Simple Series A
Closing a Series A financing requires significant investments of time and money. A startup founder can generally expect a Series A financing to take approximately 3 – 6 weeks to close (measured from the time the term sheet is signed until the lead investor’s wire is received). The legal fees for a Series A financing can easily be upwards of $50,000, as startups usually pay not just their own company counsel fees, but also the legal fees of counsel to the lead investor.
We developed the “Simple Series A” documents to address these two pain points.
The “Simple Series A” documents are an easy to use, standard set of Series A financing documents, which build off excellent existing open source resources provided by Y Combinator (YC) and the National Venture Capital Association (NVCA). We relied on the YC Standard Series A Term Sheet as our North Star because we believe it is a fair, middle of the road reflection of standard Series A terms that result when sophisticated investors and founders negotiate a deal. Our belief is backed up by the upwards of 200 priced, equity financing we have completed over the past three years for our clients.
Streamline the drafting process.
We have studied these deals in order to arrive at terms we believe are a fair reflection of market terms for a company’s first equity or priced financing round. We also utilized the industry standard NVCA model Series A financing documents as the base for these documents. The NVCA forms are a tremendous resource and have been relied on in countless equity financing transactions. However, these forms contain many footnotes, bracketed provisions and optionality which require the drafter to sort through. We sought to reduce the optionality found in the NVCA forms to streamline the drafting process, thereby reducing the time and cost associated with extensive drafting and negotiation of the principal financing documents.
The “Simple Series A” documents are intended for use by a company that is raising its first priced equity financing (Series Seed or Series A). There is optionality to address Simple Agreement for Future Equity (SAFE) or convertible note conversion, as we find many companies have either SAFEs or convertible notes outstanding prior to raising their first priced equity round. Additionally, these forms are intended for use by a company and lead investor that have agreed to use the YC Standard Series A Term Sheet (or a substantially similar derivation). Assuming your transaction is consistent with the use case described above, we believe significant time can be saved by agreeing to use these forms with your investor. These documents are intended to be used as is, without further negotiation or drafting, other than filling in blanks as applicable. While these documents do not eliminate the need for hiring experienced outside counsel, they should help reduce costs, similar to how developments like the YC SAFE have transformed pre-seed funding.
Review the Simple Series A Terms and Conditions and download the resources using the links below.