© The Editor and Contributors Severally 2020 This is an open access work distributed under the Creative Commons Attribution-NonCommercial-NoDerivatives 3.0 Unported ((https:// creativecommons.org/licenses/by-nc-nd/3.0/)). Users can redistribute the work for non-commercial purposes, as long as it is passed along unchanged and in whole, as detailed in the License. Edward Elgar Publishing Ltd must be clearly credited as the owner of the original work. Any translation or adaptation of the original content requires the written authorization of Edward Elgar Publishing Ltd. Published by Edward Elgar Publishing Limited The Lypiatts 15 Lansdown Road Cheltenham Glos GL50 2JA UK Edward Elgar Publishing, Inc. William Pratt House 9 Dewey Court Northampton Massachusetts 01060 USA A catalogue record for this book is available from the British Library Library of Congress Control Number: 2020947673 This book is available electronically in the Law subject collection http://dx.doi.org/10.4337/9781839108457 ISBN 978 1 83910 844 0 (cased) ISBN 978 1 83910 846 4 (paperback) ISBN 978 1 83910 845 7 (eBook) Alexandra Andhov - 9781839108457 Downloaded from Elgar Online at 01/05/2021 02:29:21AM via free access v Contents List of tables vi List of contributors vii Acknowledgements xii List of abbreviations xiii PART I INTRODUCTION AND IMPORTANCE OF START-UPS 1 Introduction 2 Alexandra Andhov 2 Importance of start-up law for our legal systems 9 Alexandra Andhov PART II JURISDICTIONS 3 Canada 32 Oleg Stratiev 4 Denmark 81 Alexandra Andhov, Jakob Wested and Rasmus Kristian Feldthusen 5 Israel 152 Ehud Kamar, Ayal Shenhav and Shay Yanovsky 6 Switzerland 201 Michèle Ineczka Kappeler and Luigi Bruno 7 The United States 245 Drew Amerson and Alice Armitage Index 302 Alexandra Andhov - 9781839108457 Downloaded from Elgar Online at 01/05/2021 02:29:22AM via free access vi Tables 3.1 CBCA vs. QBCA 43 3.2 Processing fees of establishing a corporation in Canada 53 3.3 Provincial tax rates on non-CCPC corporate income 64 3.4 Consumption taxes 66 3.5 Overview of the length of IP protection 68 4.1 Summary comparison of Danish business structures: ApS and A/S 97 4.2 Equity dilution table 119 6.1 Comparison of Swiss LLC and LTD legal forms 206 6.2 Swiss insurance policies 234 6.3 List of useful Swiss websites 242 6.4 Additional sources and referred sources 243 7.1 A comparison of convertible note, a standard SAFE and a Series Seed 276 Alexandra Andhov - 9781839108457 Downloaded from Elgar Online at 01/05/2021 02:29:22AM via free access vii Contributors Drew Amerson is the Director of LexLab, a center for legal technology and innovation at UC Hastings Law School in San Francisco. Before LexLab, Drew taught intellectual property and entrepreneurship courses at UC Hastings. He also managed the Startup Legal Garage, an experi- ential educational program that places students from UC Hastings and UCLA with emerging technology companies and leading law firms. A pioneer in legal innovation, Drew founded a company in 2011 that created an online community to connect law firms and corporations with highly skilled freelance attorneys. His early career included stints at large and small law firms, as well as a federal district court clerkship. Drew is a graduate of Columbia Law School and has a BA in philosophy from Carleton College. Alexandra Andhov is an Assistant Professor of Corporate Law at Faculty of Law, University of Copenhagen. In 2019, she was a Fulbright Scholar at Cornell Law School. Alexandra’s main areas of research are corporate law, capital market law, corporate social responsibility, contract law and technology. On these topics she has published articles in numerous European and US law journals and reviews. In 2017, Alexandra initiated an acclaimed educational project on ‘How to Start a Start-up’ at the Faculty of Law, University of Copenhagen, where students work directly with start-ups in Denmark. Alexandra leads the Legal Tech Group at the Faculty of Law in Copenhagen. She is on the board of the Nordic Legal Tech Hub and Finance Watch, a European NGO founded in reaction to the last financial crisis. Alexandra is currently working on topics covering blockchain and corporate governance and preparing a manuscript on the effects of technology on trust on capital markets. She has previously been a visiting researcher at Cornell Law School, Oxford Law School, Lund University Alexandra Andhov - 9781839108457 Downloaded from Elgar Online at 01/05/2021 02:29:22AM via free access START-UP LAW viii and University of Turin. Before entering academia, Alexandra practiced law in Hungary and Slovakia. Alice Armitage is a member of the faculty at UC Hastings Law School. She is also Director of Applied Innovation at UC Hastings. In that role, she has supervised two innovative programs, the Startup Legal Garage for six years, and now LexLab. LexLab is an innovation hub for all things legal tech. She has published articles on the legal issues confronting start-ups in the US, and on the inherent tensions between regulation and innovation. Professor Armitage is a graduate of the Yale Law School where she was the first woman editor-in-chief of the Yale Law Journal . She also has an AB and an MA in British and American Literature from Brown University. Her pre-UC Hastings career includes practicing international tax law at a large firm, working as a regulator for the US Department of the Treasury, and founding two start-ups. Luigi Bruno is a Senior Consultant at Deloitte Switzerland. Before joining Deloitte, he worked for the leading Italian law firm ‘BonelliErede’ and for Blockchain Valley Ventures, a reputed Swiss venture firm and advisor focused on high-quality blockchain businesses. Luigi was also an ambassador for the Swiss Finance Startup Association. He regularly speaks to legal and tech conferences in Europe and North America and was an investor and founder to start-ups in Italy and Switzerland. Luigi holds an LLM in Comparative Law from McGill University (Canada) and a Bachelor of Laws from the University of Bari (Italy). Rasmus Kristian Feldthusen is a Full Professor in Commercial Law at the Faculty of Law, University of Copenhagen. Professor Feldthusen is coordinator of the Fiscal Relations Research Group (FIRE) and writes and teaches in tax law and corporate governance. Professor Feldthusen specializes in the law of foundations, mutuals, cooperatives and corporate governance. Professor Feldthusen is member of several editorial com- mittees and frequently participates in conferences and seminar in and outside of Denmark. Professor Feldthusen currently does research on the interplay between compliance and corporate governance. Professor Feldthusen is appointed by the Danish minister for Industry, Business and Financial Affairs to the Committee on Foundation Governance and is a faculty member of the CBS Executive teaching program. Professor Feldthusen also sits on the board of foundation and companies in and outside of Denmark. Alexandra Andhov - 9781839108457 Downloaded from Elgar Online at 01/05/2021 02:29:22AM via free access CONTRIBUTORS ix Ehud Kamar is a Professor of Law at the Tel Aviv University Buchmann Faculty of Law and a research associate at the European Corporate Governance Institute. Before joining Tel Aviv University, he was a profes- sor of law and director of the University of Southern California’s business law program. He has also been a visiting professor at Harvard University, New York University, the University of Chicago and the Hebrew University. He teaches corporations, securities regulation, mergers and acquisitions, quantitative empirical methods and deal planning, and has published articles in leading scholarly journals such as the Columbia Law Review , the Harvard Law Review , the Stanford Law Review , the University of Chicago Law Review , the Journal of Financial Economics , and the Journal of Law, Economics and Organization . He holds an LLB and an LLM summa cum laude from the Hebrew University and an LLM and a JSD from Columbia University, and has practiced law in Israel and the United States. In 2019, he received the Fattal Prize for Excellence in Legal Research. Michèle Ineczka Kappeler is a Swiss lawyer and internationally trained mediator. For five years she co-founded and led as a partner a boutique attorney practice in the heart of Zurich before pursuing a new path with her company CMK Services Sàrl in Zurich. After years of international legal and banking practice based in Geneva, Lausanne and Zurich she built up expertise in the set-up and management of Swiss companies including contracts, banking and finance, and negotiations. A CIArb (UK) and KSFM (D) trained mediator she promotes alternative conflict resolution in business and private matters. After studying law followed by business management (HEC) at University of Geneva, she completed specializations in international trust management, financial asset man- agement and engineering as well as mediation. She has founded several companies in Switzerland and in the UK for her own projects and needs. Ayal Shenhav is the Head of the Hi-Tech and Investment Funds Practice at Gross, Kleinhendler, Hodak, Halevy, Greenberg, Shenhav & Co (‘GKH’), one of Israel’s leading law firms. He is ranked by Chambers & Co., Legal 500 and other publications as leading expert in Hi-Tech and Taxation. Dr Shenhav represents numerous venture capital funds and start-ups in their operations. He is also an adjunct professor at Tel Aviv University and the IDC teaching Start Up Law. Dr Shenhav was formerly Vice Dean of the Radziner School of Law at the IDC and an Associate at Davis Polk & Wardwell. He is head of the Israel Advance Technologies Association (IATI) Law Firm and Accounting Firm Committee. Dr Alexandra Andhov - 9781839108457 Downloaded from Elgar Online at 01/05/2021 02:29:22AM via free access START-UP LAW x Shenhav has an LLB ( cum laude ) from Tel Aviv University and an LLM and JSD from NYU. Oleg Stratiev graduated with a Bachelor of Civil and Common Laws from McGill University and is currently an Associate in the Corporate Group at Fasken. Oleg’s practice focuses on public, private and institutional clients with respect to matters relating to securities, mergers and acquisitions, and regulatory compliance. Oleg works with companies, from start-ups to public issuers, in their various stages of development – supporting their mergers and acquisitions, equity issuances, and commercial activities. He also assists public issuers with their continuous disclosure obligations and governance issues. As part of his practice, Oleg also assists clients with regulatory and transactional matters regarding emerging technologies, private equity, blockchain and cryptocurrencies. Oleg also has a strong interest in emerging technologies and artificial intelligence, and has pub- lished articles and spoken on subjects such as blockchain, cryptocurren- cies, liability and application of artificial intelligence. Concurrently to his practice, Oleg is also undertaking a Certificate in Accounting and Finance at McGill University. Prior to undertaking his corporate and commercial practice, Oleg was selected as one of the 15 individuals across Canada to clerk at the Tax Court of Canada. Jakob Wested , PhD, LLM (cand.jur) and BA (philosophy), postdoc at University of Copenhagen, Centre for Advanced Studies in Biomedical Innovation Law (CeBIL). Jakob is a member of CeBIL collaborative research program working with the research groups on Orphan drugs and precision medicine. He has pre- viously worked on both IPR and EU regulatory issues related to synthetic biology, gene editing, and clinical development and approval of medicinal products. Jakob has also started a number of businesses himself and works closely together with the Innovation HUBs and student incubators at the University of Copenhagen. Shay Yanovsky counsels local and international clients across a range of industries, including software, internet, cyber and social media, block- chain technologies, cryptocurrencies, ICOs, e-commerce, telecommu- nications, biotechnology, medical devices, and cleantech. Shay advises these clients on a wide variety of issues, including intellectual property, internet and e-commerce, licensing, computer and information systems, telecommunications, open source, information security, privacy law and data protection regulations, as well as in various aspects relating to the Alexandra Andhov - 9781839108457 Downloaded from Elgar Online at 01/05/2021 02:29:22AM via free access CONTRIBUTORS xi Encouragement of Research and Development Law and to dealing with the Office of the Chief Scientist within the Ministry of Economics. Shay joined GKH in 2008 as an articled clerk and became an associate in 2009 and partner in 2017. During his studies, Shay was a teaching and research assistant in various courses at the Hebrew University of Jerusalem, Tel Aviv University, and Ono Academic Center, such as Biopharmaceutical Patents, Intellectual Property at the Technological Era, and Service Inventions. In addition, Shay has been a teaching assistant at the Hebrew University, Ben Gurion University, the College of Management Academic Studies and the Interdisciplinary Center in Herzliah in advanced courses to MBA students such as Business Strategy and Strategy Management. Alexandra Andhov - 9781839108457 Downloaded from Elgar Online at 01/05/2021 02:29:22AM via free access xii Acknowledgements The Start-up Law book and the preceding project How to Start a Start-up have received support from many different people and institutions. This project would not have been possible without the Danish Foundation for Entrepreneurship that has financially supported the educational project at the Faculty of Law, University of Copenhagen in Denmark as well as the open source publication of this book. I would like to thank specifically Pernille Berg who has been my go-to person at the Foundation and who has been extremely supportive of all these projects. I am also extremely thankful to Marta Andhov who has been the executive force behind the project How to Start a Start-up and helped with the man- agement of an organization. Furthermore, I would like to thank Jakob Wested, Rasmus Kristian Feldthusen and Karina Kim Egholm Elgaard, who have supported the start-up course as well as this book. The scope of this book and insights into various jurisdictions would not be possible without all the contributors to this book, who have been a great group of people to collaborate with. Finally, I would like to thank Pedro Telles, who has supported the project and made valuable comments on some of the draft chapters. I would like to thank our editor Stephanie Tytherleigh, who has been extremely helpful and has navigated me successfully through the entire process. Lastly, I am grateful to my research center CEPRI and our student research assistants Bergþór Bergsson and Alex Chasick. Alexandra Andhov - 9781839108457 Downloaded from Elgar Online at 01/05/2021 02:29:23AM via free access xiii Abbreviations AA Articles of Association ADA Americans with Disabilities Act (US) AG Aktiengesellschaft (public limited company) (Switzerland) AGM Assembly General Meeting (of Members) AIFMD Alternative Investment Fund Managers Directive (EU) AMLA Anti-Money Laundering Act (Switzerland) ApS Anpartsselskab (private limited company in Denmark) A/S Aktieselskab (public limited company in Denmark) BIRD Binational Industrial Research and Development BO Banking Ordinance CA Contracts Act (Denmark) CBA collective bargaining agreement CBCA Canada Business Corporations Act CC Creative Commons CCPA California Consumer Privacy Act of 2018 CCQ Civil Code of Quebec CEO Chief Executive Officer CETA EU-Canada Comprehensive Economic and Trade Agreement CHF Swiss francs CJEU Court of Justice of the European Union CO Code of Obligations Alexandra Andhov - 9781839108457 Downloaded from Elgar Online at 01/05/2021 02:29:23AM via free access START-UP LAW xiv CopA Federal Act on Copyright and Related Rights (Switzerland) CPR Det Centrale Personregister (Personal Register in Denmark) DBA Danish Business Authority ( Erhvervsstyrelsen ) (Denmark) DCA Danish Companies Act DMA Danish Marketing Act DVCA Danish Venture Capital Association EPC European Patent Convention EPO European Patent Organization ESOP employee share ownership plans FATF Financial Action Task Force (Switzerland) FINMA Financial Market Regulation and Supervision Authority (Switzerland) FLSA Fair Labor Standards Act (US) FMLA Family and Medical Leave Act (US) FSA Financial Supervisory Authority (Denmark) FTA free trade agreements GDPR General Data Protection Regulation (EU) GM General Meeting GmbH Gesellschaft mit beschränkter Haftung (Switzerland) GST goods and services tax (Canada) HST harmonized sales tax (Canada) IPO initial public offering IPR intellectual property rights IRS Internal Revenue Service (US) ITC input tax credit (Canada) IVS entrepreneurial company ( Iværksætterselskab) (Denmark) KYC Know-Your-Client LLC Limited Liability Company Alexandra Andhov - 9781839108457 Downloaded from Elgar Online at 01/05/2021 02:29:23AM via free access ABBREVIATIONS xv LTD Company limited by shares M&A Mergers and Acquisitions MNE multinational enterprises MVP minimum viable product NAFTA North American Free Trade Agreement NDA non-disclosure agreement NEQ Numéro d’entreprise du Québec (Québec Business Number) (Canada) NLRA National Labor Relations Act (US) OBCD Ontario Business Corporations Act OC Operation Company OECD Organisation for Economic Co-operation and Development PatA Federal Act on Patents for Inventions (Switzerland) PCT Patent Corporation Treaty P/S Partnerskab (limited partnership company in Denmark) QBCA Quebec Business Corporations Act QST Quebec sales tax (Canada) RC Register of Commerce (Switzerland) SA Société anonyme (Switzerland) SAFE Simple Agreement for Future Equity Sagl Società a garanzia limitata (limited liability company in Switzerland in Italian) Sàrl Société à responsabilité limitée (limited liability company in Switzerland in French) SBA Small Business Administration (US) SE Societas Europea (The European Company) SEA Salaried Employees Act (Denmark) SHA shareholder agreement SME small or medium enterprise SOA Stock Option Act (Denmark) SOGC Swiss Official Gazette of Commerce Alexandra Andhov - 9781839108457 Downloaded from Elgar Online at 01/05/2021 02:29:23AM via free access START-UP LAW xvi STS Sole-trader scheme (Denmark) TRIPS Agreement on Trade-related Aspects of Intellectual Property UPC United Patent Court VAT value-added tax VC Venture Capital WIPO World Intellectual Property Organization Alexandra Andhov - 9781839108457 Downloaded from Elgar Online at 01/05/2021 02:29:23AM via free access 2 1 Introduction 1 Alexandra Andhov The global start-up economy continues to grow, creating €2.6 trillion in value between 2016 and 2018, according to the 2019 Global Startup Ecosystem Report. 2 This represents a 20.6 per cent increase from the previous period and more than double what the data collected by the Startup Genome showed five years ago. This value creation is on par with a G7 economy and bigger than annual gross domestic product (GDP) of the United Kingdom. 3 What is, however, even more important is that start-ups are not only a phenomenon in few places across the world. According to the above report, nearly 50 regions worldwide are creating at least €3.7 billion each in ecosystem value across all the continents (except Antarctica). 4 In contrast, two decades ago, during the peak of the dotcom bubble, there were only four regions in which start-ups generated that much value. This is not the case anymore and start-ups and their reg- ulatory framework should be of an interest for all lawyers, entrepreneurs, accountants, consultants, advisers, board members and regulators. Areas such as greater Copenhagen, Helsinki, India or Tel-Aviv grow their start-up ecosystem rapidly. Working closely with the ecosystem in Europe, we hear more and more about Zurich, Madrid or Stockholm being great places to start one’s innovative or entrepreneurial endeavour. Published studies show a clear relationship between the start-up activity and national economic development and competitiveness. 5 Furthermore, a variety of 1 The chapters in this book were updated in April 2020. 2 Global Startup Ecosystem Report 2019, Startup Genome, 9 May 2019, https://startupgenome .com/ reports/ global -startup -ecosystem -report -2019 accessed 20 February 2020. 3 ibid 11. 4 ibid 13. 5 Salustiano Martínez-Fierro, José María Biedma-Ferrer, José Ruiz-Navarro, ‘Impact of High-growth Start-ups on Entrepreneurial Environment Based on the Level of National Economic Development’ [2019] Business Strategy and the Environment 1–14. Alexandra Andhov - 9781839108457 Downloaded from Elgar Online at 01/05/2021 02:29:23AM via free access INTRODUCTION 3 studies present consistent evidence that the relationship between entre- preneurship and economic development largely depends on the national economic environment, which is shaped by economic, institutional and socio-cultural factors. 6 We believe that we need to also include the reg- ulatory and tax factors, which are crucial for start-ups’ foundation and life cycle. According to empirical evidence, the high-potential companies have been shown to be key to economic growth in developed countries. 7 It should be in the interest of all of the countries to attempt to create a pro start-up environment where innovation and business can be nurtured. Over the past years, we have observed that the economic and institu- tional factors in various countries start to match and offer start-ups and entrepreneurs similar opportunities. Many jurisdictions offer compet- itive education, skilled labour, financial incentives and opportunities. Therefore, more start-ups consider regulatory and tax treatments. They wish to know how labour and time intensive it is to establish a company; to what extent can founders decide on each of their individual obligations and rights and how challenging it is to sell or liquidate the company; what are the VAT rules and whether they can introduce a vesting schedule for their employees and many other factors. We learn time and time again that the law and legal tools to grow the business and manage a start-up more effectively matter. 1.1 Goals and intended audience of this book This book has a number of goals that we wish to achieve. However, the priority number one of all of the contributors was to create an open source publication for entrepreneurs, start-ups, their lawyers and advisers as well as curious students. As scholars and practitioners who have contributed to this book, it is our belief that innovation in the broadest sense can only be attempted if we have the known information easily at our disposal. We 6 See e.g. José Ernesto Amorós, Cristóbal Fernández and Juan Tapia, ‘Quantifying the Relationship between Entrepreneurship and Competitiveness Development Stages in Latin America’ [2012] 8(3) International Entrepreneurship and Management Journal 249–70; Sander Wennekers, André Van Stel, Martin Carree and Roy Thurik, ‘The Relationship between Entrepreneurship and Economic Development: Is it U-shaped?’ [2010] 6(3) Foundations and Trends in Entrepreneurship 167–237. 7 Magnus Henrekson and Dan Johansson, ‘Gazelles as Job Creators: A Survey and Interpretation of the Evidence’ [2010] 35 Small Business Economics 227–44. Alexandra Andhov - 9781839108457 Downloaded from Elgar Online at 01/05/2021 02:29:23AM via free access START-UP LAW 4 hope that the book can help entrepreneurs and lawyers decide on where to initiate business endeavours, reflecting on their individual needs. We believe that this book can become a real instrument for lawyers and current and future entrepreneurs even if their country is not represented in the second Part of this book. Given that this book offers a compar- ative understanding into the life of a start-up, it helps navigate the decision-making process and understand the business and legal elements that founders need to undertake in different periods of the life of the company. Furthermore, we often understand our jurisdictions and pro- cesses much better once we have had the opportunity to look at the others and return to our own with a new lens. This book offers five jurisdictions from three continents, while following the same original structure: the life cycle of a start-up. However, during the process of writing, we have encountered few variations in our respective jurisdictions. Therefore, all of the chapters analyse the same legal questions, but sometimes end up describing diverse phenomena and practices present in their own countries. This shows that even though we observe many harmonization attempts, the national distinctiveness is still present. Therefore, we would highly recommend reading several of the chapters as they all bring an original perspective to the law of start-ups. This book is unique as it does not only focus on a specific type of a legal entity but attempts to understand the most important elements of the start-up life cycle and become a cross-disciplinary guide, bringing together corporate, finance, IP, employment as well as tax law. Lawyers have become extremely specialized and they tend to focus on one spe- cific area of law. We believe that in order to help navigate the journey of start-ups, lawyers and advisers need to see across different fields and identify the conjunctions. All the contributors to this book have had work experience with establishing and advising start-ups and carrying out research within the law of start-ups, including crowdfunding, venture capital (VC) funding or national innovation policies. 1.2 Origins of this book This book represents a continuation of the project called ‘Law of start-up companies: How to start a start-up?’ that several of the contributors Alexandra Andhov - 9781839108457 Downloaded from Elgar Online at 01/05/2021 02:29:23AM via free access INTRODUCTION 5 and their colleagues have initiated at the Faculty of Law, University of Copenhagen in 2017. Alexandra Andhov together with Marta Andhov with support from Jakob Wested and Rasmus Kristian Feldthusen have applied for funding from the Danish Entrepreneurship Foundation ( Fonden for Entreprenørskab ) with the project that aimed to bring more entrepreneurship and innovation into legal education. The premise of that project was simple. Law and legal education need a powerful injection of innovation and entrepreneurship. The education that the majority of our students obtain is extremely narrow. Students, similarly to the lawyers, tend to focus on a specific area of law, be it cor- porate law, bankruptcy law, capital market law or tax law, but during their experience at law schools or in law firms, these fields remain isolated. It is very rarely that offered courses provide linking elements between different fields of law or the opportunity to understand the inter-relation between them and see the bigger picture. It is assumed that students will gain the bigger picture once they start to practice, but is this assumption truly correct? When discussing this educational phenomenon together with several of the contributors, we came to the conclusion that we observe the same approach to the legal education across our countries and institutions. The law schools are considered to teach predominantly the knowledge and the law firms, government or prosecutor’s office will teach the skills. Yet, these two become more and more interconnected and students are often expected to master various practical skills even before starting their first jobs. Thus, the project ‘Law of start-up companies: How to start a start-up?’ aimed to teach students various soft and hard skills, while attending classes, guest lectures and advising start-ups. In the wake of new legal technology, we have tools and software that allows us easily to access resources and big data. Yet, it takes additional skill to work with these resources, review them, understand and apply them correctly. It requires our students to be good communicators, to be able to ask the right ques- tions, read in between the lines, connect the dots between facts and the law, but also to consider the law in its entirety, where corporate decisions will affect tax obligations as well as their ability to apply for patent and protect their trade secrets. We saw a clear link between teaching our students new practical skills and connecting their previous knowledge of individual fields of law within a safe space of start-up environment. Alexandra Andhov - 9781839108457 Downloaded from Elgar Online at 01/05/2021 02:29:23AM via free access START-UP LAW 6 With the project ‘Law of start-up companies: How to start a start-up?’, we aimed to create an innovative and interactive learning experience through fostering entrepreneurship by introducing an intensive innovation and entrepreneurship driven master level course and an open-access book that would help practitioners, students and start-ups. The relevance of the project was embedded in the need of supporting a new generation of legal professionals who will be able to better understand the business and innovation needs of their clients, while mastering the start-up law. This book represents a continuation of this project as we are attempting to reach a larger audience, including the legal profession as well as the entrepreneurs themselves. 1.3 Selection of the jurisdictions When selecting the jurisdictions for this book, we had several aims. Firstly, the jurisdictions were chosen based on their ‘start-up friendliness’, which means that these jurisdictions have established themselves as places where not only the nationals, but also internationals, felt safe to initiate their business endeavours. Secondly, the diversity as to the legal systems and legal traditions was important in order to offer our audience diverse approaches and perspectives. Lastly, we also utilized our network. When creating the group of contributors, we aimed to involve people who are either recognized scholars, entrepreneurs or have been advising start-ups or all of the above. As a consequence, all of the chapters offer great depth of wisdom and experience. In addition to providing an open access, we also believe in the com- parative value of this book. Firstly, this book systematizes the life cycle of early stage start-ups. When drafting the content and discussing the elements that need to be analysed, all the contributors were involved in order to best reflect their experience and knowledge and include in the book considerations that might seem irrelevant, but might become truly determinative, e.g. will or equity-debt ratio. Although we have developed a common list of topics to be covered in each chapter, you will find that the chapters do bring their national flavour and perspective into the discussion. For the purposes of better understanding the start-up life and Alexandra Andhov - 9781839108457 Downloaded from Elgar Online at 01/05/2021 02:29:23AM via free access INTRODUCTION 7 navigating the legal journey, we would emphasize the comparative value that the chapters offer. 1.4 Structure This book is divided into two parts. In the first part, Introduction and a chapter on the importance of start-ups in our legal systems are included. In this chapter, Alexandra Andhov reflects on start-ups as a new phenom- enon and an important element in our legal systems that deserves special attention. She analyses start-ups and offers a definition, by reviewing various features. She compares small and medium sized companies (SMEs) with the start-ups and considers the distinguishing elements between them. She suggests the ways in which corporate lawyers, scholars and young entrepreneurs need to think differently about start-ups than other companies. The second part of this book focuses on five jurisdictions: Canada, Denmark, Israel, Switzerland and the United States. These chapters, by looking into their individual regulatory framework, practice and jurisprudence anticipate start-up’s legal concerns from its inception to its liquidation or bankruptcy. Each chapter is self-contained and may be read on its own. Each of the chapters brings a unique set of practices and understanding of start-up law. Yet, we observe several areas where a level of convergence between the individual jurisdictions takes place. This could be the effect of internationalization and harmonization of law, where many areas, including corporate law, intellectual property law or data protection law have been brought closer together over the decades. Moreover, we have also witnessed the spread of same practices across diverse countries through the same intermediaries – including law firms or VC funds – which are using the same legal documents (e.g. term sheets) and tools with start-ups, irrespective of the place of their activity. 1.5 What is next? We believe that this publication will reach a large audience and will help start-ups and entrepreneurs with their decision as to where to initiate their business activities. At the same time, we hope that this book will be Alexandra Andhov - 9781839108457 Downloaded from Elgar Online at 01/05/2021 02:29:23AM via free access START-UP LAW 8 the starting point for further comparative research either between the contributors themselves or further researchers. An additional hope is that the findings and observations of this publication will initiate discussions on the national and supranational level in regard to regulatory innovation and further development of one’s laws. It is undeniable that the regulatory framework substantially affects innovation and the appetite for techno- logical and business endeavours. Within the next couple of years, we also hope to publish a second edition of this book and include other jurisdictions, by continuing to spread the word and practice of start-up law across the globe. Already today, we see new trends within financing as well as corporate structures that might be changing the start-up environment and practices down the line. We would like to include several other jurisdictions that we consider inter- esting and relevant that offer supportive legal frameworks for start-ups. Many of these jurisdictions are themselves exceptionally innovative, among these Singapore, India and Portugal. We will continue to follow the development and bring new jurisdictions on board. Lastly, we would like to thank Danish Entrepreneurship Foundation ( Fonden for Entreprenørskab ) for supporting this book project and pro- viding us with funding to make this book available to everyone through open-access publication. Alexandra Andhov - 9781839108457 Downloaded from Elgar Online at 01/05/2021 02:29:23AM via free access