US high-tech firm Brobeck Hale and Dorr is pioneering the use of a new type of asset-backed venture financing through relati
ons with client European Venture Partners (EVP).
The firm is the sole adviser to EVP, a leading provider of a product called venture leasing which is common in the US but relatively new to the UK.
Venture leasing is asset-backed finance for start-up companies which combines traditional leasing with venture capital. Instead of making investments in return for an equity stake in the company, which most venture capitalists do, venture leasing gives asset-backed financing in return for a mix of equipment lease payments, the equipment's residual value, and equity warrants in the company.
The equipment is bought by the venture capitalist and then leased to the company at the same time as the company gives the venture capitalist rights to shares.
Brobeck has just acted for EVP on a £1m facility for Viewgate Networks, a software delivery solutions provider. Brobeck corporate partner Julia Bracewell led the deal, and has worked with the company on about 20 investments in the UK.
Bracewell says: “On the law firm side there's no one else acting for the venture lessors. Companies have their own lawyers acting for the investees, but we are not dealing with any particular law firms for investors.
“What we did was spend a whole lot of time bringing the transaction into the UK space so that it would not hold up the deal in future. We had to anglicise it – we do lots of venture capital and we were used to taking US ways of doing things and adapting them to the UK.”
EVP chose Brobeck because of a relationship in the US, where its partner and pioneer of venture leasing, Dominion Ventures, knew the firm.
Brobeck has also introduced companies to EVP for venture leasing, and where the firm has had a conflict Morgan Cole has tended to pick up the work.
EVP director Mark Taylor says: “The key thing for us is making sure that we bring in lawyers like us that are going to be commercial like us and not hold up the deals.”