A priced round is a fundraising event where the company sells shares of newly created preferred stock at a fixed price per share, establishing a formal valuation. Unlike SAFEs and convertible notes, which defer valuation, a priced round sets definitive terms including pre-money valuation, share price, liquidation preference, board composition, and protective provisions. Series A is typically the first priced round for most startups.
A priced round establishes an official valuation and creates a new class of preferred stock. It is more complex than SAFEs or notes but provides more structure and clarity for all parties.
Series A is typically the first priced round for most startups. Some do priced seeds, but SAFEs dominate pre-seed and seed stages.
The company and lead investor negotiate a pre-money valuation. New preferred shares are created and sold at a price per share.
All outstanding SAFEs and convertible notes convert into equity at this round, based on their cap/discount terms.
The round includes a term sheet, legal documentation (stock purchase agreement, investor rights agreement, voting agreement), and typically board changes.
SAFEs/notes: fast, cheap ($0-5k legal), minimal negotiation. Good for early stage.
Priced round: slower (4-8 weeks), expensive ($15-50k legal), thorough negotiation. Appropriate when raising $2M+, setting governance, and bringing on institutional investors.
Not budgeting for legal costs. Both sides have lawyers, and the company typically pays for investor counsel too.
Rushing the process. Priced rounds involve real governance changes. Understand what you are signing.
Not modeling how SAFEs/notes convert. The actual dilution often surprises founders who did not maintain a pro forma cap table.
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