These types of agreements are used by entrepreneurs, top law firms and investors at all stages of startup formation and financing - from idea development to selling stock and notes.

Idea stage: For example, if you and a friend are beginning to work on an idea that could turn into a startup, you may want to sign a Founder Collaboration Agreement laying out your working relationship, affirming the expectation that the work you do together will belong to a future entity, and outlining communication and conflict-resolution steps you will take to get you through any disputes that may come up. If you are putting money into your potential company, you may want to sign a Founders’ Agreement (or a Common Stock Purchase Agreement if you have a already incorporated), describing exactly how much money each founder is putting into the potential company, what ownership stake each is receiving in turn, and who owns any intellectual property created. If you have a mentor or advisor, you may want to sign a Founder Advisor Standard Template with them, setting out how they’ll be helping you and what compensation they’ll receive.

Early Stage: When raising a small amount of capital to get things started, usually from friends, family, or angels, it’s common to use convertible notes, starting with a Convertible Note Term Sheet and a Memorandum of Terms For Sale of Convertible Promissory Notes.

Raising money and splitting equity are serious issues, and while it is difficult to spend valuable cash on lawyers, playing DIY-attorney might lead to costly mistakes you will need to solve in the future. Find a startup lawyer that will help you for a reasonable fixed fee, or will agree to a cap or alternative payment structures.

Seed stage: Once you begin receiving outside funding, you will likely encounter venture capital term sheets and associated agreements. Term sheets set out the details of any investor funding you receive, and they come in a variety of forms, depending on the round of funding they address and the venture capital firm they come from. Docracy hosts a number of term sheets and related documents sourced from top incubators and VCs that you can familiarize yourself with and use in your funding deals:

Series Seed:

  • Term Sheet
  • Preferred Stock Investment Agreement
  • Restated Certificate of Incorporation



Foundry Group:

Tip: These documents are long and connected to each other. It will be hard to keep track of them during negotiation. Consider saving some headaches by negotiating them online via Docracy’s Super Signing Feature. You can even invite your lawyer.