Free seed financing docs
Open Source Seed Financing Documents.
Australia’s leading venture capital funds, angel groups and other industry stakeholders have come together to make a pledge to create more efficiency and transparency to the fund raising process.
Startups raising money in Australia should spend less time and money on the legal and financing process. AVCAL want to help by open sourcing the documents we use to invest in companies.
AVCAL’s goal in making this pledge is to create a set of documents that are both startup and investor friendly, in addition to increasing transparency and efficiency in the fund raising process. The documents should allow startups to approach investors with greater confidence and knowledge in the legal process behind early stage financing and generate a universal starting point for later financing rounds. Using these documents as a starting point, our companies have been able to complete equity financings for legal costs in the $5k-10k range on a regular basis.
Please feel free to use these documents, but please do so responsibly only after retaining your own legal counsel. Don’t use these documents blindly. Think of them as a good starting point that can save you some time and money.
Below are the seed funding documents that we have open sourced. AVCAL feel’s that they’re great model documents for an angel or seed financing round in the range of $250k-$1M in size.
Typically, startups will start by negotiating a term sheet with a lead investor, which outlines the headline terms to the investment.
The term sheet describes proposed capitalization and ownership percentages post-financing. Further, the term sheet describes other key financing terms such as the liquidation preference, mechanics of conversion, how the board of directors will be determined, protective provisions, and other rights and agreements. The term sheet is a short form version of the definitive documents.
The documents used at closing are a long form and definitive version of the terms and agreement made in the term sheet. The key workstream in the documentation process is mapping long form documents to the agreement made in the term sheet. The document templates, which have now been open sourced, are:
- Subscription Deed: This deals with the financing terms of the instrument used.
- Shareholders Agreement: This documents the relationship between investors and the startup.
- Employment Agreement: This will map to the Shareholders Agreement.
- IP Assignment Deed: The Company should own the IP that founders and early employees create.
Suggested Further Reading
If these documents have generated further interest in understanding the jargon and processes behind the legal process of financing, AVCAL suggest reading the following:
- Venture Deals – Brad Feld, Jason Mendelson and Dick Costelo
The following groups have made the pledge: