Introduction

Interested in automating your next equity financing? Contact us to learn more.

Our goal is to revolutionize the way startups fundraise. Raising money shouldn’t be a multi-month engagement that disrupts your regular business operations. Our system enables you to reduce time- and cost-requirements over traditional fundraising processes. Using our system is often easier, faster, and cheaper—it can create a better outcome for your company by providing transparency and keeping your company on the rails with all of your important information in a single place.

An equity financing is the process of raising money through the sale of ownership in the company that offers investors certain rights and privileges. You should work in close consultation with your lawyer on all aspects of your equity financing.

Running the Equity Financing Workflow

What to Expect

In this workflow, you will:

Define your next investment round: Specify your investors and the terms of the deal. Learn more about defining the investment in Structuring Your Next Round.
Construct the Disclosure Schedule: Compile documents and information in response to the representations and warranties in your Stock Purchase Agreement.
Review and approve the financing: Review and request approvals for the Stock Purchase Agreement, Voting Agreement, Investors Rights Agreement, and Right of First Refusal and Co-Sale Agreement.
Satisfy closing conditions: File the amended Charter, satisfy any closing conditions specified in the Stock Purchase Agreement (e.g., collecting signatures, obtaining a certificate of good standing, and wiring funds).
Close the deal!

Documents

The financing document templates in this workflow are based on either the model documents of the National Venture Capital Association (NVCA) or the Series Seed document set. Combining standardized, industry accepted model documents with the configurability and automation of the platform results in an unbiased and comprehensive set of financing documents.

An equity financing consists of hundreds of pages of legal documents. The workflow can generate and manage the execution of the following documents:

Stock Purchase Agreement
Investor Rights Agreement
Voting Agreement
Amended and Restated Certificate of Incorporation
Right of First Refusal and Co-Sale Agreement
Disclosure Schedules
Indemnification Agreement(s)
Board and Stockholder Consents
Stock Certificates

Disclosure Schedules

A disclosure schedule is a way for a company to list qualifications or exceptions to the representations and warranties it makes about itself to investors in the Stock Purchase Agreement. For example, the company represents to investors that it is not involved in any lawsuits, and if it actually is involved in a lawsuit, it needs to identify and describe this lawsuit in the disclosure schedule.

The Checkpoint

After entering key terms, the system will generate the full set of financing documents. At the checkpoint step, you can download, review, and edit the documents. Now is the time to review all your documents and make any changes necessary.

Click the Edit Document button to view the document section-by-section. As you explore the documents, you'll see that you can change many key terms. Any change in terms will be reflected in your documents. In collaboration with your attorney, you may even choose to customize the text in some sections.

You may download the documents for easy review or use the Share Documents option at the bottom of the document list to grant temporary access to other users. At this point, you may want to submit the documents to your lead investor or your investor's counsel for their review.

When you continue past the Checkpoint step, the execution of your equity financing begins. Your documents will be released for approvals and signatures and the workflow will advance, managing a myriad of activities to complete your financing.

Execution

Once you proceed past the Checkpoint, you enter the execution and closing phases of the financing.

A closing is the stage of a financing when all the conditions for the financing have been satisfied or waived, when all the documents have been executed, and when the investment funds can be released to the company.

What happens next?

Your Board Members and the appropriate stockholders must approve the financing. If you chose to create the consent and solicit approvals as part of the workflow, an email message (which you had an opportunity to draft text for) will be sent requesting approval signatures. Only the stockholders you selected (if applicable) will receive this notification.

You also have the option to upload fully executed consents or minutes, or upload drafted consents to be executed through the workflow, as explained further in this article.
The full suite of documents will be sent to your lawyer for review. (If you are the lawyer, you'll have an option to send the document to the rest of your team.)
The final Stock Purchase Agreement, Investor Rights Agreement, Voting Rights Agreement, and Right of First Refusal and Co-Sale Agreement will be signed by the company representative and by each purchaser and key holder named on the Schedule of Purchasers.
The Amended and Restated Charter will be approved by the Board and signed by the company Representative.
The Secretary's Certificate will be signed by the Secretary, and the system will add the Company's Charter and Bylaws, as well as the authorizing resolutions of the board and stockholders to the Certificate.
When the Company is ready to close the deal, they will file the Amended and Restated Charter with Delaware. Upon receipt of that filed Charter, the Company can receive wire transfers.
The Company will receive and acknowledge the wire transfers from each of the purchasers named on the Schedule of Purchasers.
Each investor will receive a Stock Certificate.

Already completed your financing?

The workflow will walk you through adding the financing to the system for record keeping. The workflow will capture the required data, update your capitalization table, and store the documents. Uploading your financing details and documents means that the next time you’re ready to raise money, your entire fundraising history is already in the platform and your cap table is up to date.

If you prefer, our concierge team is available to work with you to capture all the details of your equity financing. Contact your Customer Success manager for pricing information and to learn more about the equity financing upload process.

Additional Resources

Equity Financing Document Sets

Equity Financing: Structure Your Next Round

Fidelity does not provide legal or tax advice.

Third parties mentioned and Fidelity are not affiliated.

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