Startup Legal Documents
In recent years, both Y Combinator and TechStars have released legal documents that startups could use. While recommend that you consult an attorney before entering into any agreement, you could use these documents as a starting point in your discussions.
TechStars released Model Seed Funding Documents early this year.
Today, just as I promised in the recent Venture Voice interview, we’re releasing the various legal documents that we use as a starting point for seed stage financing for our companies. We’ve now done a dozen or so of these, and we thought it would be useful to release the documents to the community. We think that they’re great model documents for an angel or seed financing in the $250k-$2M range. They represent a “light” preferred equity financing and have very simple terms that are generally “balanced” but if anything lean toward the entrepreneurs and represent a great deal of trust in them, which we think is appropriate for angel deals where you are primarily investing in the people at the early stage.
They documents were created by Cooley Godward Kronish, LLP, and we thank them and Michael Platt specifically for allowing us to release them publicly.
In August 2008, Y Combinator and Wilson Sonsini Goodrich & Rosati released Series AA Equity Fiancing Documents.
While they may not be suitable for all situations, the goal was to make the terms fairly neutral. So while we would of course advise both parties using these documents to have their lawyers look at them, they provide a starting point that we hope can be used in many situations without too many modifications.
The Startup Lawyer blog gave some initial thoughts on the Y Combinator documents. Thanks also to the Startup Lawyer blog, I just discovered that Wilson Sonsini had a Term Sheet Generator.
This tool will generate a venture financing term sheet based on your responses to an online questionnaire. It also has an informational component, with basic tutorials and annotations on financing terms. This term sheet generator is a modified version of a tool that we use internally, which comprises one part of a suite of document automation tools that we use to generate start-up and venture financing-related documents.
It’s nice to see that there are legal documents for startups to use as starting points. But again I stress, you’ll want to consult your attorney because all deals are different and no doubt there will be some negotations involved. That said, enjoy the documents.