Corporate & Securities Law

TechStars Releases Model Seed Funding Documents

By Ryan Roberts

TechStars released a set of model seed funding documents that they use as a staring point for their seed stage financings.

The model seed funding documents include:

Term Sheet. This sets out the terms of the proposed seed investment into your startup and alsos include the proposed cap table (reflecting the seed investment).

Amended and Restated Articles of Incorporation. Your startup will need to restate, i.e. re-do, the charter it originally filed with Delaware now that your startup will have more than one class of stock.

Bylaws. Think of this document as your startup’s Constitution. You may already have a set of bylaws, but consider upgrading to something like this now that your startup has an outside investor.

Subscription Agreement. While the term sheet is an outline, the subscription is the definitive agreement where your seed investor purchases the securities (preferred shares in the model docs) from your startup. It will contain various reps & warranties from both seed investor and startup company, along with transfer restrictions.

Board Member Election Consent. The model documents anticipate that the preferred shareholders will have the right to select 1 board member. The preferred shareholders elect this board member with this election consent.

If you are considering using these documents on your own, David Cohen, co-founder and Executive Director of TechStars, gives the following proviso:

Please feel free to use these documents, but please do so responsibly only after retaining your own legal cousel. Don?t use these documents blindly. All of the figures in them are made up, and are not necessarily accurate or consistent. We?ve made best efforts to call out the places that need to be edited based on the situation using brackets. But still, using these documents for a real financing and without good legal advice is just plain foolish. Think of them as a good starting point that can save you some time and money.

Also note that the model documents assume your startup is a Delaware entity and is issuing equity securities.

TechStars is a mentorship-driven seed stage investment fund located in Boulder, Colorado. Learn more about TechStars here.

Full post as published by The Startup Lawyer on February 09, 2009 (boomark / email).