5 ms·

YC Series AA Equity Financing Documents

53 points by _pius 16y ago

thorax 16y ago
These are awesome but also not new-- YC released them a couple years ago. Here's some discussion on them, for example: http://www.startupcompanylawyer.com/2008/08/23/how-do-the-sample-y-combinator-series-aa-financing-documents-differ-from-typical-series-a-financing-documents-or-whats-the-difference-between-seed-and-venture-financing-terms/ http://www.startupcompanylawyer.com/2008/08/23/how-do-the-sa...
mattmaroon 16y ago
We used these for our AA, helped save a lot of money.
- chris_l 16y ago
  Did you show them to a lawyer too, or did you just plug in your info?
  - zach 16y ago
    Matt is a Y Combinator alum of note so I'd presume it was for a YC-advised Series AA.
- mcxx 16y ago
  Can you please explain how/why did it save you money?
  - mattmaroon 16y ago
    It saved money since our lawyers (who were probably the same ones who wrote these) didn't have to start from scratch.
chris123 16y ago
Will be nice when they release the new convertible notes they've been talking about and Paul G promised to release soon here: http://news.ycombinator.com/item?id=1657906 http://news.ycombinator.com/item?id=1657906
rdl 16y ago
Releasing "standard financing documents" like this is a win in two ways -- it saves you from the legal costs of creating documents from scratch each time, AND provides an "objective" "standard" set of documents, so people are less likely to waste a lot of time and energy negotiating. Or, if they do negotiate, at least there is a fair starting point. If foreign countries wanted to try to recreate Silicon Valley (as the Startup Chile people are doing), they should create equivalent financing docs under their own national laws and publish them. A well-understood legal environment with lawyers/etc. familiar with the process is one of the big advantages of Silicon Valley and the US.
danshapiro 16y ago
A brief summary of important terms (IANAL, this is just a quick read): - This has 1x preference and no participation. - Pro-rata rights are available to some shareholders. - Ditto information rights. - The preferred has a veto over selling the company that can be exercised with a simple majority. - Lots of stuff not included: board seat, drag along, antidilution, redemption rights, employee option pool (!), restriction on sales, or a no-shop. Overall mostly VERY favorable to the entrepreneurs, mostly by virtue of what's been left out. The one notable exception is the prefered's veto over an exit, which is a big ouch.
adulau 16y ago
This is a very good initiative. A small note, what's the license terms of those documents? "Open-sourcing them" doesn't mean anything and all author rights are still reserved for those documents. It would be more appropriate to add the terms of the licensing for the documents. For example, the CC-PD (to put them in public domain), GNU FDL or CC-BY-SA or CC-BY. http://creativecommons.org/licenses/publicdomain/ http://creativecommons.org/licenses/publicdomain/ http://www.gnu.org/copyleft/fdl.html http://www.gnu.org/copyleft/fdl.html

53 points by _pius 16y ago

These are awesome but also not new-- YC released them a couple years ago. Here's some discussion on them, for example: http://www.startupcompanylawyer.com/2008/08/23/how-do-the-sample-y-combinator-series-aa-financing-documents-differ-from-typical-series-a-financing-documents-or-whats-the-difference-between-seed-and-venture-financing-terms/ http://www.startupcompanylawyer.com/2008/08/23/how-do-the-sa...

mattmaroon 16y ago

We used these for our AA, helped save a lot of money.

chris_l 16y ago
Did you show them to a lawyer too, or did you just plug in your info?
- zach 16y ago
  Matt is a Y Combinator alum of note so I'd presume it was for a YC-advised Series AA.
mcxx 16y ago
Can you please explain how/why did it save you money?
- mattmaroon 16y ago
  It saved money since our lawyers (who were probably the same ones who wrote these) didn't have to start from scratch.

chris123 16y ago

Will be nice when they release the new convertible notes they've been talking about and Paul G promised to release soon here: http://news.ycombinator.com/item?id=1657906 http://news.ycombinator.com/item?id=1657906

rdl 16y ago

Releasing "standard financing documents" like this is a win in two ways -- it saves you from the legal costs of creating documents from scratch each time, AND provides an "objective" "standard" set of documents, so people are less likely to waste a lot of time and energy negotiating. Or, if they do negotiate, at least there is a fair starting point. If foreign countries wanted to try to recreate Silicon Valley (as the Startup Chile people are doing), they should create equivalent financing docs under their own national laws and publish them. A well-understood legal environment with lawyers/etc. familiar with the process is one of the big advantages of Silicon Valley and the US.

danshapiro 16y ago

A brief summary of important terms (IANAL, this is just a quick read): - This has 1x preference and no participation. - Pro-rata rights are available to some shareholders. - Ditto information rights. - The preferred has a veto over selling the company that can be exercised with a simple majority. - Lots of stuff not included: board seat, drag along, antidilution, redemption rights, employee option pool (!), restriction on sales, or a no-shop. Overall mostly VERY favorable to the entrepreneurs, mostly by virtue of what's been left out. The one notable exception is the prefered's veto over an exit, which is a big ouch.

adulau 16y ago

This is a very good initiative. A small note, what's the license terms of those documents? "Open-sourcing them" doesn't mean anything and all author rights are still reserved for those documents. It would be more appropriate to add the terms of the licensing for the documents. For example, the CC-PD (to put them in public domain), GNU FDL or CC-BY-SA or CC-BY. http://creativecommons.org/licenses/publicdomain/ http://creativecommons.org/licenses/publicdomain/ http://www.gnu.org/copyleft/fdl.html http://www.gnu.org/copyleft/fdl.html