Corporate & Securities Law

Model Series Seed Docs

By Ryan Roberts

“The Series Seed Documents are a standardized set of documents that can be quickly and easily deployed for a seed investment: to help get a company financed properly, legally, quickly, and intelligently.”

The drafters, Fenwick & West and Andreessen Horowitz, imply these docs should be used for $500,000 to $1,500,000 investments. The drafters are “open sourcing” the documents so that they may be continually improved by the startup community.

The Series Seed Documents include:

(1) Amended and Restated Certificate of Incorporation

The Amended and Restated Certificate of Incorporation includes the typical provisions you might find in a VC deal, less (i) preferential dividends, (ii) redemption rights, and (iii) price based anti-dilution.

The board is set up to consist of 3 directors: 1 director elected by the common (founders); 1 directors elected by the preferred (investors); 1 “independent” director (i.e., the CEO) elected by the common via fiat in the Investors Rights Agreement.

(2) Series Seed Stock Preferred Stock Purchase Agreement

The requirements of various closing conditions, an officer’s certificate, a secretary’s certificate, and a legal opinion (from company counsel) have been dropped. The drafters also anticipate a management rights letter will be included in order to ensure “Venture Capital Operating Company” compliance for the VC investor(s).

(3) Investors’ Rights Agreement

The IRA does not provide for any registration rights. It also scales back the right of first refusal and jettisons the co-sale right. Lastly, the IRA contains a provision that the Series Seed investors should get whatever rights the investors in the next round of financing get.

(4) Term Sheet

The term sheet summarizes the provision found in the documents 1-3 above, but also includes a $10,000 legal fee reimbursement (cap) for investor counsel and a 4 year vesting schedule with double trigger acceleration for the founders.

Check out the docs here.

Full post as published by The Startup Lawyer on March 02, 2010 (boomark / email).