Tech start-up incubator Startmate has made available all the documents it uses to make investments, to help new ventures with the legal demands of launching a business.
The documents, which are free to download, are based on a template used in the US called Series Seed www.seriesseed.com , but adapted for Australian law.
Prepared by law firm DLA Piper, it’s hoped the documents will help start-ups raise money by eliminating a lot of the legal groundwork needed before an investment is made.
Startmate facilitated the investment of $25,000 to each of the five winners chosen in its inaugural program in January.
The scheme, helmed by a raft of mentors including Atlassian co-founders Scott Farqhuar and Mike Cannon-Brooks and Deliotte partner Damien Tampling, aims to back the next generation of leading web and software start-ups in Australia.
Niki Scevak, another Startmate mentor, says that the newly-released documents could help start-ups slash their legal bills from $20,000 to around $2,000.
“You will still need a lawyer, of course, but this template will get you 95% of the way there,” he says.
“When you are raising money, there is a lot of back and forth to work out various terms, so this helps move that process along.”
“It will help transparency and introduce terms to Australian start-ups that they’re not familiar with. It also has information on company structure, so even if you’re not raising money, it will help you incorporate.”
Scevak says that many start-ups in Australia are unaware of terms such as preferred equity and founder vesting, which are commonly used in the US.
“The concept of founder vesting is that while usually there is a 50/50 split between co-founders, and someone leaves and the company is hampered, this term will allow for a more graceful exit,” he says.
“This is by far the most common area in which start-ups here don’t understand.”
Scevak adds that the next round of Startmate applications will open in October, with more mentors and further integration with the US start-up scene set to be incorporated into the program.
The Startmate documents can be accessed by clicking here.