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Australian start-ups will now save thousands in legal fees when raising capital thanks to these open sourced legal documents

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Some of Australia’s leading venture capital funds, angel groups and other industry stakeholders have come together in a very commendable move to make a pledge to bring more efficiency and transparency to the fund raising process, by open sourcing the documents typically used to invest in start-up companies.

Dan Atkin, partner at Sparke Helmore Lawyers, Paul Bennetts of AirTree Ventures and Niki Scevak of Blackbird Ventures have been working together since the beginning of the year to make this pledge a reality.

The law firm and two VC funds have now put together a set of industry-wide standardised fund raising documents that are friendly to both sides of the capital raise coin, the start-up and investor.

Paul remarked that start-ups raising money in Australia should be spending 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,” he stated.

Dan highlighted that these open sourced documents are aimed at removing the heavy lifting from the financing process. “Think of them as a great starting point that will save start-ups time and money.”

The Australian Private Equity & Venture Capital Association Limited (AVCAL), the national association that represents the private equity and venture capital industries of Australia, supports this initiative and will be hosting the documents.

How will these open sourced documents help?

These documents should allow start-up entrepreneurs to approach investors for funding with greater confidence and knowledge in the legal process behind early stage financing ($250,000 to $1 million in size) and also generate a universal starting point for later financing rounds.

The documents can be executed in less than an hour saving the start-ups thousands in legal fees. Using these standardised documents as a starting point, companies have been able to complete equity financings for legal costs in the $5,000 to 10,000 range on a regular basis.

Angel and early stage investors can now also rest assured that more of their investment dollars will actually be used for the start-ups’ growth instead of ending up in the start-up lawyers’ pockets.

It is hoped that the Australian early stage financing process will now have transparency, efficiency and terms that are friendly to both start-ups and investors and consistent with most angel rounds in the US.

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