Ask the VC Bonus Material

When Jason and I set out to write Venture Deals: Be Smarter Than Your Lawyer and Venture Capitalist, we both agreed that we wanted to try to create as useful and durable a reference guide for entrepreneurs interested in raising a round of venture capital as we could. As a result, we created a Resources page on Ask the VC and decided to load it up with legal documents that are part of a venture capital financing.

Now, while I’d like to be able to simply do all of my financings with a handshake, or possibly on a napkin written in crayon, I also wish I had a herd of unicorns, surrounded by rainbows, a balanced US government budget, and agreement on how to address the debt ceiling issue.

As a step in the right direction, Jason and I decided to open source our Foundry Group form legal documents. You can find them on the Ask the VC Resources page. Included are our standard forms for the following:

If you do a deal with us, simply feel free to mark them up. Or use them for other deals. Or study them, in conjunction with Venture Deals: Be Smarter Than Your Lawyer and Venture Capitalist, to know what we do and don’t care about (yes – there are some hidden extra-bonus tips in the forms for you to enjoy if you want.) Of course – all of the traditional legal disclaimers apply (e.g. “You take full responsibility for using these documents. We aren’t your lawyers and we give no warranties (express or implied) that they documents are any good or legally enforceable.”) So make sure you have a good lawyer advising you, even if you are smarter than him.

We’ve included plenty of other bonus material on this page, including LOI / merger docs and seed deal docs. We’ve got more coming, including a thorough dissection of a convertible note (and all the various permutations), but we thought this would be plenty to digest for now.

And if you find some unicorns, or typos in the documents, send them my way.

  • Thank you.
    Would you have venture debt documents as well which can be shared?

  • Typo on p6 of the term sheet: “is a professional
    investment funds”

  • Pete Griffiths

    Fabulous.  Invaluable resource for the community.  Thanks so much.

  • Brad, this is a great add to the growing body of open startup and funding docs.  I think you’ve openly hoped for standardization across the industry to lower complexity and costs and focus all on the few things that should be negotiated.  Curious if you see a path?

    On a related note, Foundry’s Series A term sheet is quite a bit more ‘heavy’ than TechStars’ doc.  A fund needs many of these provisions.  But what’s you opinion for an angel round of, say, $200k . . . in general is it more appropriate to lean towards the TechStars doc or the Foundry doc with its provisions for participation, board and legal expense reimbursement, audit requirements, registration rights, no-shop, etc?

    • I don’t see a path forward in standardization.

      Re: a $200k seed round – definitely the TechStars docs or a “light preferred” approach.

  • thanks for the post! like it!

  • “As a step in the right direction, Jason and I decided to open source our Foundry Group form legal documents”

    You guys continue to do stuff that simultaneously surprises + pleases me. Keep it up.

  • Skylaragnew2


  • Awesome stuff Brad and the startup community will really benefit from this and also a good open source convertible note whenever that comes so i am looking forward to it.  Two questions on the forms that i was hoping you could address in a future post or commentary either on ask the vc or here.  First, why should the company pay the investor’s legal fees if the deal doesn’t close?  I think it would help for founders to hear your rationale there.  Second, why should a founder agree to vote their shares as others do after they are gone as those others may be employees or investors who have differing interests from the former founder.  I presume this is done to protect the remaining founders and investors from a dissident stockholder down the line but again i think it would help if you explained the rationale to founders.  Thanks again for this.

    • On legal fees – “it depends”. If the deal didn’t close because the investors flaked out, the company should never pay their legal fees. Some VCs insist on it but I think it’s inappropriate. On the other hand, in the case where the entrepreneurs decide not to move forward, in some cases they should cover the legal fees. The circumstances vary, but if it’s ambiguous, I’d generally err on the side of the company covering the legal fees.

      Re: departed founders voting their shares – this is commonly known as a “drag along agreement.” We talk extensively about it in the book. There’s also a post on it at

      • Thanks Brad.  I take it from what you are saying on the fees that you essentially want the document drafted so that you control the decision of whether to require reimbursement but whether you actually do require reimbursement is on case by case basis and people should rely on your reputation when evaluating that you control that decision.   

        On the voting provisions, I believe your forms go a little beyond what I see as a typical drag-along provision in two ways – first because the drag covers not just the sale context but also future rounds of financing, and then two because there is a separate voting provision where founders who are no longer providing services are obligated to vote in favor of anything submitted to the stockholders for approval in the same manner as a majority of the other stockholders.  So I just was curious as to whether you wanted to share the rationale for including these extra provisions in scenarios where I would observe that a meaningful number of top tier VC firms do not.  But i guess it is just the same rationale as the drag to make sure you can get the deal done and not have any rabble rousers try to block it and have their hand out.    I just haven’t seen these two variations nearly as often as the more typical sale related drag. 

        Thanks again for this as i appreciate the opportunity for people to be able to talk about these provisions in an open forum outside the context of a specific transaction.

        • Anonymous

          My general counsel friends in the venture industry use the version of drag along that we do for the most part.  Without the two provisions that you are discussing, there isn’t much usefulness to include the provision at all.  I believe that we were the first firm (back in the Mobius days) to implement a drag along.  The case was specifically a poor performing CEO that was fired by his two co-founders and then held up every type of transaction possible.  So both in in the future financing situation, and M&A situation, we were locked up.  All in all, I truly believe that strong drag alongs are not an investor/company issue, but rather good for the company and its continuing employee base. 

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  • Gary Sevounts

    Thanks for the post.  It is a really good resource.  Always great idea to do the homework and get into these conversations ready and knowing what to expect.

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