Tech Ventures – Structuring, Capital & Commercialisation
Our speciality is intellectual property and commercialisation strategy for their integration into the life cycle of ventures. This involves business structuring, legal drafting for engaging people and capital raising.
Top questions answered
What information do investors require?
For early stage capital raising a common package of three items:
1. a pitch slide deck,
2. a budget or forecast spreadsheets, and
3. an information memorandum.
Underlying these are an intellectual property register, pricing policies and a brand strategy. For some clients we’ve prepared all of these, call us for a complementary costed proposal.
Can you get investors without a company valuation?
A convertible note may be suitable, it postpones difficult valuation decisions. It is a type of loan agreement that can convert a debt into shares when a specified event takes place. As rights for an early lender or investor, interest is usually payable on the loan and a discount rate in any share conversion price is provided.
What types of distribution agreements are there?
A distribution agreement involves interdependence between a supplier of products and the distributor. Beyond this common feature, there’s wide variation in distribution agreement elements. Those elements appear in a diverse range of contracts designed, for example, for a licensee, manufacturer, agency, affiliate, outsource facility, product hire, franchisee or joint venturer.
Why is analysis of supply chains so important to commercialisation?
Supply chains evolve, so do value chains inside them. They change in response to innumerable factors, eg new laws, technology shifts, currencies fluctuations. What was once expensive (eg software) becomes almost free (eg mobile apps). What was once provided by limited outlets (eg news) becomes abundant (eg news feeds in social media). Knowledge about contemporary realities in supply chains avoids wasted effort.
As business lawyers we monitor developments in supply chains to apply business model innovation for client business strategies and agreements. Call for a conversation on your situation.
What revenue can a licence agreement generate?
There’s a lot to cover for this topic. Here’s a framework.
1. Upfront sums (eg advances paid on signature, milestones or in instalments).
2. Backend revenue (eg royalty percentage or commission on sales).
3. Working out what the backend is of, eg net or gross sales revenue.
4. Mechanisms that vary the upfront and backend revenues (eg escalating royalties and minimum performance obligations).
5. Revenue security clauses (eg most favoured, options, security deposits, and contributions towards costs of patent maintenance and marketing).
Selection of a suitable financial structure requires examination of each individual case.
What risks can a contract minimise for manufacturing locally or abroad?
The risks are considerable when a manufacturer is engaged. To manage them there are specific types of clauses. Manufacturers can be:
1. blocked from copying intellectual property,
2. required to follow set quality requirements and standards,
3. obliged to obtain insurance against product liability claims,
4. restrained from reverse engineering products or doing their own adaptations, and
5. required to vary pricing based on fluctuations in underlying costs.
What are the options for tech venture business structuring?
This depends on many factors. Consider for example a venture in the early stage of its life cycle:
- Long term friends who become co-founders often operate cooperatively on a handshake.
- Alternatively, a relatively simple memorandum of understanding, with some legally binding provisions, can suit and get the show on the road for an idea-stage start-up.
- A company structure with a shareholders agreement can suit many early stage or advanced ventures or ventures with investors.
- Investors may instead prefer a simple loan agreement or a convertible note.
We’ll provide a fixed price after an initial review of your business structure, business offerings and existing legal documents.
As an indication, the fee ranges for drafting common capital raising documents are listed below.
- Slide presentation pitch with financial model $1,320
- Spreadsheet modelling venture costs and revenues $1,100
- Term sheet ranges from: $990 to $1,100
- Information memorandum: $3,300
- Convertible note ranges from: $3,300 to $4,400
- Collaboration, joint venture or licensing agreement: $3,300 to $6,600
All figures indicated above are inclusive of GST.
- Information on: your target market; founder of the venture or inventor; any potential or existing investor; and any identified market opportunity.
- Your plan or business plan (if any), at least your vision for what you have
- Existing legal documents with co-founders, collaborators, business partners and clients (if any)