BVCA Model Documents: February 2025 Updates – What They Mean for Founders and Investors

The BVCA has refined its model documents for early-stage investments. Discover the key changes.

The British Private Equity & Venture Capital Association (BVCA) has released updated versions of its standardised documents for early-stage venture capital investments, replacing the previous editions from February 2023. These updates, published in February 2025, aim to refine and clarify existing provisions to better align with current industry practices.

🔑 Key Changes in the February 2025 Edition

📄 Subscription Agreement

• Completion Mechanics:
  A new short-form alternative has been introduced for scenarios where 100% of funds are expected prior to completion. While offering streamlined protections, this alternative may not be suitable for all situations.

• Regulatory Actions:
  An optional provision has been added requiring the company to assist investors in regulatory investigations or matters under the National Security and Investment Act 2021, ensuring necessary documentation and support are provided.

• Warranties:
  Revisions have been made to the intellectual property, business systems, and data protection warranties. Notably:

  • New definitions for "Know How" and "Patents".
  • Warranties addressing artificial intelligence (AI) and insolvency.

🤝 Shareholders’ Agreement

• Strategic Investors:
  Optional language now allows the Board to restrict information access for strategic (non-financial) investors in specific circumstances, balancing transparency with competitive considerations.

• Indemnification:
  Companies can now undertake to:

  • Enter indemnification agreements with Investor Directors, or
  • Provide direct indemnification, offering flexibility in director protection.

• EIS/VCT Provisions:
  The Enterprise Investment Scheme (EIS) and Venture Capital Trust (VCT) undertakings have been reworded to include optional language that makes these undertakings subject to the fiduciary duties of Directors.

• Other Investment Opportunities:
  New clauses clarify that:

  • Investors are permitted to invest in competing companies.
  • They must not disclose the company’s confidential information.
  • They are not obligated to present other investment opportunities to the company.

• Company Undertakings:
  Expanded to include:

  • Anti-bribery, anti-money laundering, anti-tax evasion, and sanctions.
  • Governance, financial policies, and compliance procedures.

📜 Articles of Association

• Bad Leaver Definition:
  The clause designating resignation (except constructive dismissal) as a Bad Leaver event has been removed due to its rare use in practice.

• Liquidation Preference:

  • Clarified liquidation preference mechanics to align with market norms.
  • The Board, with Investor Majority Consent, can now determine exchange rates for amounts in different currencies.
  • Linguistic revisions to EIS/VCT investors’ liquidation preference, with minimal practical effect.

• Anti-Dilution:

  • Clarifies protections when Series A shares have different starting prices, such as those arising from convertible notes.
  • Allows the Investor Majority to waive anti-dilution protections fully or partially.

• Sanctions:

  • Prevents issuance of securities to sanctioned individuals/entities.
  • Prohibits share transfers to sanctioned parties.
  • Requires shareholders to confirm they are not subject to sanctions.

🧭 What This Means for You

These updates underscore the BVCA’s commitment to maintaining robust and clear documentation that reflects the evolving landscape of venture capital investments. By adopting the February 2025 model documents, investors and companies can ensure their agreements are aligned with current best practices and legal standards.

💼 How Avery Law Can Help

At Avery Law, we specialise in advising founders, investors, and venture capital firms on all aspects of early-stage fundraising and investment structuring. With deep expertise in venture capital transactions, we help clients navigate the complexities of the BVCA documents and fundraising process.

We understand fundraising can be costly, which is why we offer competitive and transparent fee structures, including:

• Fixed fees
• Staged payment options

We’re committed to delivering high-quality legal support tailored to your growth stage—without unexpected costs.