Several Australian venture capital funds have come together to standardise their legal documents and make them publicly available in order to make it easier and cheaper for startups to access early-stage funding.
The agreement is expected to allow Australian startups to complete their funding documents in less than an hour and save them thousands of dollars in legal fees.
AirTree Ventures investment manager Paul Bennetts, Niki Scevak from Blackbird Ventures and Sparke Helmore partner Dan Atkin have been working on the open source initiative for the past few months.
The Australian Private Equity & Venture Capital Association Limited will host the documents, which will be for rounds worth between $250,000 and $1 million.
Bennetts told StartupSmart the standardised documents will improve transparency and efficiency for Australian startups and investors consistent with the majority of angel rounds in the US.
“The biggest cost when launching a startup is legal,” he says.
“This can cost up to $25,000 to $30,000 regardless of the size of the investment. It makes no sense that five to 10% of a startup’s capital raising is going to legal fees when every startup is getting a very similar set of documents.”
Bennetts says any startup looking to complete a seed round will be able to access the documents.
“This means that angels can become familiar with the same set of docs across multiple deals rather than having to review from scratch 100 pages of documents each and every time they invest in a startup,” he says.
“This removes friction and costs for angels, which will result in more seed deals being done and faster capital raising processes for startups – getting them back to running their business quicker. For VC funds, we can know that the shareholder structure setup before we invest is sound.”
Atkin said in a statement the standardised documents are aimed at removing the “heavy lifting” from the financial process.
“Think of them as a great starting point that will save startups time and money,” he said.
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