This article opens our analysis of the ‘Open Source Seed Financing Documents’ released by the Australian Private Equity and Venture Capital Association Limited (AVCAL). Below, we set out what the documents are and why AVCAL released them to the public.

AVCAL’s ‘Open Source Seed Financing Documents’

AVCAL’s ‘Open Source Seed Financing Documents’ are four template legal documents which the public, including startup founders, may download for free from AVCAL’s website. These documents are named:

  1. Subscription Deed
  2. Shareholders Agreement
  3. Employment Agreement
  4. IP Assignment Deed

Documents of this description are typically required in negotiations between founders and investors in order to give legal effect to their deal. The versions uploaded to the AVCAL website are in template form for parties to insert their relevant details.

Who Drafted AVCAL’s ‘Open Source Seed Financing Documents’?

AVCAL attributes the documents to three of its members working in consult. These members are representatives from two venture capital firms and the partner of a law firm which typically acts for venture capital and private equity clients. Three individuals are given special mention:

  • Paul Bennetts – Investment Director of AirTree Ventures;
  • Niki Scevak – Co-Founder of Blackbird Ventures (he previously founded Startmate); and
  • Daniel Atkin – Partner of K&L Gates.

Why Did AVCAL Release These Documents to the Public?

AVCAL released these documents to “increase transparency and efficiency” during the capital raising process and “create a set of documents that are both startup and investor friendly”. On AVCAL’s website, the text introducing the document suite is in plain English and consequently, accessible to a person without legal training. In this way the site further enhances the notion that the documents are there to help startups in their negotiations.

A Good Starting Point But Open for Negotiation

Some investors may insist on using the AVCAL suite and may be unwilling to negotiate particular terms – that is, investors will require their inclusion due to the risk they assume. It’s then important you engage a lawyer with a strong understanding of the ACVAL documents and the startup equity raising space to assist, rather than wasting time trying to amend terms which the investor won’t agree to. Focus your energy on the bigger issues that you can negotiate.

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As a startup itself, LegalVision has an in-depth understanding of the startup space and the issues involved in raising capital. LegalVision has assisted many startups in negotiating the AVCAL documents. We are extremely familiar with the documents and know which terms investors will be willing to negotiate. Alternatively, we can help you draft your equity capital raising documents (based either on our precedents or the AVCAL suite). If you have any questions about capital raising, get in touch with our startup lawyers on 1300 544 755.

Jill McKnight

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