When we launched our Series A program about a months within the past, we decided that what we learn along the arrangement shouldn’t legal be saved inner of YC. We’re going to post instruments and learnings from this technique that should abet every firm produce better outcomes.

Here is the fundamental instrument. It’s easy, however fantastic.

Underneath, you’ll earn a Series A diligence pointers. This runs thru all of the objects of knowledge you’ll occupy to occupy willing when you signal a term sheet. Having all of this collectively in one pickle – a Records Room – earlier than you signal a term sheet will nick as noteworthy as a week off of your closing route of. Founders don’t in general realize that closing an A can utilize bigger than a month, noteworthy of which is in most cases spent tracking down paperwork for attorneys.

Jason Kwon, the GC of YC Continuity build this pointers collectively after being fervent about a lot of of financings with nearly every laws company and VC fund within the valley.

Corporate Details and Charter Documents

  1. All minutes of directors’ and stockholders’ meetings, and all written agrees of directors and stockholders.
  2. Certificates of Incorporation, Certificates of Designation, Rights, and so on., and Bylaws.
  3. Identical knowledge for the Firm and subsidiaries, if any.
  4. A corporate entity organizational chart, if there are every other folks or subsidiaries.

Industry Concept and Financials

  1. Most modern industry thought and any financial projections.
  2. Most modern financial statements.

Psychological Property

  1. A checklist of the Firm’s trademarks, patents, copyrights and domains (or any purposes therefore) in conjunction with documentation of filing or registration with the loyal governmental entities.
  2. If any of the foregoing were assigned to the Firm, please so issue and provide documentation of the project and recordation with the loyal governmental entities.

Security Issuances and Agreements Pertaining to Securities

  1. A checklist of the Firm’s stockholders, in conjunction with issuance dates and customary issuance impress.
  2. A checklist of the Firm’s option holders, in conjunction with grant dates and exercise costs.
  3. Copies of agreements relating to to outstanding alternate choices, warrants, rights (in conjunction with conversion or preemptive rights) or agreements for the acquisition or acquisition of any of the Firm’s securities, and agreements relating to to the Firm’s past stock issuances.
  4. Any paperwork evidencing registration rights for the Firm’s securities, or evidencing any agreements among the Firm’s shareholders or between the Firm and its shareholders.
  5. A summary of the vesting schedules of any stock or alternate choices discipline to vesting, in conjunction with any vesting acceleration.
  6. Agreements relating to to balloting of securities and restrictive portion transfers.
  7. Proof of qualification or exemption underneath appropriate federal (in conjunction with Rule 701) and issue blue sky legal pointers for issuance or transfer of the Firm’s securities.

Cloth Agreements

  1. The Firm’s long-established terms of service / terms of utilize for its customers.
  2. Any agreements, realizing, devices, contracts or proposed transactions to which the Firm is a event or in which it is poke which involve obligations of, or payments to, the Firm in a ways more than $25,000.
  3. Any personal property leases.
  4. Any agreements pertaining to the acquisition, rent, or sublease of loyal property.
  5. Any paperwork evidencing indebtedness for money borrowed or any various liabilities incurred by the Firm.
  6. Any paperwork evidencing any mortgages, liens, loans and encumbrances with respect to the Firm’s property or resources.
  7. Any paperwork evidencing any loans or advances made by the Firm.
  8. Any licenses or agreements of any variety with respect to the Firm’s or others’ patent, copyright, replace secret or various proprietary rights, proprietary knowledge or skills, in conjunction with employee confidentiality and proprietary knowledge agreements.
  9. Any insurance insurance policies held by the Firm or of which the Firm is a beneficiary and a summary of such insurance policies, if obtainable.
  10. Any judgment, yell, writ or decree in which the Firm is poke or to which it is a event.
  11. Any long-established forms of agreements feeble by the Firm.
  12. Any joint endeavor and partnership agreements.
  13. Any management, service and marketing agreements.
  14. Any confidentiality and nondisclosure agreements.
  15. Any agreements requiring agrees or approvals in reference to the financing.
  16. Any consulting contracts.
  17. Any various agreements discipline fabric to the industry of the Firm, or birth air the long-established route of industry.
  18. A checklist of officers and directors. If any officers are no longer within the interim devoting a hundred% of their industry time to the Firm, please show them on this record.

Records Relating to Disputes and Seemingly Litigation

  1. Any correspondence or paperwork relating to to any pending or threatened action, suit or proceeding or investigation, in conjunction with, without limitation, (i) these inspiring the Firm’s workers in reference to their prior or fresh employment or utilize of workmanship and (ii) these being performed by or earlier than any governmental entity or regulatory company.
  2. Any correspondence or paperwork relating to to allegations of the Firm’s infringement of the proprietary rights of others.
  3. Any correspondence or paperwork relating to to any labor agreements or actions, union representation, or strike or various labor dispute.

Records Relating to Employees and Employee Advantages

  1. A checklist of the Firm’s workers and consultants, in conjunction with title, spoiled wage, blueprint bonus (if appropriate), charge thought (if appropriate), classification (in conjunction with, if an employee, whether or no longer the employee is exempt or non-exempt) and issue of pickle.
  2. The Firm’s long-established influence of offer letter.
  3. Any agreements, understandings or proposed transactions between the Firm and any of its officers, directors, affiliates, or any affiliate thereof, in conjunction with without limitation, employment agreements and offer letters with severance advantages or vesting acceleration provisions.
  4. Any plans, agreements or arrangements that provide advantages contingent upon a replace as much as the mark.
  5. Any severance or deferred compensation plans (in conjunction with any wage deferral agreements, whether or no longer written or oral, with workers or consultants).
  6. Any employee merit plans, in conjunction with, without limitation, stock option plans, 401(k) plans, pension plans and insurance coverage.
  7. Any forms of agreements feeble in reference to any stock option plans (equivalent to a influence of option agreement, peep of exercise and restricted stock take hold of agreement).
  8. If the Firm sponsors a 401(k) thought, any resolution or concept letter and Form 5500 filings for the last observe three years.
  9. All paperwork or various knowledge relating to to any loans made by the Firm to its workers, directors or consultants.
  10. The Firm’s employee handbook.
  11. If the Firm has any foreign workers, one by one record (by country) all advantages supplied to foreign workers.

Equity Grants
Whilst you occupy any pending or promised fairness grants you haven’t already sorted earlier than you birth your Series A route of, cease that ASAP. More of us than no longer mediate that when you occupy a term sheet, you would no longer utilize your fresh 409A valuation for option/stock grants on chronicle of a discipline fabric event has happened that implies a more moderen (and confidently increased) valuation for the firm’s long-established stock. Physique of workers people that were employed earlier who haven’t been granted their fairness but will then occupy to receive their fairness at a increased strike impress, which reduces their upside. Some hires will realize this and you would then occupy to amplify their compensation (in fairness, money or each) to accomplish up the adaptation to steer poke of a morale concern. Since you cannot regulate the loyal timing of when you happen to receive a term sheet, the prudent ingredient to cease is to guarantee there isn’t a well-known backlog of fairness grants when you are within the guts of your fundraise route of.