Guide to Startups (including Legal Basics, Capital Raising and Future Opportunities)

Legal Basics for Startups with Robert Osler

In this series, Robert Osler (Special Counsel at Velocity Legal) speaks with Andrew Henshaw (Managing Director at Velocity Legal) about legal basics for startups. The discussion explores essential legal topics relevant for startups and founders, including the importance of structuring these businesses effectively for success and highlighting the various challenges and opportunities faced by startups and founders in the Australian ecosystem.

The series begins with a discussion around legal structures for startups and how this impacts governance, risk, and compliance. Robert and Andrew then explore the capital raising process, including investor engagement, fundraising laws, and legal documentation requirements to ensure a smooth execution of a funding round. They wrap up the series with a discussion on the broader opportunities and challenges that face startups in Australia and provide insights into the evolving startup ecosystem.

Legal Basics and Foundations for Startups

This episode introduces some of the key legal considerations for startups and founders. Robert and Andrew emphasise the importance of setting up an appropriate corporate structure, governance and decision-making, IP protection, contract management, and compliance. Some of the key discussion points include the significance and importance of shareholders' agreements, the critical issue of protecting IP and the necessity of drafting comprehensive contracts with customers and suppliers. The episode also highlights how adhering to the corporations law and industry-specific regulations is crucial for startups and risk management more broadly.

Capital Raising and Investor Engagement

Delving into capital raising, this episode presents a case study of a technology startup seeking to raise $5 million. The discussion focuses on the key elements that startups need to consider as part of the capital raising process, including preparing for investment, identifying the right investors, and the legal requirements that must be complied with to secure funding. Andrew and Robert explain different investor categories, such as sophisticated and wholesale investors, and the relevance of legal documentation such as term sheets, subscription agreements, and shareholders agreements. They emphasise the importance of protecting confidential information including as part of the due diligence process, and typical negotiation dynamics between startups and potential investors.

Future Opportunities and Challenges for Startups

The final episode shifts focus to the broader landscape of opportunities and challenges facing Australian startups. Andrew and Robert touch on legislative changes affecting startups and how these may impact them where they implement employee share schemes or seek early stage innovation company incentives. They also discuss some of the opportunities that may arise through international expansion by startups and engaging in deeper overseas markets. The episode concludes with insights into the evolving startup ecosystem, highlighting the roles of venture capital firms and the importance of regulatory compliance in shaping the future of startups.