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STARTUPS FAQs

Raising funds is not an easy task. We try to help founders where we can. These are a few of the questions we get asked most often.

How long does the investment process take?

It varies. Anywhere from between 6 weeks and 6 months from initial pitch through to funding. Our best advice is to start early and build relationships with investors.

What type of companies are you looking to invest in?

We mostly invest in early stage technology companies. Our preference is technology, but if you are pursuing an exciting potential market and have built a solid team, we will definitely take a look. The earlier the better. We're happy to write the first cheque or follow other investors into a round.

How should I value my business?

At seed stage, valuations are difficult. There are a few different ways to value a business. Considerations like product strength, team, traction, market size all feed into your valuation.

What is a term sheet?

A term sheet effectively sets the terms of an investment between a company and the incoming investors. A term sheet should include key items such as valuation, control terms (ie: how major decisions are made, board composition) and investor protections items (ie: founder vesting and preference shares). The term sheet is where most of the negotiating happens. Once agreed, this will become the core document utilised in the drafting of the long-form documentation. The term sheet will be incorporated later in the process in to other important documents such as the subscription agreement and the shareholders agreement.

What is the best structure for my startup?

In Australia, the best structure is a proprietary limited company (Pty Ltd). Partnerships, trusts and state registered business names are difficult for investment purposes.

When should I start looking to raise funds?

The earlier the better. You don't want to be in the position where you are running out of time and runway. This may put your company at a disadvantage when negotiating. As a rule, 6 months from start to finish should be easily sufficient. Anything less than 3 months is cutting it fine.

I've got a great idea. Can you help me develop it?

If you are embarking on the startup journey, the first thing we suggest you do is getting involved in your local startup community. Co-working spaces and startup initiatives like River City Labs host hundreds of seminars, networking opportunities and events. It's a great way to give your idea some 'air' and meet people who can help you along the way.

What's the difference between investment via direct equity or a SAFE note?

Direct equity is the most common form of investment. In this scenario, the company would issue new shares to the incoming investor in exchange for capital investment. A SAFE, Simple Agreement for Future Equity, is where an investor makes a cash investment, with shares issued at a later date following a predetermined trigger point (such as future capital raising).

How do I apply for investment?

If you are looking for investment, a warm introduction from one of our portfolio companies, community partners or investors will go a long way. We also welcome pitches via our online pitch form. You can apply to our investment team directly here: www.transitionlevel.com/pitch . All applications are reviewed by the team.