Venture Capital Update Updates on new BVCA Model Docs & North America Roadshow
The VC View
Over the past month the BVCA’s activities have included our response to the government’s consultation on carried interest, setting out our key asks for the government’s upcoming Spending Review, updating our Series A model documents for the venture community, engaging with North American LPs with our VC members and engaging with our fellow associations across the Atlantic on key issues.
We are delighted to publish updated versions of our early stage model documents. This includes new versions of the Articles, Subscription Agreement and Shareholders’ Agreement, as well as a new Summary of Terms to help parties understand the terms and conditions set out in the documents and inform transaction negotiations at the term sheet stage. The Model Documents are some of the most widely used resources produced by the BVCA, and we will continue to work with the industry to help investors do what they do best! Marriott Harrison have provided a helpful Insight piece on the changes below.
Fresh from our North American engagement earlier this month, we have been reflecting on the differences between the UK and US venture ecosystems, particularly in how university spinouts are funded and scaled. In this week’s insight piece, David Grimm of Albion examines the unique strengths of the UK university ecosystem, and the untapped potential there is for US investors to benefit from investing in UK spinouts.
Alongside a series of events bringing together UK GPs and North American LPs, the BVCA team engaged in discussions with North American partners, including the NVCA and ILPA. These talks focussed on what impact the new US administration will have on venture capital and the tech sector more broadly. We are assessing changes of approach in areas such as sustainability, diversity, and defence, as well as how relations between the UK, US and EU are evolving. Some of the fast-moving developments around Ukraine have been concerning, but we will continue to build on initiatives designed to support investment in Ukraine, as set out in our update on the UK-Ukraine TechBridge initiative below.
So another busy month at the BVCA, and no doubt the policy direction set by the new US administration will continue to be explored in future editions of this newsletter. The next stop in our international engagement, working with our members, will be Asia, where updates will be provided next month.
Chris Elphick,
Head of Venture Capital, BVCA
Insight
BVCA Model Documents for Early Stage Investments – key changes to February 2025 edition
Authored by David Strong, Partner & Head of Venture Capital, & Bradley Heath, Senior Associate, at Marriott Harrison.
For a summary of the latest changes to the BVCA Series A Model Documents, please see this Insight prepared by David Strong and Bradley Heath at Marriott Harrison.
View from the BVCA North America Roadshow – the opportunity for spinouts
Authored by David Grimm, Partner, Albion
Fresh from the BVCA North America Roadshow, David Grimm, Partner at Albion, reflects on the unique strengths of the UK universities and research, and the untapped potential there is for North American investors to benefit from investing in UK spinouts.
BVCA Round-Up
POLICY:
BVCA publishes updated Series A Model Documents
The BVCA working with a group of industry experts, have published updated versions of the Series A Model Documents to facilitate transactions taking place at this investment stage. Originally launched in February 2023, these have been used by investors and founders to promote industry-standard legal documentation in the UK so investors and entrepreneurs can focus on deal-specific matters.
The updated documents include revised versions of the Subscription Agreement, Shareholders’ Agreement and Articles of Association, as well as a new Summary of Terms to be used at the term sheet stage. The accounting briefing on the treatment of preferred shares is also still available for reference. The BVCA is delighted to see the industry wide adoption of the documents, which are intended for a Series A funding round where a significant investment being made in whole or in part by fund investors.
The working group will continue to update the documents on a regular basis to encompass market developments. The documents can be downloaded for free from the BVCA website here. Please contact Chris Elphick, Head of Venture Capital, for further information.
SUSTAINABILITY:
BVCA hosts VentureESG discussion on data harmonisation in reporting
VentureESG together with the BVCA gathered LPs and GPs from the VC community to discuss how to increase data harmonisation and standardisation in reporting. The discussion provided an opportunity to understand the barriers to reporting on both sides, emphasising the value in driving greater data convergence with existing market templates to streamline the reporting process.
VentureESG co-founders Hannah Leach and Dr Johannes Lenhard, presented the non-profit organisation’s joint work with Invest Europe and a group of large continental European state LPs to improve VCs data collection and reporting processes. This work has resulted in a harmonised ESG Reporting Guidelines templates.
Discussion also focused on LP requirements and action ‘beyond reporting’ and value creation. VentureESG added that harmonisation’s main benefits is freeing time for working on ESG rather than just reporting on it.
To learn more about sustainability within private capital, contact Harriet Assem, Head of Sustainability.
Please contact the VentureESG team for more information.
RESEARCH:
BVCA Investment Activity Survey Update
The BVCA asks members to share data for the latest Investment Activity survey. The representation of the industry relies on the data that members provide, which demonstrates the impact of private capital to the economy and how it invests across the nations and regions of the UK.
As such, the BVCA are glad to announce that the new Report on Investment Activity will be published on 6 May at the BVCA’s Parliamentary Reception. Last year’s activity data informed several BVCA publications in 2024, including Private capital: Building a better economy for the future, Report on Investment Activity, and Venture capital in the UK. Together, these publications highlight the critical role of private capital and support advocacy efforts.
BVCA research, supported by industry data submitted by members, has been referenced by key figures such as the Chancellor of the Exchequer, the City Minister, and Pensions Minister in recent months.
For more information on the Investment Activity Survey, please contact, BVCA’s Head of Research, Suzi Gillespie.
POLICY:
BVCA calls on VCs to share input for Government’s AI consultation
The BVCA asks the venture capital community to share input on the Government’s consultation to investigate how any adverse impacts of AI to financial stability and vulnerable consumers can be mitigated. Led by the Treasury Committee, the recently launched a call for evidence will explore how the UK financial services industry can utilise opportunities provided by Artificial Intelligence (AI).
The call for evidence will investigate:
• How AI is currently utilised within firms and how this is likely to change over the next 10 years.
• The extent that AI can improve productivity.
• How Government and regulators can strike the right balance between seizing the opportunities of AI while protecting consumers.
The inquiry follows the Government’s recent announcements on leveraging AI to 'turbocharge' UK economic growth, alongside its endorsement of 50 recommendations from the AI Opportunities Action Plan.
The deadline for submission is Monday, 17 March. Submit a response here.
For more information regarding the inquiry, please contact Olivia Green, BVCA’s Senior Policy Executive.
Spotlight
New initiatives from the UK-Ukraine TechBridge
The BVCA has been a proud supporter of the UK-Ukraine TechBridge, a collaborative initiative launched to connect the tech sectors of the UK and Ukraine to foster innovation, trade and investment. The scheme has launched two exciting programmes to help support investment in Ukraine.
The Start-up Competition, taking place on March 6, 2025 at the Cottons Centre in London Bridge is a competition open to applications from tech startups with Ukrainian leadership, teams, or operations. Startups wishing to apply should be focused on sectors such as Education, Agriculture, Cyber Security, AI, Sustainability, and Infrastructure. Following the pitches, there will be a networking event for startups to connect with investors and established UK businesses. Interested attendees should note that seating is limited and should email TechBridge team at DBT to secure their spot.
Additionally, startups and investors are invited to participate in the TechBridge Investment Accelerator. This is the second iteration of the Accelerator, announced by Small Business Ministers, Gareth Thomas MP aims to enhance investor engagement based on insights from the successful pilot program in 2024. More information can be found here:
• Investor interest form
• Start-up interest form
Research Update
UK Innovation 2025 Forward Look
Dealroom’s “UK Innovation 2025 Forward Look” report provides a comprehensive analysis of the UK’s innovation landscape as of the fourth quarter of 2024, along with projections for 2025.
The report underscores the UK’s position as Europe’s leading tech hub, with a combined tech sector valuation of $1.2 trillion and the creation of 1.8 million jobs in the UK. It examines venture capital flows, identifying sectors that have attracted significant funding and those with emerging potential. The report also explores various industries, highlighting areas of rapid growth and innovation, and includes a regional breakdown of innovation activities across the UK, noting shifts in regional dynamics.
Projections for 2025 offer insights into anticipated trends and developments in the UK’s innovation ecosystem.
Media Update
This month a new report from PWC finds that failure rates among start-ups are at the lowest levels in a decade despite record levels of incorporations in recent years.
In other news, the FT reported on Andreesen Horwitz decision to close its London office, while the Telegraph reported on rising numbers of millennials working in private capital buying up properties in the city.
The Times reported on Beauhurst data which found lower numbers of VC deals. The Times also reported on the outperformance of female led-firms. Meanwhile, Pitchbook’s European VC Valuations report finds valuations and deal sizes are on the rise.
News
PwC:
Failure Rates amongst startups at lowest level in a decade, despite record company formations.
Financial Times:
Andreessen Horowitz to close London office in pullback from UK crypto investing.
Telegraph:
The new breed of millionaires buying up London.
Sifted:
The DeepTech company builder with a ‘flavour of YC’ coming to the UK
The Times:
Female-led firms outperform rivals. So why is raising cash so hard?
PitchBook:
European VC roars back: 2024 sees soaring valuations and deal sizes
The Times:
Venture Capital deals fell by a quarter in 2024.
