Simplicity, Clarity, Alignment: Welcome Series Seed

With today’s launch of Series Seed Legal Documents, the early stage venture industry just got a lot simpler, and a lot better.

Our good friend Ted Wang from Fenwick and West has been working on this initiative for a very long time, and Ted has long been passionate about innovating and streamlining the process of closing Seed and A-round financings. The new documents are a universal, “open-source” set of deal closing documents, and importantly they are supported by the top attorneys and legal professionals at multiple firms across the valley.

The docs are all that’s required to close a standard Seed/Series A venture capital financing. They include the most important provisions of legal docs for early stage companies, plant the flag on issues squarely in the clear and fair category, and (importantly) throw out much of the un-necessary provisions found in most legal docs. Because the docs are simpler and cleaner, the legal costs for closing a standard, clean Seed/Series A round will drop dramatically. This is good for Founders and investors alike, and it’s good for our industry. Ted and his group call these “Series Seed” legal documents, and True and a handful of other early stage investors have joined on to help launch this initiative. You can find the docs here.

At True, we’re committed to simplicity, clarity and alignment. Since we started our firm in 2005, we’ve designed and led over 45 Seed and Series A financings with these principles in mind. Since day one, all of our docs are clean and simple: no tricks, no onerous voting provisions, no multiples on liquidation preference, no participation, no board control, yes generous founder vesting and yes ample acceleration for Founders upon change of control. One of our Founders eloquently told a roomful of our LPs that True “doesn’t do any of that sneaky VC sh%t.” They might have been surprised by the word choice, but believe me they liked the sentiment ☺.

We’ve been practicing the principles of the Series Seed for the 4.5 years, so our actions speak much louder than our words, but both action and words greatly support this initiative because it’s good for Founders.

Ted and his team have taken a complicated set of documents and applied good legal judgment and pragmatic business thinking to them. Broad adoption of Series Seed documents will result in lower legal costs for the early stage market, more efficiency and much greater value creation because more of a deal’s proceeds will be used for company building. At True we’ve aggressively pushed the legal costs of closing a small seed round ($250K) to $10K total (i.e. $10K for both sides). Normally these costs total over $30,000, which is ludicrous in the context of a $250K raise.

We’re proud of this innovation and these savings, but there are more important benefits than cost. Simplicity re-affirms trust. Clarity lets everyone see in the plain light of day how a deal works in all scenarios. Alignment creates value for Founders and investors alike, and a set of standardized docs helps our industry focus more of our time on what counts: engaging phenomenally talented people to build products that change the world.

We’re very pleased to support Ted and the Series Seed, and we encourage Founders everywhere to consider forming their Seed/A round deals with this simple, Founder-friendly approach.