
Mäkitalo's stand at SLUSH. Picture: Kai Kuusisto
Three main themes at the Mäkitalo Stand
During the two days we came across several interesting startups and investors. The conference gathers people from all around the world and companies from all lifecycle stages. Therefore, one could say that there were as many questions and issues discussed during the event days as there were encounters with these energetic entrepreneurs and investors. That being said, and while the angles of the questions vary, our experts felt that the discussions had three carrying legal themes.
Firstly, as one can imagine, a lion’s share of the discussions concerned matters relating to incorporation in Finland. Similar questions arose during conversations with first-time entrepreneurs and foreign startups wishing to incorporate in or expand to Finland; how much capital is required to set up a limited liability company? How quickly can one set up a company? What kind of documentation needs to be drafted and in which language? Establishing a company in Finland is quite a straightforward matter. As a minimum requirement you need a name for your company, a bank account with the paid up minimum share capital (2500 €) and diligently drafted establishment documents of the company as well as registration documentation for the Finnish Patent and Registration Office (PRH). Incorporation documentation needs to be submitted in Finnish or Swedish to the Trade Register, however they may be drafted as bilingual documents for example in Finnish and English. As concluded many times during the Slush discussions, if you have a solid business idea do not let the incorporation of the startup stand in your way while seeking success - it’s neither burdensome nor expensive.
Importance of Contracts
Another key theme revolved around different kinds of Supply Agreements, Distribution Agreements and Software Licensing Agreements. It was nice to notice that the startups whom had already overcome the mental hurdle of incorporation had started thinking about the possible risks related to the services being provided. It is refreshing from a lawyer’s perspective to see that many of the startups are informed of the legal environment that they are operating in. Still the question remains: “what do I get out of the contracts?” It cannot be too much emphasized how important it is that the contract management and corporate documents are properly managed right from the incorporation. Some documentation, such as the Shareholders’ Agreement, should in most cases be drafted and signed even before incorporation. Proper contract management is something that usually culminates in exit situations and the investors are inclined to invest in a startup company that has all of its internal and external documentation in order.
This is something that should be kept in mind when thinking of the future of the company, as the company documentation can play a significant role in a potential M&A process. In Mäkitalo’s experience diligently managed corporate and contractual documentation is a key factor in avoiding prolonged due diligence processes as well as diminishing costs. Accordingly, it is incredibly important to have all the required corporate documents in order, protect your intellectual property and limit your liability to mitigate risks and ease your day-to-day business.
Lastly, Slush has proven to be the perfect platform for startups and investors to meet up and team up. Consequently, many of our discussions and consultations were about investments. We had fruitful discussions with investors about how to structure funds in Finland, where amongst others different kinds of tax treatment was highlighted between the various corporate structures.
Startups were highly interested in the different sources of funding available in Finland and we had vivid discussions on what form of funding would be suitable for the particular startup at the given time. Should the startup seek private funding or would it be eligible for available public funding? Should one apply for a loan or give up equity against the investment? Usually the contractual set-up differs when considering private as opposed to public funding and in addition the negotiation processes are quite different. Also the interests of public and private investors are not typically the same, giving its own flavor to the whole process. It is certain that there is never one fit-for-purpose concept for all situations. Whether you secure financing from a single private investor, a bank, through crowdfunding or a combination of the former, always think first, weight the pros and cons and most importantly, execute the best possible solution with diligence.
Life after Slush
It was a pleasure to meet so many new entrepreneurs, be presented with such a colorful array of new business ideas and feel the enthusiasm that the venue was filled with. We were delighted to see that Mäkilähtö’s legal menu with its pre-agreed fee caps got a warm welcome among the startup community. We are pleased to continue the work after Slush with our existing and newly met startups by adding value to their companies and helping them on their way to success.
We would like to remind you about Mäkitalo Startup Venture Clinic meetings where startups can discuss and solve their legal issues with Mäkitalo experts and interest groups. For more information about Mäkilähtö [ˈmækiˌlæhtø] service packages and our Startup Ventures Clinic meetings, please see our startup pages.
Finally, congratulations once again to the Slush 100 Pitching competition winner CybelAngel whom Mäkitalo supports by providing legal services worth of 10,000 euros.