DENMARK Law and Practice Contributed by: Poul Guo, Martin Søndergaard, Patricia Rasch and Jonas Miller Rasmussen, Moalem Weitemeyer
aligning with the country’s commitment to sus - tainability and green transition initiatives. A distinction can be made between industries that experienced VC-backed exits and those that saw an increase in financing rounds. The technology sector, particularly fintech and soft - ware companies, accounted for a higher share of VC-backed exits, predominantly through M&A. In contrast, deep tech and renewable energy start-ups underwent multiple financing rounds, reflecting their capital-intensive nature and extended development timelines. This trend was further reinforced by the European Investment Fund’s commitment to PSV Hafnium, Denmark’s first venture fund dedicated to deep tech, under - scoring the sector’s need for sustained funding. Overall, Denmark’s VC landscape over the past year has followed a clear pattern: technology firms are more likely to achieve VC-backed exits, whereas deep tech and renewable energy com - panies continue to attract successive funding rounds to support long-term growth and com - mercialisation. In Denmark, VC funds are typically structured as limited partnerships ( Kommanditselskab – K/S), where the general partner (GP) manages the fund, and limited partners (LPs) provide capital while maintaining limited liability. The GP is usu - ally a private limited company (ApS or A/S) to minimise liability exposure. Decision-making is governed by the limited part - nership agreement (LPA), which defines capital commitments, governance and profit distribu - tion. The GP has discretionary authority over 2. Venture Capital Funds 2.1 Fund Structure
investment decisions, often with oversight from an investment committee, which may include LP representatives. Market-standard corporate documentation includes: • an LPA – defines fund structure, governance, investor rights and capital calls; • subscription agreements – regulate capital commitments and LP obligations; • an Investment Committee Charter – establish - es decision-making authority on investments; • management agreements – outline roles, fees and responsibilities of fund managers; and • side letters – address specific investor rights and bespoke terms. 2.2 Fund Economics Fund principals typically participate in the eco - nomics of the fund through: • management fees – usually ranging from 1.5% to 2.5% of committed capital, covering operational expenses; and • carry or carried interest – standard market practice sets this at 20%, contingent on surpassing a predetermined hurdle rate (often 8%). 2.3 Fund Regulation Danish VC funds are subject to the Alternative Investment Fund Managers Directive (AIFMD) and must comply with licensing, reporting and investor protection requirements. However, VC funds operating exclusively for professional investors may benefit from lighter regulatory obligations. Funds structured as limited partnerships are not subject to direct corporate taxation, as profits and losses pass through to investors. Addition -
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