Legal Analysis of the Contractual Terms of Venture Capital Investors and Their Relationship with the Financing of Digital Economy Companies through Initial Public Offering

Sanieimanesh, Zeinab; Sadeghi, Mohsen

doi:10.48300/jlr.2025.535948.2990

Legal Analysis of the Contractual Terms of Venture Capital Investors and Their Relationship with the Financing of Digital Economy Companies through Initial Public Offering

Articles in Press

Document Type : Original Article

Authors

Zeinab Sanieimanesh ¹

Mohsen Sadeghi ²

¹ PhD student in Foreign Trade and Investment Law, Faculty of Law and Political Science, University of Tehran, Tehran, Iran.

² Associate Professor, Department of Private Law, Faculty of Law and Political Science, University of Tehran, Tehran, Iran.

10.48300/jlr.2025.535948.2990

Abstract

Digital economy companies in Iran are considered as a type of startup. These companies require capital and, in this regard, entering into investment contracts with venture capital investors—who are prominent players in the investment process—is essential. On the other hand, initial public offerings (IPOs) and entering into the capital market, represent a promising avenue for financing startups. The unique principles and regulations of the capital market, along with the characteristics and contractual agreements of digital economy companies with their investors, can create different conditions for the issuing company, the capital market, entrepreneurs in the digital economy sector, and the investors of these companies. The main question is whether the regulations established for financing these types of companies align with previous contractual agreements and the practical requirements governing those companies, or whether they lead to legal challenges. This paper, through a descriptive-analytical method and by examining the relevant contractual terms of investors in these types of companies, concludes that, firstly, financing digital economy companies through IPOs requires feasibility assessments accordant to the company’s conditions, and secondly, this method can influence the contractual conditions of investors in the applicant company.

Keywords

Control terms

Exit terms

Venture capital investor

Startup companies

(OTC market)