The documents in a priced round
A typical venture round involves an amended certificate of incorporation that creates the new preferred stock, a stock purchase agreement, and agreements covering investor rights, voting, and rights of first refusal on founder shares. Many investors use forms modeled on widely circulated industry templates, which helps, but the details still get negotiated. The company gives representations about its capitalization, IP, contracts, and litigation, and qualifies them through a disclosure schedule. Board and stockholder approvals must be obtained in the form the charter and state law require. Expect the lead investor's counsel to circulate the first drafts, and in many deals the company pays part of the investors' legal fees.
Diligence and cleanup
Investor counsel will review the cap table, past stock issuances and option grants, founder and employee IP assignments, key contracts, and whether earlier raises complied with securities law. Problems commonly found include options granted without proper board approval, missing assignments from early contractors, and equity promised by email but never documented. Fixing these before the request list arrives speeds the closing and avoids awkward disclosures. If earlier SAFEs or convertible notes are converting, confirm the calculations with your accountant and the investors in advance. Founders should also expect questions about side letters or informal commitments made to earlier investors.
Closing and what follows
Venture financings rely on exemptions from securities registration, and those exemptions come with filings, such as a notice to the SEC after the first sale and notice filings in some states. The new investor rights also carry ongoing obligations, including information delivery, board procedures, and consent requirements before certain actions. In an early conversation we review the signed term sheet, the current cap table, and your records, identify gaps, and set a realistic closing timeline. We also explain which obligations will change how the company operates after the money arrives. Later rounds will build on these documents, so terms accepted now tend to carry forward.
