How do you stay one step ahead?
Wenger Vieli has been a leader in providing legal support for start-ups – for almost 25 years. What are the reasons for this practice group’s success? Initiator Christian Wenger and future helmsman Michael Baier reveal their formula.
Christian Wenger (top) and Michael Baier (left):
Fascination became a core business.
Christian Wenger, what led you to bet on start-ups back in 1996? After all, these companies aren’t much more than an idea and have tight budgets, if any.
Christian Wenger: Like so many things, it was happenstance. I had always had an affinity for technology and was fascinated by smart people who want to take off for new shores – they didn't have to ask me twice. So I advised colleagues and founders. Word got around, there were more and more inquiries, and I really enjoyed it. The business developed well.
What was the situation for start-ups in Switzerland back then?
Wenger: People laughed at small start-ups; Switzerland had always been known for its large corporations. There may have been three venture capital firms that believed in new ideas of this kind, but they were still on a learning curve. The first Internet bubble gave the start-ups a boost, and we were already heavily involved at that point.
You would hardly have continued to pursue that strategy if you hadn’t been encouraged by your success. When and how did it come about?
Wenger: From the entrepreneurial viewpoint, our involvement paid off from the outset because the market was growing and we grew along with it. Back then, each piece of the puzzle was still very expensive. One financing round could quickly mean CHF 200,000 in legal costs. Those amounts have decreased dramatically, not least because we actively influenced them by simplifying the processes that were involved. Today a financing round might cost one tenth of what it once did. I’d say the start-up scene really took off about five or six years ago.
Were you ever afraid it wouldn’t work out?
Wenger: On the contrary, I was still doing other things and didn't have to rely on the start-ups being successful. And we all knew that it’s in the nature of a start-up for it not to get really exciting until a certain amount of time has passed. We may have focused too much on the investors at first before we noticed that the company side is actually more interesting – because you’re on a journey with these small, innovative companies and can focus on supporting them, and when there’s an exit you can participate in an exciting transaction.
Still, there must also have been setbacks working in an area of that kind with no past experience?
Wenger: Yes, of course, that’s all part of it. You get upset about teams of founders who won’t listen to you or are too stubborn and you embark on the next project with great anticipation.
A company has to be legally set up right from the start."
One major factor in the success of Wenger Vieli was that you didn't wait for the start-ups to come to you, but instead got involved early on and created the need for legal advice. How did you do this?
Wenger: More or less because we were involved in all initiatives having anything to do with start-ups, be it in the sphere close to the Swiss Federal Institute of Technology (ETH), or on the financing side.
We created investor platforms and were members of all of the major associations. And we told everyone the same thing: a company has to be on a solid legal footing from the outset to ensure that it’s not crippled later by problems that impede its development. Luckily everyone understands that these days.
Michael Baier, you joined the start-up team about eight years ago. What particularly impressed you at that point?
Michael Baier: I came in as a recent graduate, and what particularly impressed me was that they let me do things. Little time passed before I was allowed to communicate independently with the start-ups, and I had other partners along Chrigel Wenger and Beat Speck by my side who encouraged me in the best possible way. That meant that I immediately got into the entrepreneurial flow, which in my view is vital for efficiently when providing legal advice to start-ups.
What skills were most in demand?
Baier: You had to be able to react quickly and give clear, understandable answers – including in case of complex legal questions. And you had to be willing and able to grapple with new ideas so you could sense what’s important for start-ups. It was very exciting for a recent graduate to be able to deal constantly with new companies and business models, establish structures, and provide assistance in a quick and flexible fashion. My predecessors clearly recognised that start-ups like it when they have people on the legal side who are as “young” as they are and have as few preconceptions as they do.
A start-up is most exciting legally, as well as financially, during financing rounds or when there’s a joint venture. Today Wenger Vieli skips many steps in the founding phase by providing new companies with automated tools free of charge.
Baier: People can use our Digital Lawyer, for example, to generate the forms needed to record changes of registered directors of stock corporations and limited liability companies in the commercial register. All you have to do is sign them and hand them in. We’re also working with a Swiss fund-tech company to automate all of the documentation needed for financing rounds. We also want to develop digital solutions at various levels which will be accepted and used in the Swiss start-up scene. That’s our way of helping start-ups during a phase when money is tight so we can focus our advisory services on more complex, individual legal issues and contract negotiations – during which we can contribute our entire experience to the start-ups.
It works because we're part of the scene.”
And does that work? Wenger Vieli hasn’t been the only player for some time now.
Baier: It works because we’re part of the scene and have an excellent reputation. People know that we tackle complex contractual and legal problems efficiently and proactively – and that our approaches to a solution are innovative. That’s the major benefit of 25 years of honest, solid work in this field.
Isn’t Wenger Vieli cannibalising itself by offering tools of this kind free of charge?
Baier: No, because the companies will face challenges that require custom- made solutions at least by the time of the larger financing rounds. We may invest six years in a start-up, offset our services with a great deal of goodwill, and prove ourselves as a sparring partner during that time, and are accordingly in a good position when there’s an exit.
Twenty-five years ago there were two or three deals a year. Now there may be from 60 to 70. You’ve obviously done a lot right. Still, what would you do differently today?
Christian Wenger: For too long we put too few resources into this area; I was on my own and busy with many other things. Beat Speck then properly expanded the division and brought in talented young people. But the main factor in our success was our sincere commitment. We were always extremely interested in this subject area.
Where do you see scope for further improvement? How can Wenger Vieli stay one step ahead of the competition?
Baier: We will be even more active in the background, for example by helping platforms with educational work and constantly entering into additional partnerships. But we must also make our presence felt more prominently. Most people now know that we do start-up work, but we’ve got to be more dynamic in marketing ourselves. That’s why we’ve now got a designated place for the start-up desk on our website; people can find all of the important information there.
You’re the third generation at Wenger Vieli to work with start-ups. When will it be time for the fourth generation?
Baier: It’s already time! We have several freshly-minted lawyers who enjoy working with young companies and who are prepared to go the extra mile. We quickly get them involved in the action, and throw them in at the deep end with the best of our knowledge– naturally under supervision – just as the firm did with me. Because we believe in them.