Australian venture capital firms, angel groups, incubators, accelerators and other industry stakeholders have pledged to open source the legal documents used in their seed fundraising processes. Industry-wide standardised fundraising documents can now be downloaded via AVCAL’s website and used during early-stage equity investment rounds.
Since the start of the year, Dan Atkin, Partner at Sparke Helmore Lawyers, Paul Bennetts, Investment Manager at AirTree Ventures, and Niki Scevak, Managing Director at Blackbird Ventures have been working together to create open sourced legal document templates that would help cut down legal expenses for startups, bring more efficiency and transparency to the early-stage fundraising process, and act as a universal starting point for later-stage fundraising rounds.
Previously, startups looking to raise seed funds would be required to spend $20,000 to $25,000 in legal fees. The biggest cost in the legal process has been the drafting of the documents, which can take hours by lawyers who typically charge on a per-hour basis. By downloading open-sourced templates, documents can be completed much faster, allowing startups to close equity financings for legal costs within the $5,000 to $10,000 range.
“Startups raising money in Australia should spend less money and time on the legal and financing process. Open sourcing these documents will remove friction and bring more transparency to our local ecosystem,” said Bennetts.
The model documents – which include the Subscription Deed, Shareholders Agreement, Employment Agreement, and IP Assignment Deed – are recommended for startups looking to raise between $250,000 and $1 million in angel or seed investment.
It is not recommended, however, that the model documents be used blindly and without legal counsel. Atkin insisted, “Think of them as a great starting point that will save startups time and money.”
Those that have pledged to partake in this initiative include: AirTree Ventures, BlackBird Ventures, 25Fifteen, Adventure Capital, Blue Sky, M. H. Carnegie & Co, Incubate, Innovation Bay, Optus Innov8, Pollenizer, Rampersand, Scale Investors, Square Peg Capital, Starfish Ventures, Sydney Seed Fund, Tank Stream Ventures, and York Butter Factory.
More information is available at AVCAL.
Image: Niki Scevak (Left), Dan Atkin (Top Right), and Paul Bennetts (Bottom Right).