Raising Capital for start-ups


Michael Pilegaard Hansen, assistant attorney

Mph@edisonlaw.dk | Linkedin


When raising capital to a start-up company it is important to decide which lawyer to choose.

A founder can choose between:
(1) investor’s lawyer, or
(2) the founder’s own lawyer

Read more about why not to choose investor’s lawyer here.

When a start-up company is raising money from an investor there are some important terms to be aware of.  Terms relating to control of the company end economic terms are the most important.


Michael Pilegaard Hansen, assistant attorney

Edison law

Raising Capital for start-ups

How To Legally Operate Commercial Drones In Denmark


Written by Kristian Holte, dealmaker & technology lawyer

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drone [noun]

An unmanned aircraft or ship guided by remote control or onboard computers

Merriam-Webster


Amazon is developing a drone-based delivery system named Amazon Prime Air. I find this very interesting … and difficult. As with all things with great potential.

One of the challenges is regulatory.

As witnessed by Amazon’s letter to the US Aviation Administration, Amazon would like for US rules to treat commercial drone operations better.

But what about Danish rules? How does the legal climate for commercial drone operations look in Denmark?

BASIC RULES

The Danish Transport and Construction Agency has issued some basic rules for drone operations.

For a drone weighing up to 7 kg some of the more interestering rules are:

  • It is not allowed to fly higher than 100 m
  • It is not allowed to fly over densely populated areas
  • It is not allowed to fly nearer than 150 m of urban housing and large roads
  • It is not allowed to fly nearer than 5 km of public airports

For drones weighing from 7 to 25 kg additional rules apply, for instance:

  • Operations have to take place from an authorized airfield
  • Liability insurance must be taken out

Now, as you can see, these rules apply serious constraints on the commercial operations of drones.

This is why the Transport and Construction Agency has issued additional rules for such operations.

RULES FOR COMMERCIAL DRONES

According to these rules, the Transport and Construction Agency can issue a permit for commercial drone operations.

With such a permit, the Agency can cut companies some slack from the pressure of the basic rules. For this to happen, the Agency has to find that the company will implement adequate safety and control measures.

As a rule of thumb, the Agency only considers granting a permit if the following conditions are met:

  • Each drone must be operated within the pilot’s visual line of sight (not using cameras)
  • Each flight must be aborted if another aircraft is entering the airspace
  • Each flight must be carried out in accordance with an approved operations manual

If the flight is not carried out within the pilot’s visual line of sight, the Agency can only issue a permit if the flight takes place in specially dedicated airspace. This condition seems, for instance, to impede an army of long-distance automated delivery drones.

If the Agency grants a permit, this does not mean that a company can operate its drones without restrictions.

Generally, a company can expect to have to comply with at least the following rules:

  • A pilot must be designated to each drone flight
  • A drone is not allowed to fly higher than 100 m
  • A safety area with a radius of minimum 15 m and maximum 50 m must be maintained during the entire flight
  • A drone may not fly between sunset and sunrise
  • The operator must take out insurance
  • Each drone must be individually marked

BUSINESS MODELS INVOLVING DRONES

In light of the optimism which currently surrounds commercial drones, the regulation imposes severe restrictions.

According to some the rules are not business friendly.

True, as the rules currently look, they might hinder a number of business models like the ones of Amazon Prime Air. But others, like drone photography in various forms, are already possible.

However, I do believe there is some wriggle room within current rules for serious providers.

But, if the drone industry gathers serious momentum, it seems likely that the rules will be changed. Fundamentally.


Written by Kristian Holte, dealmaker & technology lawyer

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How To Legally Operate Commercial Drones In Denmark

What is an option pool?


Michael Pilegaard Hansen, assistant attorney

Mph@edisonlaw.dk | Linkedin


An option pool is used by start-up companies to attract and incentives talentet people. The option pool consists of a percentages of the company’s shares which is reserved for key employees. Sometimes an option pool is referred to as an employee, incentive or warrant pool.

Find out how actually pays for the option pool here.

An option pool is a typical term in a term sheet. The pool normally makes up 10 to 20% of the shares in a start-up company. The function of the option pool is to provide incentives in the form af equity to future employees and others.


Michael Pilegaard Hansen, assistant attorney

Edison law


What is an option pool?

What is a no-shop clause?


Michael Pilegaard Hansen, assistant attorney

Mph@edisonlaw.dk | Linkedin


When a founder is raising capital to his start-up company, investor will often include a no-shop clause in the term sheet. The purpose is to restrict the founder from negotiating with other parties. A no-shop clause is generally only in effect for a limited period of time, until the parties know, if the can agree on the main terms of the investment. The clause is also sometimes referred to as “exclusivity”.

Should you – as a founder – accept a no-shop clause and what are the consequences of breaching the no-shop clause. Find out here.


Michael Pilegaard Hansen, assistant attorney

Edison Law


What is a no-shop clause?

What is a stock option?


Michael Pilegaard Hansen, assistant attorney

Mph@edisonlaw.dk | Linkedin


A stock option is a right for a person to become a shareholder in a company, if certain terms are met.

A common term is that the person must remain employed for a certain period of time. Another common term is that certain milestones must be fulfilled.

Stock options are often used by start-up companies who cannot pay market salary for skilled employees. In this case, the company can make itself more attractive by adding stock options to the employee’s pay.

Read more about the advantages, economic consequences, and how to structure start-up stock options here.


Michael Pilegaard Hansen, assistant attorney

Edison Law


What is a stock option?

Legal check-list for start-up companies


Written by Michael Pilegaard Hansen, assistant attorney

Mph@edisonlaw.dk | Linkedin


Incorporate an ApS or IvS from the beginning. Create a register of shareholders to ensure control of ownership of shares and enter into a shareholders’ agreement. Learn more about the key issues to be aware of when entering into a shareholders’ agreement here.

Create a vesting plan in relation to founders, employees and directors who receive shares. Vesting protects your start-up company from shareholders who leaves the company at an early stage.

Use incentive compensation in the form of bonuses, options or warrants to attract the right people to your start-up company.

Transfer intellectual property to your start-up company, which was created before the company’s incorporation and insert intellectual property clauses in employment, co-operation and consultant agreements that make your company the owner of the intellectual property.


Written by Michael Pilegaard Hansen, assistant attorney

Edison Law


Legal check-list for start-up companies

What is a non-compete clause?


Written by Michael Pilegaard Hansen, assistant attorney

Mph@edisonlaw.dk | Linkedin


A non-compete clause for the founder means that the founder cannot start a competing business for a period of time, if the founder leaves the start-up company. Under Danish law non-compete clauses are generally valid.

A non-compete clause for the investor means that investor is not allowed to invest in competitors.

Founders often sign a non-compete clause, whereas investors often don’t. Read more about the reasons behind this, and learn the tools to negotiate investor’s non-compete clause here.


Written by Michael Pilegaard Hansen, assistant attorney

Edison Law

What is a non-compete clause?

What is vesting?


Written by Michael Pilegaard Hansen, assistant attorney

Mph@edisonlaw.dk | Linkedin


Vesting is a legal tool that creates a strong incentive for people to keep on working to develop a company.

Vesting is the process by which the shares given to a company’s co-founder or employee is subject to repurchase by the company, if the co-founder or employee leaves the company before the shares are vested.

Learn more about vesting here


Written by Michael Pilegaard Hansen, assistant attorney

Edison Law

What is vesting?

Convertible notes


Written by Michael Pilegaard Hansen, assistant attorney

Mph@edisonlaw.dk|Linkedin


Convertible notes is used to raise capital for start-up companies. A convertible note is a loan to the start-up company, which gives investor the right to convert the convertible note into shares, before the start-up company is sold. In this way, investor will participate – as a shareholder – in any economic upside of the sale. The terms of the conversion is specified in the note.

An important term is what happens with the convertible note if the start-up company is sold. You can read more about this here.

 


Michael Pilegaard Hansen, assistant attorney

Edison Law

Convertible notes