Faster than you can say "seed round"

Financing rounds are always a nerve-wracking and costly affair for start-ups. Also because a lot of it involves cumbersome powers of attorney, forms, contracts and lengthy processes in the most beautiful legalese. But much of it is "monkeywork", says our guest author Dr. Peter Möllmann from the law firm PXR. With his new SeedX project, he now has this work done by the GAIA software platform and wants to make pre-seed and seed rounds not only faster, but also significantly cheaper.

It doesn't work without money. Every start-up founder knows that. But why are investors so hesitant at the moment? The gloomy growth prospects, changed market conditions due to fundamental events such as the war in Ukraine and, above all, the turnaround in interest rates mean that less VC money is currently flowing in than in previous years. The mood among VC investors has not been this bad for around two decades.

In order to convince VC investors, startup founders must therefore be particularly attractive. Above all, they must handle their capital much more efficiently than before in the new market environment. The usual transaction costs can be significantly reduced with a lean and fast process right from the first financing rounds. Start-ups can thus position themselves more capital-efficiently right from the financing stage. Digitalized solutions can simplify tedious steps and ensure faster completion of seed financing. In this guest article, expert Dr. Peter Möllmann explains exactly how this works.

It used to take a week, now it takes a few hours

The pre-seed or seed round is the first step for young start-ups to raise VC capital for the development of their product and for the go-to-market. The duration of the financing process can vary, but it usually takes a few months from the first investor approach to closing. Once an investor has submitted a term sheet, the "legal process" begins and with it a huge amount of documentation, combined with sometimes seemingly archaic formalities: notarized and apostilled powers of attorney, inconsistent KYC forms, different cap table formats and, last but not least, hundreds of pages of financing agreements that are drafted over days or weeks - all of this is associated with lengthy processes, takes up a large part of the time and thus causes considerable transaction costs.

Digitized workflows are overdue here and provide a remedy, for example in the creation and processing of the necessary documents. In fact, all of this can be done completely digitally in just a few hours. This allows all parties involved to concentrate on the essentials: negotiating the deal properly and bringing it to a successful closing in a short time with predictable costs, without cutting corners in the wrong place.

PXR + GAIA = experienced VC lawyers with technology in their luggage

PXR, which specializes in advising technology companies, has been supporting its clients for years with complex legal and tax issues, including VC transactions from seed to growth stage. Together with GAIA, a cloud-based LegalTech platform, SeedX was developed to revolutionize legal advice for early financing rounds for the next generation of founders.

All standard legal processes for seed financing, from term sheet to closing, are mapped completely digitally via GAIA and offered at a fixed price using a slider. Founders can therefore not only complete their seed round much faster, but also plan with fixed costs. And all this with the unlimited support of PXR's VC-experienced lawyers, who are included in the overall package with their expertise and negotiate the financing from term sheet to closing. After closing, the startups also have access to all of GAIA's services to ensure that all legal issues - from ESOP/EIP management and contracts to the data room - are properly implemented until the next financing.

15 seed rounds per month via SeedX

With SeedX, cumbersome legal processes for seed financing rounds are a thing of the past. With SeedX, founders benefit from fully digitized legal processes that significantly shorten the duration of the "legal process" and make transaction costs predictable. On average, there are 20 seed rounds per month in Germany. At least three quarters of these should be digitalized and therefore optimized.

Guest article by Dr. Peter Möllmann