DENMARK Law and Practice Contributed by: Poul Guo, Martin Søndergaard, Patricia Rasch and Jonas Miller Rasmussen, Moalem Weitemeyer
ally, certain government-backed VC initiatives may have extra reporting obligations. 2.4 Particularities Denmark’s VC ecosystem comprises a diverse mix of impact funds, fund-of-funds and gov - ernment-backed VC initiatives. The Export and Investment Fund of Denmark (EIFO) and the European Investment Fund (EIF) play significant roles in supporting early-stage investments, often co-investing alongside private funds. Given the extended holding periods in VC, fund strategies have adapted to accommodate this trend, including through: • secondary market transactions – enabling LPs to exit positions before fund maturity; • continuation funds – providing extended capi - tal support to late-stage portfolio companies; and • hybrid fund structures – combining VC with growth equity strategies. 3. Investments in Venture Capital Portfolio Companies 3.1 Due Diligence VC fund investors in Denmark generally adopt a risk-weighted approach to due diligence, focus - ing their in-depth analysis on business-critical areas while addressing other customary topics through management discussions and targeted confirmatory inquiries. The level of scrutiny var - ies based on factors such as the company’s industry, growth stage and regulatory exposure, ensuring a due diligence process that is propor - tionate to the associated risks. Key areas of focus typically include ownership structure, intellectual property (IP) rights, key
commercial contracts, and employment terms for key personnel. Investors assess the compa - ny’s shareholding and capital structure, includ - ing any warrants, stock options or convertible instruments that could impact dilution and gov - ernance. IP ownership and protections are particularly crucial for tech-driven companies, ensuring that patents, trade marks and proprietary technology are properly assigned to the company and are free from third-party claims. Likewise, a review of material commercial agreements helps evalu - ate long-term revenue stability, dependencies on key customers or suppliers, and contractual risks. On the employment side, investors typi - cally scrutinise non-compete, non-solicitation, confidentiality and IP assignment clauses to ensure that founders, key employees and tech - nical talent remain committed and aligned with the company’s growth. 3.2 Process The timeline for a new financing round in a growth-stage company with new anchor inves - tors can vary significantly based on transaction complexity, the number of stakeholders involved, and due diligence requirements. Generally, the process takes between two and six months, covering key phases such as preparatory work, investor negotiations, due diligence, legal docu - mentation and closing. The introduction of a new anchor investor often adds complexity, as they may require extensive due diligence, negotiate key terms and influence the investment round’s structure. A single financing round involves multiple parties with differing interests, including existing inves - tors, new investors, the company, and some - times key management. Existing investors typi - cally aim to protect their pro rata rights, maintain
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