Venture Capital (VC) funding plays a critical role in transforming ideas into innovative products or solutions. As VC funding becomes increasingly prevalent in Singapore and the region, the Venture Capital Investment Model Agreements (VIMA) provide a set of standardised documentation for use in seed and early-stage financing rounds, to reduce transaction costs and the time taken to close such rounds.
Since the successful launch of the VIMA in 2018, the Singapore Academy of Law (SAL), Singapore Venture Capital & Private Equity Association (SVCA) and the VIMA working group have received many positive comments on how the VIMA forms have facilitated and eased early-stage funding for startups.
Encouraged by the adoption of the VIMA, the VIMA working group has decided to publish this online handbook to complement the VIMA forms. This handbook is unique in that all the articles are adapted specifically for the nuances of early stage investments in Singapore and the region, including many commonly encountered business and legal issues. References to the VIMA in the handbook will also better guide the practitioner and reader on what and how the VIMA forms may be used, thus shaping the thought process and setting the right foundation for later round financing.
This VIMA handbook is a compendium of practical and user-friendly articles catered for the startup doing its first CARE or Series A financing, to the more experienced investor and practitioner looking for an instructive refresher. The handbook will take the reader through the process of fundraising, starting with an overview to articulate the key motivations of investors and founders, to the more technical aspects of legal documentation and related practical tips. There are also articles on tax and valuation to present a holistic view of the concepts relevant to the entire fundraising process.
We have thus divided the handbook into three parts as follows:
A. Brief background on the early-stage funding process, the VIMA, and the key issues that you should be concerned with (as an investor or founder).
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B. The following chapters provide a deeper dive into the issues that you may encounter in using the VIMA
- VIMA Term Sheet – A road map for a start-up’s relationship with investors by Kyle Lee (WongPartnership) and Jaewon Yoon (Jungle Ventures)
- The Convertible Agreement Regarding Equity – Why CARE? by Satbir Walia and Michael Ng (Clifford Chance)
- A guide to Employee Incentive Schemes and Employment Legislation in Singapore by Yeo Boon Kiat and Darren Low (Allen & Gledhill) and Jaewon Yoon (Jungle Ventures)
- Relevance and use of VIMA in South-East Asia by Brian Ng and Lee Jin Rui (Rajah & Tann Singapore) and Chua Joo Hock (Vertex Ventures Southeast Asia and India)
C. The last 3 chapters are intended to provide a wider understanding of the early-stage funding process, by providing some background on valuation, tax and ESG considerations that you should also be mindful about at the early-stage fund-raising process.
- Tax - An essential consideration for start-ups by Lim Maan Huey and Trevina Talina (PwC Singapore)
- Considerations in valuation of start-ups by Leonard Woo and Chong Su-Lyn (Deloitte Southeast Asia)
- The role of ESG in start-ups by Lip Kian Ang, Thomas Chou and Alfredo B.D. Silva (Morrison Foerster)
Finally, on behalf of the editorial committee and SAL, I would like to express my deep appreciation and thanks to all the contributors — members of the legal community (both practitioners and in-house lawyers), tax advisers, accountants and VC firms — who have been so generous in sharing their experience and expertise. I have no doubt that the VIMA handbook will be a very useful resource for anyone who wants to participate or simply understand start-up financing in Singapore and the region.
Gregory Tan is currently a Managing Director of Legal & Regulatory at Temasek. He graduated from the University of Bristol and is qualified in Singapore, England & Wales and New York. He currently also serves on the Promotion of Singapore Law Committee at the Singapore Academy of Law and is Chair of the Working Group for the VIMA (Venture Capital Investment Model Agreements) project.
Before joining Temasek, Gregory was a partner at the US-based international law firm of Morrison & Forester where he worked on a wide range of transactions, specialising in cross border M&A transactions, joint ventures and private equity. His practice was recognised in leading directories such as Chambers Asia- Pacific, IFLR 1000 and Asia Pacific Legal 500. Prior to private practice, Gregory was a Justices’ Law Clerk in the Supreme Court of Singapore.
Disclaimer: The articles on this website are for general information only. Readers are advised to seek specific legal advice before acting on the contents set out therein. The views and opinions expressed in the articles which comprise the VIMA Handbook are those of the authors alone and do not represent the official position of the Singapore Academy of Law.
Published 29 May 2020