Use this section for assistance in the capital raising process with TVP. Find assistance on preparing your business submission, find answers to frequently asked questions, decipher VC jargon with our glossary, or contact us directly.
- Why should I elect to seek funding from a professional VC firm, if there are other sources of equity funding?
- How should I choose a particular VC firm to work with?
- What is a Confidentiality Agreement/Non-Disclosure Agreement and do I need one?
- Who do I "deal" with when I contact TVP initially?
- What if I want to speak to somebody?
- How long does the entire process take?
- How should I review my own submission before I submit it to TVP?
- Why does TVP summarily reject many good business opportunities?
- Where can I go if I am rejected by TVP?
This is a key decision that needs to be made by the entrepreneur before they go down the path of VC investment. Alternative sources of equity financing may include individuals ("Angels"), corporations, and the public stock market. Not all of these sources may be available depending on general market conditions and the stage of your business. Each source has pros and cons, and is not necessarily mutually exclusive to VC investment. For example:
- Angels may add value early on providing seed or start-up financing, relevant experience and contacts. Some angels may not however wish to get too involved in operational aspects of the business, based on a relatively narrow experience base.
- Corporations invest in ventures for strategic reasons. It is important to understand the motivation for these investors, ensure conflicts of interest are carefully managed, and business options are not compromised.
- Access to public equity markets has to be carefully timed to ensure management structures, processes and business models are robust enough to survive the demands of public scrutiny. The IPO process and subsequent reporting regime is very costly and challenging. Many companies list too early in their lifecycle, and struggle to maintain investor support as a result.
An experienced VC firm has the following advantages:
- The support of a team of professional managers who seek to make informed, rational decisions based on maximising returns.
- Experience to draw from multiple investments in aspects including strategy, recruitment, technology development, international expansion, channel development, funding, etc.
- Extensive networks which can accelerate channel development, commercial and technical relationships, future funding, etc.
- Relevant industry knowledge which ensures common understanding of customer problems, technology challenges, emerging trends, etc.
- Ability to support multiple rounds of financing which provides a buffer in the event that growth demands further capital or that commercial or technical progress is slower than anticipated. A deep pocketed investor can substantially reduce the cost and management distraction of raising additional capital and give new, external investors, confidence to invest in your company.
- Experience of all stages of the business lifecycle from start-up through to exit and the issues your company confronts as it grows and evolves.
- Empathy and understanding of the entrepreneurial process which enhances our ability to assist you in meeting the challenges you will inevitably face.
Just as we will do due diligence on you, make sure you do due diligence on us! At the end of the day this is a partnership that will probably last for several years so people are critical. Ask yourself whether you can work through good and bad times, with the principals of the VC firm. Check this out by speaking with our portfolio companies. Some other points to consider:
- What is the track record of the firm and the particular people you will be working with?
- How much do you trust and respect the business judgment of the people?
- How much money do they manage and where does it come from?
- Do they understand your business and industry?
- Do they have any relevant operational experience?
- What types of investment have they made and how relevant are these to your business?
- What networks do they have which are relevant to your business?
- Can they support subsequent rounds of financing?
A Confidentiality or Non-Disclosure Agreement (CA or NDA) is a legal document, which may be entered into by the party seeking investment and the venture capital firm. At common law, breach of information that is disclosed under conditions of confidentiality may be actionable in the courts if damages can be proven, irrespective of whether a CA or NDA exists.; However, the existence of a CA or NDA clarifies the extent of the obligations between the parties. A diary note and correspondence confirming that information was disclosed under conditions of confidentiality should also be sufficient to ensure conditions of patent law are not breached.
Many VC firms refuse to sign such agreements because:
- The common law protection should be adequate in case of deliberate breach.
- Their business is based on a reputation for integrity.
- They deal with a surprising number of similar business concepts, resulting in many "shades of grey" when determining what information is confidential.
TVP's current policy on this issue is that we will sign our own NDA, which is based on the standard document adopted by the Australian Venture Capital Association. Unfortunately we cannot enter into variations of this. To enter into an NDA with TVP, please download, and sign and fax or deliver to TVP. TVP is not required to sign and return this document to create a binding agreement, since we have posted it on our website and this constitutes an offer.
When you work with TVP, you work with a tight-knit team. Our office manager, Wendy Watson, will typically answer your queries but it's not uncommon for a Principal or Partner to answer initial telephone enquiries. If you progress to an opportunity submission:
- Wendy is generally the first point of contact, fielding both electronic submissions and hardcopy documents.
- Your submission is tracked electronically by Wendy, initiating an item in our deal-flow database. This ensures your submission is tracked, that your contact details are associated with the information submitted, and that all members of the team are aware of progress.
… and who reviews and evaluates my submission?
- Wendy will assign your submission for review by one of our Partners or Principals. This is done on the basis of relevant knowledge and workload.
- Initial feedback will be provided within 2 weeks as to whether TVP will be progressing the opportunity to a further stage. This process may involve ongoing discussions, meetings and information gathering.
- Once elevated to "high interest" status, the overall business concept will be reviewed by the TVP executive team (Principals + Partners) at our weekly review meeting. At the earliest stage possible, the entrepreneur will be invited to "pitch" to the TVP team, to assist the knowledge transfer necessary to progress the deal to investment.
… and who will be the ultimate decision maker?
- The TVP team decides as a group, which deals should progress to a commercial agreement stage prior to due diligence. Deals that get this go-ahead are assigned a deal team comprising a Principal and a Partner. This team negotiates a commercial agreement (in the form of a "term sheet"), which sets out the indicative terms on which an investment will be made. Due diligence, which is an intensive evaluation process, commences and TVP must complete this prior to finalizing an investment.
- The final decision to invest is made by the TVP team after due diligence is completed.
Whilst we are happy to speak with you, we believe that this web site has all the information that you require in order to determine if your opportunity fits within our investment criteria. It also gives extensive guidelines in preparing your business submission.
From submission to funding the process can take as little as 2 months or as long as 12 months. The actual time required is a function of several factors:
- The strength/completeness of the business plan presented.
- The extent to which credible third party evidence to support the major assumptions underpinning the business has already been assembled.
- The ability of the management team to position the merits of the opportunity.
- The commercial aspects of agreeing and documenting a deal.
- How busy we are with other deals and portfolio companies.
- On average we would expect the process to take from 3 to 6 months.
We understand that for many entrepreneurs, submitting your business proposal to a VC can be quite daunting. At TVP we aim to do between 4 and 6 deals a year but we receive many hundreds of applications. As a consequence many business proposals are declined by TVP after a very rapid review. To avoid this happening to you, here are some things to check for:
- Do you fit within our investment criteria (both ICM industry sector and connection with Australia or New Zealand)?
- Have you clearly explained a compelling value proposition for a target market segment?
- Have you demonstrated an understanding of the competitive forces in the target market and your competitive advantage?
- Have you provided a clear plan of how you are going to find, and sell to customers?
- Have you shown you have the right team to execute the plan or can hire one?
- Have you clearly explained how much money will be required to develop the business and how it will be spent?
- Have you set out milestones against which progress will be measured?
- Have you provided information to support what the business is worth today, how much it might be worth in the future, and how investors might realize their investment?
- Have you provided relevant third party evidence to support key claims and assertions made in the proposal?
- Have you demonstrated you understand the risks and challenges facing the business and how you will deal with these?
You may want to consider working with an investment advisor to enhance your submission, although this is not essential.
TVP aims to invest in approximately 4 to 6 new companies in a year. In order for our relatively small team to spend adequate time working with the short list of 20 to 30 investment candidates that we review in depth each year, we need to quickly reject many applications that potentially fit our criteria. We seek to respect all applicants by quickly rejecting businesses that we consider unlikely to make it through our process. A rejection may be made for a variety of reasons that do not necessarily reflect on the quality of the business or the management team.