To The Point: Technology & Digitalisation May | 2023

• Published date: 06 June 2023
• Subject Matter: Privacy, Technology, Data Protection, New Technology
• Law Firm: Schoenherr Attorneys at Law
• Author: Mr Niklas Kerschbaumer, Maximilian Czernin, Dominik Tyrybon, Daria Rutecka, Florian Terharen, Yelyzaveta Semenovykh, Nikolaus Stepan and 'zgür Semiz

Welcome to the May edition of Schoenherr's to the point: technology & digitalisation newsletter (read online)!

We are excited to present a selection of legal developments in the area of technology & digitalisation in the wider CEE region.

Editorial: Rome wasn't built in a day. Neither was Austria's new "FlexCo"

Austrian start-ups to benefit from new corporate form

In an ever-evolving global economy driven by innovation and entrepreneurship, it is imperative for legal systems to adapt and create an environment conducive to the growth of start-ups. Today, we shed light on a remarkable development in Austria's corporate landscape: the introduction of a new corporate form known as the "Flexible Company" (Flexible Kapitalgesellschaft - FlexCo). The Austrian legislator has worked for many years on draft legislation for a new corporate form tailored to the demands of start-ups (we have already reported on it several times in this newsletter). Last week, a comprehensive start-up package was finally presented that includes the implementation of the FlexCo and several other new features (such as tax reliefs for employee participation programmes) that will foster the Austrian start-up ecosystem. FlexCos can be founded as of 1 November 2023.

The FlexCo combines the features of a limited liability company (GmbH) and a stock corporation (AG), aiming to present a unique opportunity for start-ups to flourish. It

• empowers entrepreneurs to establish businesses with lower capital requirements (EUR 2,500 cash pay will be sufficient for establishment);
• encourages employee participation (implementation of a new share class designated for employees);
• facilitates share transfers and issuance of new shares in capital increases (deeds by attorneys will be an alternative to notarial deeds); and
• provides for features that are useful for implementing financing rounds (such as the implementation of authorised capital or convertible instruments with a 75 % majority of the votes cast) and embraces digitalisation in decision-making and governance (shareholder resolutions can be made in text form and not only in written form as currently provided).

The FlexCo demonstrates Austria's commitment to nurturing entrepreneurship and supporting the start-up ecosystem. However, it is important now for start-ups to evaluate and understand the new proposed legislation relating to their businesses and to explore opportunities. We will therefore be talking and writing about these matters throughout the next few weeks, including in this monthly newsletter. Stay tuned.

Niklas Kerschbaumer

Venture Capital Glossary
Niklas Kerschbaumer & Dominik Tyrybon

Runway/Burn rate

In the context of venture capital, the terms "runway" and "burn rate" are often used to describe the financial aspects of a start-up or company:

1. Runway: Runway refers to the length of time a company can sustain its operations before it exhausts its available funds or reaches a point of financial insolvency if no additional revenues or funding are secured by then.

The runway is calculated by dividing the available cash or funding by the average monthly burn rate. A longer runway provides more time and flexibility for the company to reach key milestones, such as product development, market expansion or revenue generation.

1. Burn rate: Burn rate is the rate at which a company consumes its available funds or cash reserves to cover its operating expenses over a specific period. It is an indicator of how quickly a company is "burning" through its capital.

The burn rate is typically measured on a monthly...