US venture capital (VC) funds have become an increasingly important source of capital for UK based high growth businesses and, coronavirus aside, this trend is set to continue.
2021 was another record year for US VC investment into UK businesses with UK Government data showing that over £10.8 billion had been raised from US investors. This number was 8% larger than the amount invested by UK-based investors, showing that the US remains a key source of finance for UK companies. The UK's increasing volume of innovative scale-up companies and its status as a hub for world class talent should mean that US VCs continue to look across the pond for investment opportunities.
While both US and UK VCs are both typically structured as limited partnerships investing in early stage companies alongside other investors in the form of preferred equity or convertible instruments, there are some notable differences between the jurisdictions in terms of both the legal process and customs.
Early stage companies looking to raise capital in the US should be aware of the key differences in US venture capital investments. With that in mind, we set out at the link below a high-level comparison of the terminology and documentation typically used in UK VC transactions and those used in the US.
View the key differences comparison table here.
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This article was written by Alex Lloyd and Niall Mackle. If you would like to discuss venture capital structures in further detail, please contact Mark Shepherd, Alex Lloyd, Niall Mackle or your usual contact at Burges Salmon.