Financing stages
As Brad Feld points out in his work on standardized venture funding documents, one of the challenges in startup financing is that “nobody has done the work to get all the various players in the room and standardize on one form.” While multiple standardized sets exist, each has its strengths and weaknesses.- Friends and family
- Seed financing
- Series A and beyond
Your earliest stage of funding, typically from personal networks. This stage often uses simpler instruments like:
- Convertible notes
- SAFE agreements
- Shared Earnings Agreements
Available document sets
The Startup Starter Pack draws from several standardized document sets, each with different philosophies and use cases.Series Seed
Series Seed
A standardized set of legal documents that can be quickly deployed for a seed investment round. The Series Seed documents are maintained by Cooley LLP and represent a streamlined approach to seed financing.Best for: Seed rounds from 2M with straightforward termsKey documents:
- Term Sheet (Equity)
- Preferred Stock Investment Agreement
- Restated Certificate of Incorporation
- Board and Stockholder Consents
Y Combinator
Y Combinator
Y Combinator provides two main sets of documents:
- SAFE (Simple Agreement for Future Equity): A revolutionary instrument that’s simpler than convertible notes, with no interest rate or maturity date
- Series AA: Equity financing documents for angel rounds, designed to be easy and streamlined
Techstars
Techstars
Model documents for seed financing that represent “light” preferred equity financing with simple, balanced terms that lean toward entrepreneurs.Best for: Seed rounds with high trust between parties and minimal complexity
NVCA
NVCA
National Venture Capital Association template documents for traditional venture capital investments. These are comprehensive, investor-protective documents.Best for: Series A and later rounds with institutional VCs
Earnest Capital
Earnest Capital
Shared Earnings Agreement (SEA) - an alternative to traditional equity financing designed for sustainable, profitable businesses.Best for: Bootstrapped companies seeking growth capital without equity dilution
Choosing your financing instrument
The right financing instrument depends on your stage, goals, and relationship with investors.SAFE agreements
Quick, simple agreements that convert to equity later. No valuation needed upfront.
Convertible notes
Debt instruments that convert to equity at a qualified financing, with interest and discount.
Equity financing
Direct sale of preferred stock with immediate valuation and full investor rights.
Shared Earnings
Revenue-based financing that aligns incentives for profitable growth without dilution.
Key considerations
Understand your stage
Your financing stage determines which instruments are appropriate. Don’t use Series A documents for a friends and family round.
Consider founder dilution
Each financing event dilutes founder ownership. Convertible instruments delay but don’t eliminate dilution. Plan your cap table carefully.
Evaluate control implications
Equity rounds may include board seats, voting rights, and protective provisions. Understand what control you’re giving up.
Think about future rounds
Your current financing terms affect future rounds. Investor-friendly terms now make later rounds easier; founder-friendly terms preserve more control.
Document library quick reference
Access the complete collection of financing documents:| Document Type | Use Case | Available Formats |
|---|---|---|
| Term Sheets | Outline deal terms for equity or convertible rounds | Markdown, Word, OpenLaw |
| SAFE Agreements | Simple future equity agreements | Word, PDF |
| Convertible Notes | Debt converting to equity | Markdown, Word |
| Stock Purchase Agreements | Equity investment documentation | Markdown, Word |
| Board Consent | Board approval for financing | Markdown, Word |
| Stockholder Consent | Stockholder approval for financing | Markdown, Word |
| Shared Earnings Agreement | Alternative revenue-based financing | Markdown, OpenLaw |
Next steps
Learn about term sheets
Understand how to structure and negotiate term sheets for your financing round
Explore SAFE agreements
Discover Y Combinator’s simple, founder-friendly financing instrument
Compare instruments
Learn the differences between convertible notes, SAFEs, and direct equity
Alternative financing
Consider revenue-based alternatives to traditional venture capital