AVCAL is an association of sophisticated investors (principally private equity and venture capital investors) that created a suite of documents named “Open Source Seed Financing Documents” and made them available for public use. In our recent experience, prospective investors are increasingly presenting these to founders as a starting point for negotiating an investment in their startup. Below, we look at AVCAL’s role.
What is AVCAL?
Undoubtedly, AVCAL is now one of the key stakeholders in Australia’s startup community. As its name suggests, the members to whom it reports consist of private equity and venture capital participants.
AVCAL describes itself as:
“a national association which represents the private equity and venture capital industries… [Its] members comprise most of the active private equity and venture capital firms in Australia.”
In fact, the majority of its members are venture capital or private equity firms whose primary interests are to acquire the maximum returns on business investments and minimise losses in those investments.
Who Occupies the Seats on the AVCAL Council?
Managing directors of venture capital or private equity firms hold the majority of seats on the AVCAL Council.
The AVCAL Council consists of thirteen office bearers, and the Chairman is the director of a major private equity fund. At the time of writing, of the thirteen office bearers who sit on the AVCAL Council:
- One is reserved for the AVCAL Chief Executive;
- No less than nine are for managing directors of Venture Capital and Private Equity firms, being:
- Crescent Capital Partners;
- Archer Capital;
- Anchorage Capital Partners;
- Pacific Equity Partner;
- Evolve Private Capital;
- ROC Partners;
- Brandon Capital Partners;
- KKR;
- Evolve Private Capital; and
- The remaining three positions are filled by top executives from three investment funds within Westpac, HESTA and Ernst and Young.
What are AVCAL’s Objectives?
AVCAL brings together venture capital and private equity participants in a self-organised body to bear collective influence on government and industry. More specifically, AVCAL performs the following roles:
- Works to promote business interests in the venture capital and private equity ecosystem;
- Operates as an authoritative voice in the startup ecosystem, bearing in mind that its primary aim is protecting investor interests. In the context of a deal, this involves promoting upside to their investment and minimising risk; and
- Promotes founders’ interests to the extent these align with members’ interests.
Since 2007, AVCAL has issued awards to venture capital and private equity firms for leading deals in companies’ portfolios. AVCAL selects award recipients according to such criteria as “delivered outstanding returns to their investors via a portfolio company exit.”
Key Takeaways
Understanding AVCAL’s composition as an association that represents private equity firms and venture capitalists is important in the context of our ongoing analysis of the “Open Source Seed Financing Documents” that it released to facilitate deals in the startup community. We are told that these documents aim to “save you time and costs with your legal requirements”. However, prudent startup founders should ensure they engage their legal counsel in advising them on the documents.
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Questions about your startup’s documents? Ask our startup lawyers on 1300 544 755.
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