Not usually. Most rights are limited to “major investors” who meet certain thresholds, preventing administrative complexity from smaller shareholders.

Yes. Some SPAs allow staged investments or additional closings if investors commit to fund in tranches.

If misstatements are discovered, investors may have indemnification claims, meaning the company (or founders in some cases) could be liable.

Yes, all participating investors sign the SPA, along with the company. It governs the purchase of shares in that financing round.

The term sheet is a non-binding summary of key deal points. The SPA is the binding agreement that formalizes the transaction and contains detailed legal terms.

Seed-stage caps often fall between $3M and $10M, but terms vary widely depending on market conditions, industry, and company traction.

Low caps can create significant dilution when notes or SAFEs convert, especially if the company grows rapidly before a priced round.

Not always, but they are common. Some early-stage investors accept uncapped SAFEs if they have strong conviction in the company.

A cap sets the maximum valuation for conversion, while a discount lowers the share price relative to the next round’s investors. Many instruments include both, and investors convert using whichever is more favorable.

Yes. While ROFRs protect control, they can limit founder or employee liquidity if structured too rigidly. Negotiating carve-outs can help preserve flexibility.

Typically 30–60 days, though shorter timelines may be negotiated to avoid deal delays.

Not always. ROFRs may apply only to certain classes (e.g., preferred stockholders) or exclude transfers such as estate planning or gifts.

A ROFR (Right of First Refusal) allows the company or investors to match a third-party offer. A ROFO (Right of First Offer) requires the shareholder to offer their shares internally before seeking outside buyers.

Yes. Founders often negotiate for higher approval thresholds, equal treatment provisions, and liability caps to ensure fairness.

Most agreements require majority or supermajority consent (often 60 - 70%) from preferred shareholders, though this can vary by deal.