The involved parties
Typically, each deal syndicated on Uniborn includes the following parties:
Deal Lead (also referred to as the lead investor);
Investors (all other investors);
SPV (special purpose vehicle);
Target Asset (startup receiving funding).
The process and documents
When a deal progresses to the "syndication" stage, the following steps take place:
The Platform establishes an SPV — an Estonian limited liability company (OÜ) and initiates the opening of a dedicated bank account for it. SPVs are ring-fenced (segregated) from Uniborn's operational holding to mitigate risks associated with the Platform.
Each Investor is offered to undergo KYC/KYB (if not done previously), and to enter into a loan agreement with the SPV. These loan agreements constitute debt obligations with interest tied to the performance of the Target Asset.
The Deal Lead is offered to pass KYC/KYB as well, sign all existing loan agreements signed by the investors, and execute a lead investor loan agreement. This agreement governs the specifics of the relationships between the Deal Lead, the SPV, and the Investors.
Upon the deadline or when all involved parties have signed their document (whichever comes first), both the Deal Lead and the Investors are offered to fund their commitments by wiring funds to the SPV's bank account.
The Deal Lead instructs the Platform to finalize the signing of documents with the Target Asset and the subsequent transfer of funds to the Target Asset's bank account.
The Platform designates the Deal Lead as a board member of the SPV or confers a power of attorney, which bestows equivalent rights.
The platform handles all administrative tasks for the SPV throughout its lifecycle.
Upon Exit, the Platform initiates payouts to the Deal Lead, each Investor, and any other designated fee recipients, should the Deal Lead choose to share their fees with additional contributors.
Key aspects on relationships between the parties:
Investors and Deal Lead do not automatically become shareholders in an SPV. Investors have economic rights to receive the proceeds from the investments made by the SPV via Loan Agreements (aka. Loan Notes). Uniborn can oversee the transition from Loan Agreements to Shares, but this is a tailored process and necessitates tax considerations that vary by case.
The SPV is exclusively formed for investing in a specific Target Asset and is prohibited from engaging in any other activity.
The Deal Lead's role involves facilitating, coordinating, and overseeing the investment on behalf of the Investors. Prior to making any decision or taking actions that could impact the Exit, the Deal Lead must seek the Investors' opinions. Failure to sign all documents and fulfill their commitment will prevent the closure of a deal.
The Deal Lead does not provide personal recommendations, advice, or make decisions on behalf of the SPV, except when explicitly instructed by the SPV.
The Platform is responsible for establishing and managing the SPV throughout its lifecycle. A specific amount of cash is maintained in the SPV's bank account by the Platform. This safeguards a smooth transition to another service provider without causing inconvenience for the Investors in case the Platform is unable to continue administering services.
This list is not exhaustive. For complete details, we recommend referring to the linked original agreements above and seeking advice from your legal counsel.