On a number of occasions I have written about Protecting Yourself through Shareholders Agreements, Corporate Governance. I’d also like to add to that list “Venture Funding Documents”.
Collectively, Venture Funding Documents are legal documents which form a great starting point for seed stage financing for companies. When securing seed funding, you will generally start with what’s know as a Term Sheet, a bullet-point document outlining the material terms and conditions of the investment. “The term sheet lays out the proposed capitalization which includes number and type of shares for each shareholder and their relative ownership percentages, post-financing. It goes on to describe the liquidation preference, mechanics of conversion, how the board of directors will be determined, protective provisions, and other rights and agreements. The term sheet is not a definitive document – it just describes the basic agreement. This is the one we promote and use” (TechStars Model Seed Funding Documents).
