Model Legal Documents

From The National Venture Capital Association (NVCA):

Annually, the venture industry closes several thousand financing rounds, each consuming considerable time and effort on the part of investors, management teams and attorneys. Conservatively, the industry spends some $200 million in direct legal fees annually to close private financing rounds. In an all-too-typical situation, the attorneys start with documents from a recent financing, iterate back and forth to get the documents to conform to their joint perspective on appropriate language (reflecting the specifics of the deal and general industry best practices), and all parties review numerous black-lined revisions, hoping to avoid missing important issues as the documents slowly progress to their final form.In other words, the venture industry goes through an expensive and inefficient process of “re-inventing the flat tire” on a daily basis. By providing an industry-embraced set of model documents that can be used as a starting point in venture capital financings, it is our hope that the time and cost of financings will be greatly reduced and that all principals will be freed from the time-consuming process of reviewing hundreds of pages of unfamiliar documents and instead will be able to focus on the high-level issues and trade-offs of the deal at hand.

In general, these documents are intended to reflect current practices and customs, and we have attempted to note where the West Coast and East Coast differ in a number of their practices. However, one of our goals in drafting these documents is also to reflect “best practices” and avoid hidden legal traps, even if doing so means straying from current custom and practice. We have attempted to avoid, or at least point out, certain problematic provisions that have become “market standard” terms. We have generally tried to indicate such issues with a footnote and explanatory language.

The model documents aim to:

  • Reflect and in a number of instances, guide and establish industry norms
  • Be fair, avoid bias toward the VC or the company/entrepreneur
  • Present a range of potential options, reflecting a variety of financing terms
  • Include explanatory commentary where necessary or helpful
  • anticipate and eliminate traps for the unwary (e.g., unenforceable or unworkable provisions)
  • Provide a comprehensive set of internally consistent financing documents
  • Promote consistency among transactions
  • Reduce transaction costs and time

The working group that developed this set of model legal documents will continue to touch base approximately once a year to determine whether any changes need to be made to the documents, including in light of any recent legal developments or actual experience using the documents in deals.

Use this link to access the Model Legal Documents:​

Disclaimer: Each document is intended to serve as a starting point only, and should be tailored to meet your specific requirements. These documents should not be construed as legal advice for any particular facts or circumstances.