PORTUGAL Law and Practice Contributed by: Domingos Cruz, Joana Bugia and Constança Morão, CCA Law Firm
3. Investments in Venture Capital Portfolio Companies 3.1 Due Diligence VC fund investors typically carry out legal, tax, financial, technical and (more recently) behav - ioural due diligence. The legal due diligence is usually conducted on “red flag” basis, focusing on corporate structure, assets, financial aspects, key contracts, insur - ance, labour, intellectual property, technology, data protection, regulatory matters and litigation. The tax and financial due diligence are often car - ried out by financial consultants. The technical due diligence aims to validate the existence of the technology and its state of the art. Behavioural due diligence aims to assess and establish the founders’ ability to tackle the chal - lenges of a fast-paced, high-octane, and aggres - sive environment. 3.2 Process The timeline of a new financing round, such as a Series A financing round, with new anchor inves - tors, can vary significantly, typically ranging from one to six months. This variation depends on several interrelated factors, including the scope of due diligence, the complexity of the deal structure, the negotiation of terms and condi - tions, the mix and interests of existing versus new investors, and the drafting and finalisation of legal documentation. Factors Affecting the Timeline There are a number of factors that may affect the timeline.
Innovation Agency (ANI) as R&D companies, and creates additional layers of governance rights and reporting obligations. Moreover, the trend of co-investment has been adopted by government-backed funds, through the programme “Coinvestimento Deal-by- Deal” , which has a EUR200 million budget and emphasises innovation and sustainability. 2024 was also marked by the creation of the Venture Capital programme by Banco Português do Fomento, with a EUR400 million budget. Under this initiative, the bank invests in Portuguese venture capital funds, which in turn are expected to invest in early-stage start-ups during the first months of 2025. Lastly, in terms of the ecosys - tem itself, the presence of VC investments in Portugal has been growing and evolving over the past decade, with increasing activity in start-up funding (from Portuguese and foreign investors) and the creation of incubators and accelerators (like StartUp Lisboa, StartUp Braga, Startup Leiria, and Fábrica de Unicórnios). On the other hand, given current market condi - tions, venture capital investment in Portugal now often requires longer holding periods. One such approach is the establishment of continuation funds, which enable investors to exit under more favourable terms than they might achieve at the original maturity date of the fund. Additionally, because SIFIDE investments typically impose a minimum holding period of four years, inves - tors are increasingly seeking a more active role in portfolio companies. This is often reflected in requests for board seats, observer rights, and enhanced reporting obligations to ensure closer involvement in the company’s day-to-day opera - tions.
457 CHAMBERS.COM
Powered by FlippingBook