If you’re raising capital for your startup, you’ll quickly realise it’s not just about finding the right investor - it’s also about understanding the “rules of the road” in Australia’s venture capital ecosystem.
One term you’ll often hear is AVCAL (now known as the Australian Investment Council). Whether you’re pitching to funds, negotiating a term sheet, or trying to understand what “market standard” looks like, the industry body formerly known as AVCAL is still a common reference point in the Australian venture capital landscape.
In this guide, we’ll break down what AVCAL is (and what it’s called today), why it matters to founders, and what legal and practical steps you should think about before you start fundraising - so you can raise capital with confidence and protect what you’re building.
What Is AVCAL (And Why Do Startups Keep Hearing About It)?
AVCAL is the former name of Australia’s key industry association for the venture capital, private equity and growth investing sector. It has since rebranded and now operates as the Australian Investment Council.
From a founder’s perspective, it matters because it sits close to the “centre” of the venture ecosystem. Even if you never directly deal with the Australian Investment Council, it can influence how the market talks about fundraising, deal terms, and industry standards.
In practice, you might see AVCAL (or the Australian Investment Council) referenced when:
- a VC fund describes itself as “industry-aligned” or engaged with the broader venture ecosystem;
- you’re trying to understand what’s typical in Australian venture deals (and what’s not);
- you’re looking at venture capital trends, policy discussions, or market insights that shape how capital flows;
- you’re comparing different funding pathways (VC, angel, strategic, grants) and want context on how venture works in Australia.
Important: AVCAL/the Australian Investment Council doesn’t “approve” your raise and it isn’t a regulator. But it is part of the ecosystem that shapes how venture capital operates in Australia.
How AVCAL Relates To The Venture Capital Ecosystem In Australia
When you raise venture capital, you’re stepping into a market with its own expectations around governance, reporting, and documentation.
AVCAL’s relevance to startups is mostly indirect, but still useful. Understanding what it is (and the Australian Investment Council’s role today) can help you understand why many funds operate the way they do - particularly around consistency and process.
It Helps Set The Tone Around “Market Practice”
Venture capital deals often follow patterns, such as common approaches to board composition, investor rights, liquidation preferences, and information rights.
While the specifics vary from deal to deal, the market tends to converge on familiar structures. That means when you’re negotiating, you’ll often be negotiating within a “range” rather than from scratch.
It Sits Near Policy And Industry Developments
Fundraising doesn’t happen in a vacuum. Changes to tax settings, innovation policy, and investment incentives can influence how easy or hard it is for startups to raise (and how investors approach risk).
So, when founders track industry discussions (even at a high level), it can help you understand investor sentiment and timing - especially if you’re planning a raise in the next 6-12 months.
It’s A Useful Signal When You’re Doing Investor Research
If you’re vetting potential investors, it helps to understand how they operate in the broader market. Funds that are engaged in industry associations and discussions may also have more established processes around due diligence and documentation.
That’s not automatically “better” for your startup - but it can help you anticipate what they’ll expect from you.
What Founders Should Prepare Before A VC Raise (So You Don’t Lose Momentum)
Fundraising is a legal process as much as it is a relationship-building process. If you wait until you have an investor ready to sign before you start getting your legal house in order, you risk delays, renegotiations, or - worst case - a deal that collapses late in the process.
Below are the core building blocks we recommend founders think about early.
1. Get Your Structure Right (And Make It Investor-Ready)
Many venture capital investors in Australia prefer (and sometimes require, depending on their mandate) that you raise through an Australian proprietary limited company structure - or another structure suitable for the deal and the investor.
If you’re still operating as a sole trader, partnership, or informal arrangement between co-founders, it’s worth addressing this before you raise. A clean structure can also make it easier to issue shares, create option pools, and formalise director duties.
In many cases, founders start by doing a proper Company Set Up, so the cap table, ownership records, and governance framework are clear from day one.
2. Lock In Founder Alignment Early (Before Investors Force The Conversation)
Investors will often ask questions like:
- Who owns what (and why)?
- What happens if a founder leaves?
- How are big decisions made?
- Can founders transfer shares freely?
If you don’t have a clear agreement between founders, you can end up negotiating internal issues at the same time as negotiating investor terms - which is a high-stress place to be.
A Shareholders Agreement can help set expectations around decision-making, founder exits, share transfers, and dispute pathways, which can make the fundraising process smoother and reduce the chance of internal conflict derailing the raise.
3. Build A “Due Diligence-Ready” Business (Contracts, IP, And Compliance)
Due diligence is where investors validate that your startup is legally and commercially investable. This is often where messy issues come to light, such as:
- unclear ownership of intellectual property (especially if early contractors built your product);
- customer or supplier arrangements that are “handshake deals”;
- privacy and data issues (particularly for online platforms or SaaS);
- employment misclassification risks (employees treated like contractors, or vice versa).
If you’re collecting personal information through a website, platform, or mailing list, investors will often expect that you have an appropriate Privacy Policy in place and that your practices broadly align with Australian privacy requirements.
And if you’re hiring team members (or engaging long-term contractors), having a clear Employment Contract can help protect your startup and clarify expectations around confidentiality, intellectual property and termination.
4. Be Clear On Your Fundraising Plan (Even If It’s High-Level)
Investors commonly want to understand:
- how much you’re raising (and whether it’s realistic);
- your runway and burn;
- what milestones the capital will achieve (product, revenue, hiring, growth);
- how this round connects to the next round.
From a legal perspective, clarity helps you choose the right fundraising instrument (equity, convertible note, SAFE-style arrangements, etc.) and ensures the documents match the commercial reality.
If you’re still deciding how to structure the raise, a capital raising consult can help you think through risk, documentation, and the approach that fits your stage.
Legal Documents You’ll Commonly See In A VC Fundraise (And What They’re Really For)
One of the most stressful moments for founders is receiving a “standard” set of investment documents and feeling unsure what’s negotiable, what’s normal, and what could create problems later.
Below are common documents and why they matter.
Term Sheet
A term sheet sets out the key commercial terms for the deal. It’s often not fully legally binding (except for certain clauses), but it sets the direction of negotiations.
Once you’ve signed a term sheet, it can be difficult to “walk back” major terms without risking the relationship or deal momentum.
If you’re at this stage, it’s worth getting advice on a Term Sheet early so you understand what you’re committing to commercially, even before the long-form documents are drafted.
Share Subscription Agreement (Or Share Sale Agreement)
This is typically the main investment agreement where the investor subscribes for new shares (and money flows into the company). It will cover:
- how many shares are issued and at what price;
- conditions precedent (what must happen before completion);
- warranties (promises you make about the business);
- completion mechanics and timelines.
This is also where founders can get caught out by broad warranties or unrealistic disclosure expectations - so it’s important to handle the disclosure process carefully.
Shareholders Agreement And/Or Constitution Updates
Many investments require updates to your governance documents to reflect investor rights and decision-making processes post-investment.
Often, investors will want certain matters to require special approval (for example: issuing new shares, taking on major debt, changing the business model, or selling key assets).
This is also where you’ll deal with board appointment rights, information rights, and sometimes drag-along/tag-along clauses.
If you don’t already have one, adopting a fit-for-purpose Company Constitution can be part of getting your governance investor-ready.
Convertible Notes (For Pre-Seed Or Bridge Rounds)
Some early-stage raises use convertible notes (or similar instruments) as a way to bring in capital now, with conversion into shares at a later priced round.
This can be faster than an equity round, but the detail matters. Terms like valuation cap, discount rate, interest, maturity date, and conversion triggers can significantly affect founder dilution and control.
If you’re considering this approach, a properly drafted Convertible Note helps ensure the “quick” option doesn’t become a messy cap table problem later.
Practical Tips For Fundraising Like A Pro (Without Losing Control Of The Process)
Fundraising can move quickly - especially once an investor is excited. Here are a few practical habits that can help you stay in control and reduce legal risk.
Keep Your Cap Table Clean
Before you raise, make sure you have:
- accurate records of issued shares and shareholder details;
- clear documentation for any past investments or loans;
- signed founder agreements (not verbal understandings);
- a plan for any employee share option pool (if relevant).
A messy cap table is one of the most common reasons deals slow down.
Use NDAs Strategically (But Don’t Rely On Them Alone)
Founders often ask whether they should use an NDA before pitching. In many VC contexts, investors won’t sign NDAs for early pitch conversations. That’s normal.
Where NDAs tend to be more useful is when you’re sharing genuinely sensitive information with parties like suppliers, developers, commercial partners, or advisors.
When it is appropriate, having a Non-Disclosure Agreement ready can help you move quickly without overthinking every disclosure.
Be Ready For Warranties And Disclosure
As part of the investment documents, you’ll likely give warranties about the company - for example, that you own the IP, that you’re compliant with key laws, and that there are no undisclosed disputes.
This is where founders can unintentionally take on risk by signing “broad” warranties that don’t match the reality of an early-stage business.
A good disclosure process is not about being negative. It’s about being accurate, transparent, and protected if something later turns out not to match a warranty.
Think About The Relationship After The Raise
Venture capital isn’t just capital - it’s a long-term relationship.
Governance terms matter because they shape how you and investors make decisions under pressure, such as when growth slows, when you need to raise again, or when acquisition opportunities come up.
Your goal isn’t to “win” every term. It’s to land on a structure that is fair, investable, and workable for your business in the real world.
Key Takeaways
- AVCAL is a well-known name in Australia’s venture capital and private equity ecosystem (now operating as the Australian Investment Council), and understanding it can help founders navigate how VC fundraising works in practice.
- Even though it isn’t a regulator, it sits close to market practice - which can influence what investors expect in terms of process, governance and documentation.
- Before you raise, it’s worth getting investor-ready: a clear company structure, founder alignment, clean cap table, and basic compliance (especially around IP, contracts and privacy).
- Key fundraising documents often include a term sheet, investment agreement, governance updates (shareholders agreement/constitution), and sometimes convertible notes for early-stage rounds.
- Fundraising moves faster when you’re prepared - and legal preparation can help you protect your ownership, reduce risk, and avoid last-minute delays.
Note: This article is general information only and does not constitute legal advice. If you’d like advice on raising funds for your startup (including reviewing your term sheet or preparing investment documents), you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no-obligations chat.
