The British Private Equity & Venture Capital Association (BVCA) has released updated versions of its standardised documents for early-stage venture capital investments, replacing the previous editions from February 2023. These updates, published in February 2025, aim to refine and clarify existing provisions to better align with current industry practices.

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Key Changes in the February 2025 Edition:

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Subscription Agreement:
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• Completion Mechanics: A new short-form alternative has been introduced for scenarios where 100% of funds are expected prior to completion. While offering streamlined protections, this alternative may not be suitable for all situations.
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• Regulatory Actions: An optional provision has been added requiring the company to assist investors in regulatory investigations or matters under the National Security and Investment Act 2021, ensuring necessary documentation and support are provided.
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• Warranties: Revisions have been made to the intellectual property, business systems, and data protection warranties. Notably, new definitions for "Know How" and "Patents" have been added, alongside warranties addressing artificial intelligence (AI) and insolvency.

Shareholders’ Agreement:
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• Strategic Investors: Optional language now allows the Board to restrict information access for strategic (non-financial) investors in specific circumstances, balancing transparency with competitive considerations.
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• Indemnification: Companies can now undertake to enter indemnification agreements with Investor Directors or provide direct indemnification, offering flexibility in director protection.
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• EIS/VCT Provisions: The Enterprise Investment Scheme (EIS) and Venture Capital Trust (VCT) undertakings have been reworded to include optional language that makes these undertakings subject to the fiduciary duties of Directors.
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• Other Investment Opportunities: New clauses clarify that investors are permitted to invest in competing companies, provided they do not disclose the company's confidential information, and are not obligated to present investment opportunities to the company.
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• Company Undertakings: Updates include commitments related to anti-bribery, anti-money laundering, anti-tax evasion, sanctions, governance, and financial policies and procedures, enhancing the company's compliance framework.
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Articles of Association:
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• Bad Leaver Definition: The clause designating resignation (except in cases of constructive dismissal) as a Bad Leaver event has been removed, reflecting its rare application in practice.
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• Liquidation Preference: Clarifications have been made to the liquidation preference mechanics, aligning them with common practices. The Board, with Investor Majority Consent, can now determine applicable exchange rates for amounts in different currencies. Additionally, the EIS/VCT investors' liquidation preference has been overhauled linguistically, with minimal practical changes.
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• Anti-Dilution: Language has been added to clarify anti-dilution protections when the Series A share class includes shares with different starting prices, such as those arising from convertible securities. It also allows the Investor Majority to waive anti-dilution protections partially or entirely, providing flexibility in specific funding scenarios.
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• Sanctions: Provisions have been introduced to prevent the company from issuing new securities to sanctioned individuals or entities. Restrictions on share transfers to sanctioned persons have been added, along with requirements for shareholders to demonstrate they are not sanctioned, ensuring compliance with applicable sanctions regimes.

These updates underscore the BVCA's commitment to maintaining robust and clear documentation that reflects the evolving landscape of venture capital investments. By adopting these revised model documents, investors and companies can ensure their agreements are aligned with current best practices and regulatory requirements.

At Avery Law, we specialise in advising founders, investors, and venture capital firms on all aspects of early-stage fundraising and investment structuring. With deep expertise in venture capital transactions, we help clients navigate the complexities of the BVCA documents and fundraising. Whether you're raising your first round or negotiating a later-stage investment, our team ensures your documentation aligns with the latest BVCA standards and best practices.

We understand that fundraising can be costly, which is why we offer competitive and transparent fee structures designed to support startups and growth-stage companies. We work with clients to provide fixed fees and staged payment options wherever possible, ensuring high-quality legal support without unexpected costs.

If you're a founder preparing for a fundraise or an investor seeking to protect your interests, our team is here to help. Contact us today to discuss how we can streamline your transaction and provide tailored legal solutions to fit your business needs.

Read more: BVCA Model Documents for Early Stage Investments – key changes to February 2025 edition