This article aims to provide a quick overview of the most important documents in a fundraiser where investors buy shares. Unlike a bond conversion issue, these equity transactions permanently alter the company`s capitalization by adding new shareholders who typically purchase a whole new class of shares created for them, usually a series of preferred shares with special rights and privileges they have traded. „In addition to what my COQ (colleagues-on-quora) offers, a seed trick is not a real VC ride. Have they invested a few tens or hundreds of thousands in person or through a secondary fund? If this is the case, this has not been done by the due diligence and negotiation process in which your VC contacts must justify your business to your skeptical partners, it is only a care and training and an opportunity to fill in the missing parts until you are truly ready to present them. Your investors may have been awake at the wheel and given you a fair assessment, and your business is truly one of the hot ones. They may also whistle and wait for difficult negotiations when real money is at stake. One way or another, a successful seed lap is a good sign, you have either convinced them or you have had a successful training run. Technically, a dilution in the sense of the percentage you have to give up to complete the next round is not a matter of evaluation, unless you are a super-hot startup of the Facebook class. They give up 15 to 35% of the fully diluted cap, whatever happens, that`s the premise of most of the favorite tricks. The only valuation question is how much private equity the company will earn in return and whether your business justifies this investment size. In other words, if you don`t meet expectations, you may not just be watered down in the next round, you just can`t finish the next round. Congratulations, BTW. Most people can`t do it.

It`s just getting harder from here, but you didn`t because it`s easy, right? Update after reading the amount of funding: $3.5 million is more than a sperm round. If you stretch Jason M. Lemkin`s answer, it looks like they skipped the seed and went straight to Serie A. I don`t know of any serious angels or VCs who would invest at this level regardless of valuation, so if you`re not dealing with non-standard investors or z-list, someone who is able to know has confirmed the value of your business. Angel Investing almost always requires a shareholder pact between the founding group and new investors. When considering or developing a proposal, keep these fundamental points in mind: the guarantee you have acquired may take the form of an original copy of the convertible bond you buy or general or preferred share certificates, along with share purchase agreements made by all parties.

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