Venture Capital Investment Model Agreements (VIMA) 2.0

By Singapore Academy of Law and Singapore Venture and Private Capital Association

Following the successful launch of the Venture Capital Investment Model Agreements (“VIMA”) in October 2018 and its widespread adoption by industry users since, the Singapore Academy of Law and the Singapore Venture and Private Capital Association, together with the working group of VIMA, have revised the initial model agreements, incorporated more annotations and alternative provisions, and introduced new documents (such as the model constitution) to reflect feedback from users and enhance the appeal of the VIMA. To provide targeted assistance for innovative businesses, a suite of pre-Series A documents was created to facilitate the start-up’s journey towards its first fundraising. This vigorous upgrade was undertaken by a working group comprising 10 local and international law firms, venture capital firms and startups, together with investment firm, Temasek. In parallel, an extensive industry consultation reached out to over 50 industry stakeholders, including The Law Society of Singapore, and the detailed and comprehensive feedback received helped shape the development of these model agreements.

Background

The VIMA was conceived as a pragmatic set of contracts intended to balance the interests of both the investor and company. Its goal was to narrow the scope of open issues and negotiation by the contracting parties to help them reach common ground more quickly, allowing them to focus their time on addressing and negotiating more bespoke and deal-specific issues for incorporation into the documents.

VIMA offers the following advantages to both founders and investors:

• The terms take into account the interests of founders and investors in a balanced and pragmatic fashion. Many clauses reflect industry norms. This helps to reduce the number of issues that needs to be resolved, and frees up time for founders and investors to focus on negotiating high-level issues and key deal-specific terms.
• VIMA 2.0 provides general information regarding funding which would be especially useful to founders and investors seeking such funding for the first time to bridge any information asymmetry.
• VIMA 2.0 provides more choices for users via alternative clauses in these model agreements/standard forms with appropriate annotations to guide the users.

What VIMA 2.0 comprises

The prior versions of these documents have been refreshed and revised, and new documents have been added to the VIMA 2.0 suite. To obtain the VIMA 2.0 suite, please complete the webform found on this page.

Series A documents

• Lexicon
• Non-disclosure Agreement
• Term Sheet – short and long form
• Shareholders' Agreement
• Subscription Agreement
• Convertible Note (NEW)
• Employee Share Option Plan Primer (NEW)
• Model Constitution (NEW)
• Environmental, Social and Governance Letter Agreement (short form) (NEW)
• Environmental, Social and Governance Letter Agreement (long form) (NEW)
• For companies that are involved in a transaction that requires ESG documentation, the VIMA 2.0 suite includes a sample letter agreement that sets out some examples of how ESG-related provisions can be incorporated in an investment by way of a share financing or convertible note financing in a Singapore company.  Early stage companies may consider using the short form letter agreement, while later stage companies, growth or matured companies may consider using the long form letter agreement.

Pre-Series A documents

• Mutual Non-disclosure Agreement (NEW)
• CARE - Convertible Agreement Regarding Equity
• Founders' Agreement (NEW)
• Employee Deed of Assignment of Intellectual Property (NEW)
• Employee Share Option Plan Schedule (NEW)

How to use VIMA 2.0

Each document includes explanatory and drafting notes on various clauses in the documents. The documents have been drafted based on Singapore law, and therefore incorporate Singapore law as the chosen governing law and Singapore as the chosen dispute resolution forum.

The Lexicon sets out the terms which are commonly used in an early-stage financing round, to provide founders and seed investors with general information and explanations on the terminology used in funding rounds.

Founders and investors may use VIMA 2.0 to commence investment discussions and focus on key commercial points, tailoring any terms (or inserting any additional terms) as they may require into the documents.

Please note that VIMA 2.0 does not provide the entire range of potential options available or appropriate for early-stage financing rounds, since these are necessarily dependent on the specific transaction or parties involved. Parties should carefully consider their circumstances and decide whether and how these documents could be used or tailored to suit their situation and to seek professional advice accordingly. Additional documents may also be required for an early-stage financing round (e.g., consent of other investors, founder employment agreement, etc). However, we believe that the VIMA would remain highly relevant for industry users by providing a general guide and market reference as to early-stage financing terms and how such financing is typically structured.

VIMA 2.0 in global context

VIMA Working Group member Morrison Foerster has prepared a report which, among others, compares eight key venture capital investment terms from VIMA 2.0, and the latest US and UK model documents (the NVCA and BVCA respectively), and against their respective local market positions.

The report is available at https://www.mofo.com/key-venture-capital-investment-terms-start-ups.

Industry insight

The VIMA 2.0 working group regularly publishes articles on venture capital investments which hopefully can serve as a starting point for founders and investors to conduct initial research and arm themselves with knowledge.

Fundraising 101: Understanding Liquidation Preference | By Gabriel Li and Dr Jeremy Loh

Fundraising 101: Understanding Liquidation Preference | By Gabriel Li and Dr Jeremy Loh (PDF version)

Fundraising 101: Governance rights - What does a founder need to know? | By Tom Jokelson, Felicia Tan, Vanessa Teo and Kelvin Goh

Fundraising 101: Governance rights - What does a founder need to know? | By Tom Jokelson, Felicia Tan, Vanessa Teo and Kelvin Goh  (PDF version)

Fundraising 101: Low tide in the South-East Asia venture capital and start-up ecosphere – Observations on fraud and down rounds and pay-to-play structure trends in 2024 | By Kyle Lee and Jacob Low

Fundraising 101: Low tide in the South-East Asia venture capital and start-up ecosphere – Observations on fraud and down rounds and pay-to-play structure trends in 2024 | By Kyle Lee and Jacob Low (PDF version)

Fundraising 101: Valuation of start-ups – some key considerations | By Lip Kian Ang, Mark Tay and Yong Wei Tan

Fundraising 101: Valuation of start-ups – some key considerations | By Lip Kian Ang, Mark Tay and Yong Wei Tan (PDF version)

Fundraising 101: Drag-along rights

Fundraising 101: Drag-along rights (PDF version)

Form update and feedback

VIMA will be updated periodically to remain relevant to users. We therefore welcome feedback and if you have any comments to share regarding the VIMA 2.0, please let us know at [email protected].

Members of the Working Group

The Singapore Academy of Law and the Singapore Venture and Private Capital Association wish to record their appreciation to the following members who have participated in the working group to prepare the Venture Capital Investment Model Agreements (VIMA) 2.0:

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DISCLAIMER

No document or information provided in VIMA 2.0 should be construed as legal advice (including for any fact or scenario described in such documents or any assumptions made in relation to such documents). The documents and the information in VIMA 2.0 are a starting point only and the relevant documents should be tailored to meet the specific legal and commercial requirements of the contemplated transaction. Additional documents may be required for the contemplated transaction. Legal and tax advice should be sought before using these documents. Neither the Singapore Academy of Law nor any of the working group members or contributors takes any responsibility for the contents of the documents provided in the VIMA 2.0. 

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