Tech Venture Structures, Commercialisation & Capital
Our technology expertise and experience over four decades is across a wide range of digital and non-digital technologies.
We provide tech venture founders and stakeholders a considerable depth of experience and insider knowledge about their markets.
- Digital technology: We are pioneers in the Australian digital media tech sector. We’ve advised hundreds of tech venture founders and stakeholders for ecommerce websites, social media platforms, mobile apps, video subscription services, online film festivals, Bitcoin ventures, cloud computing services, computer games merchandising and more.
- Industrial and product technology: As a short list we’ve helped clients structure, commercialise and raise capital for their dentistry tools, food and beverage products, medical devices, industrial robots and machines, and chemical technology. This work has included drafting paperwork to engage and manage employees and contractors, and raise capital for growth.
For our Tech Venture Structures, Commercialisation & Capital service read the three tabs below titled Q&A, Pricing and What We Need From You.
Q&A – Top questions answered
What information do investors require?
For early stage capital raising, to make a pitch a common package of items could include some or all of the items below.
For many clients over several decades we’ve prepared all of these. Call for a chat, following which we can provide a costed proposal.
- Pitch slide deck
- Pitch script
- Spreadsheet with a budget or forecast
- Information memorandum.
- Foundations for each of the above could be:
- customer acquisition strategy
- assessment of how long it may take to get to paying customeres
- brand strategy
- intellectual property register
- pricing policies
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 that basic common feature, there’s wide variation in distribution agreement business models, financial models, clauses, lengths and styles.
Those variables appear in a diverse range of contract types we’ve designed and drafted, for example, for:
- Agents and agencies
- Outsourcing facilities
- Joint venturers.
Why is analysis of supply chains so important to commercialisation?
As business lawyers and commercialisation consultants over four decades, we’ve monitored developments in productivity, supply chains and value chains and applied that in business model innovation for client business strategies and agreements. This can be of little or no relevance to clients selling commodities. In contrast, clients selling something special need to innovate.
What is central to business model innovation? One of the most fundamental flaws in legal agreements can be weaknesses in arrangements that do not increase productivity. Productivity is fundamental to advances in both standards of living and the the quality of life. Supply chains and value chains within them affect productivity. Globalisation links processes across time and space, it too contributes enormously to productivity when all things are equal.
A complexity is that supply chains evolve or change dramatically, so do value chains within them. They change and productivity is affected due to innumerable factors, eg new laws, technology shifts, changes in belief systems and values within civilisations, currency fluctuations, and pandemics.
When productivity improvements are evident we may see that:
- What was once expensive (eg software) can become free or almost free (eg mobile apps).
- What was once limited (eg news in newspapers) can become abundant (eg news feeds in social media).
- What once took more time for processing of transactions (eg using printed cheques) can become frictionless with fintech.
- What once needed negotiation and wet signatures can with an online contract become no longer relevant.
To get down to brass tacks, the above productivity, supply chain and value chain thinking and factors influence our negotiation of deal points for clients and our drafting of agreements and related documents. They play into legal decisions to make on how a client should charge its customers, the legal commitments it can make, and what warranties it should seek or provide.
Clients who work with advisers in law, accounting and other fields who have knowledge about contemporary realities avoid going down the wrong path, and wasting effort, time, money and other resources.
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.
- Upfront sums (eg advances paid on signature, milestones or in installments).
- Backend revenue (eg royalty percentage or commission on sales).
- Working out what the backend is of, eg net or gross sales revenue.
- Mechanisms that vary the upfront and backend revenues (eg escalating royalties and minimum performance obligations).
- 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.
With the drafting of specific clauses manufacturers can be:
- Blocked from copying intellectual property
- Required to follow set quality requirements and standards
- Obliged to obtain insurance against product liability claims
- Restrained from reverse engineering products or doing their own adaptations
- 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 can suit, with some legally binding provisions. It 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, below are examples of fee ranges (inclusive of GST) 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 preparation – ranges from $990 to $1,100
- Information memorandum: $3,300
- Convertible note – can range from $3,300 to $4,400
- Collaboration, joint venture or licensing agreement: $3,300 to $6,600
- 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 a page of bullet points on your vision for what you have already
- Existing legal documents with co-founders, content and intellectual property developers and contributors, collaborators, business partners and any clients or customers