Comments on: Why There Will Never be a Standard Set of Seed Documents (a.k.a “Why Brad Feld will Fail”)

By: color10

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By: Jason Mendelson

Jason Mendelson — Sat, 03 Apr 2010 14:24:03 +0000

Yep. I’ve been saying this for a long, long time in my law firm 2.0 series.

By: Sammy

Sammy — Sat, 03 Apr 2010 03:14:01 +0000

Another legal topic worthy of your analysis…..

http://dealbook.blogs.nytimes.com/2010/04/01/at-l...

By: Jason Mendelson

Jason Mendelson — Thu, 25 Mar 2010 12:54:05 +0000

Yes, saw the post and it is possible to come up with a term sheet, but the devil is in the details of the forms and I still think my original posts stands. I hope I am wrong, but think that I am right. I spoke to another active early stage VC the other day and we can't even agree on terms.

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Jason Mendelson

Sent from my iPhone
- please forgive iTypos.

By: Susan Morgan

Susan Morgan — Thu, 25 Mar 2010 04:26:58 +0000

Hi Jason – I think there is value in proceeding with this effort. See my post about this on the Walker Corporate Law Group blog (http://bit.ly/dlxpQu), and tell me if you don't agree with, at least, some part of what I am saying!

By: Jason Mendelson

Jason Mendelson — Sun, 21 Mar 2010 17:17:07 +0000

You are 100% right on law firms marketing then as VC friendly. I should have included this in the post. I am clearly biased, but done correctly, I think they are fair

By: Dave_Broadwin

Dave_Broadwin — Sun, 21 Mar 2010 17:12:40 +0000

I too participated in the initial session. I missed several years due to scheduling conflicts but attended this year. My view is that we had a good high quality discussion (although, at this point the changes to the docs have become small tweaks). The knock on the forms has always been that they may be VC friendly. At the risk of bringing opprobrium upon myself, I will assert that some law firms market against them on that basis. Despite the fact that there are a few niggley things (like the way "broad based" is defined and used in the antidilution formula) that might be characterized as unfair to founders, I don't agree with people who assert that the NVCA forms are deeply and systemically biased. I take your point about regional differences, but VCs across regions (and within regions) have substantial consensus about the concepts that need to be included in their investment docs. Whatever you think of redemption rights, some very large percentage of deals have them. Angels and other seed players are too diverse and don't share a consensus around what they need in their investment docs. I think your partner, Brad, is going to have to segment the seed ecosystem and look for smaller groups where there is consensus as to needed terms. If he can identify some of those he may be able to get to forms with them. I wish him good luck.

By: Jason Mendelson

Jason Mendelson — Sun, 21 Mar 2010 16:08:07 +0000

I think it’s different by region and firm type, actually. It’s great to hear that you guys are using the documents – bravo. However, most of the west coast brand name firms are still using their own firm documents. I was one of the original drafts persons, along with Sarah at the NVCA drafting sessions and sit on the board of the NVCA now. Trust me, I have a large vested interest in having these documents accepted by all, but also know the realities. Also the horse trading that went on in some of those sessions was hilarious.

By: Dave_Broadwin

Dave_Broadwin — Sun, 21 Mar 2010 15:35:53 +0000

So, all good points. The only thing I want to add to the discussion is that I think the NVCA forms project has been a massive success. With respect to Boston/New England series A deals, our firm has been tracking the use of the NVCA forms over two years (we track other deal points as well) and publishing the results quarterly in EEC Perspectives. Adoption rates for the NVCA forms in series A deals in Boston/New England in Q4 of 2009 were approximately 77%. There have been similar rates of adoption in prior quarters for the two years that we have been tracking the data. I have not aggregated the data and calculated a two year adoption rate, but I could have it done. We don't track west coast deals, so this data says nothing about the west coast. In my view, this level of adoption suggests that the NVCA forms project is a smashing success. Sarah Reed of Charles River Ventures was one of the moving forces behind the forms project. Brad and others should talk to her about how she did it.

By: William Carleton

William Carleton — Thu, 18 Mar 2010 09:57:15 +0000

Yokum, I wonder if opening up the document automation software is the way to go. You guys have done a great thing and set a good precedent by putting your term sheet generator out there publicly. When it comes to the purchase agreement and other deal docs, rather than try to cull things down to one standard "output" or iteration of what is possible, the goal might actually be more reachable if all the possible variations were accessible, modularized, and it wouldn't be so challenging to keep "manual" track of how choices are impacting the output. Also feel you are right that standardization has to follow from the principals…