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Ted Wang
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Brian So a number of our firm's clients have used the documents (including Blippy and Civic Solar both of whom have done some media around it). Generally, I've not had any negative feedback on the Series Seed Documents themselves. Most of the comments are on the Blog. The lone criticism that I hear consistently is that convertible notes are preferable, which I tried to address in one of my earlier posts. Thanks for your interest.
Brian Thanks for your comments. To make it clear, I don't have any problem with anti-dilution generally speaking and it is both standard and appropriate in a full blown Series A. In my experience, it is highly unlikely that this term will come into play in a Series Seed since the valuation is presumably very low. The basic Series Seed investment tests a hypothesis. If that hypothesis is correct, the company raises money at a higher valuation. If incorrect, it shuts the doors. Given this background and the fact that a proper anti-dilution clause is lengthy, heavily negotiated and impossible for a civilian to read and understand, I thought it would be better to exclude.
This is typically done in a founder stock purchase agreement which contains vesting. That document does two specific things (a) gives everyone a firm number of shares in the company and (b) sets up a "vesting" period. What vesting means in this context is that you get issued a certain number of shares but those shares are subject to being repurchased by the company at nominal cost if you leave the company (either by quitting or by being fired by the other two guys). I've not posted a form to date on this but I am thinking about doing so. The problem is that they are very fact specific so difficult to do without counsel.
Toggle Commented Jan 19, 2011 on Series Seed Financing Documents at
Good point. I'll put them up in an archive.
Thanks for your helpful comments! Glad you found these useful. I am working on a bug fix release and will review all of these changes (I've got a handful of other nits). Board and SH consents are a good idea and are on my roadmap. Good luck with your company.
Toggle Commented Apr 23, 2010 on About the Series Seed Documents at
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Mar 16, 2010
On the drag along, it's a good point. The reason I omitted those admittedly standard carve-outs is that it is truly a convenience drag along, meaning that the sale has to be approved by all of the Board, the majority common and the majority preferred. My thinking is that if all three constituencies favor the sale, there's probably no need for the standard carve-outs.
Toggle Commented Mar 11, 2010 on Series Seed Financing Documents at
One the request for additional forms, its not on my road-map right now. My quest is to simplify financing for seed stage investments. That's a big job and until I've made significant progress, I'm not going to look at doing the same for other forms.
Toggle Commented Mar 11, 2010 on Series Seed Financing Documents at
They are word docs so the .doc extension should work. Will try and fix today.
We went with equity because ivestors would prefer to get equity for the following reasons: 1. Sets the valuation at the time of the investment. 2. Locks in rights, preferences and priviledges of the stock. 3. Investors get stockholder rights (as opposed to being mere creditors). 4. Less likely for mischief by subsequent investors. 5. Long term capital gains possible for early exit. One of the reasons notes have become so popular is that the equity documents were too expensive. I'm hoping this will ease that problem.