Clara, the legaltech startup founded in the UAE and part of Wamda’s portfolio of partner companies has launched the Mena Series A Term Sheet standard form - a document which has been endorsed by an initial group of 16 firms.
The new Mena standard form is available on Clara's website for free and is the first of several regional VC financing documents that will be rolled out in the months ahead.
"Startup legals are unnecessarily complex and far too expensive. We, along with many of the leading regional VCs and law firms, are setting out to fix a big part of this problem by producing free best-practice templates that will become the starting points for VC financings across the region,” said Patrick Rogers, co-founder and CEO of Clara.
The form is intended to streamline funding rounds in the Middle East.
"This initiative was way overdue," said Fadi Ghandour, executive chairman of Wamda. "Timelines for regional VC deals are measured in months instead of weeks in large part because of the lack of consensus on starting point documentation. Having a set of model documents with broad acceptance will produce incredible results. Lawyers will become far more efficient and legal fees will drop substantially."
It is also a sign of maturity for the region according to Mahmoud Adi, founding partner of Shorooq Partners.
“For too long VCs, law firms and startups have been negotiating "in the dark" when it comes to deal terms, claiming, without sufficient evidence, that the relevant terms they are insisting upon are "market norms." Well now we have our first real regional standard form document in place…a fantastic achievement and certainly one we'll be building on in the months ahead," he said.
A number of regional lawyers also believe the launch of this standard form document will remove some severe pain points all stakeholders have been facing for years.
"The time savings that the regional ecosystem's adoption of this standard form term sheet will usher in cannot be overstated," said Philip Dowsett, Partner at Dechert LLP, a global law firm that advises many of the top VC's in the region. "But we're not stopping here. This is just the first step of a wider plan to standardise the full suite of regional VC funding documentation which will lead to massively streamlined funding rounds in the region."
Rogers noted that VCs and law firms endorsing the term sheet would likely make their own tweaks to it in line with their own philosophies: "We appreciate that different VCs / law firms may have additional items to add or specific provisions that they wish to adjust. Endorsing this form of term sheet does not in any way inhibit their ability to tailor it for their purposes. It is intended to serve as guidance and provide an agreed starting point for deals but not dictate the entirety of a deal."
Firms using the term sheet as their new starting point are welcome to become official Endorsing Partners and have their logo displayed alongside those of the existing Endorsing Partners, "This is all about inclusion and saving startups and VCs precious time and money while making life easier for lawyers," said Rogers.
The full list of Endorsing Partners for the new Mena Series A Term Sheet standard form (in alphabetical order) is as follows: 500 Startups, +VC, Arzan VC, Dechert LLP, Dentons LLP, EQ2 Ventures, Hala Ventures, Leydan Ventures, Mindshift Capital, Nuwa Capital, Oman Technology Fund (OTF), Precinct Partners, Shorooq Partners, Support Legal, VentureSouq and Wamda.