The Series First documents, crafted by Rimon Law partner Brian Dirkmaat, are an innovative instrument designed to address the shortcomings of traditional convertible notes and SAFEs while simplifying preferred stock issuances. Introduced as an “elegant alternative” to SAFEs, these documents aim to facilitate “high-resolution” financing — allowing founders to raise capital incrementally from multiple investors without the protracted negotiations typical of priced rounds. The intent is to provide investors with actual preferred stock from the outset, ensuring clarity on equity ownership, tax benefits under IRS Code Section 1202 (Qualified Small Business Stock, or QSBS), and reduced dilution risks for founders. By streamlining the process, Series First seeks to lower legal costs (potentially to levels comparable to SAFEs) while eliminating the “cap table confusion and conversion uncertainty” inherent in convertibles. This founder- and investor-friendly approach promotes transparency and efficiency, enabling early-stage companies to secure funding quickly without sacrificing the protections of preferred equity.
Download the Series First template documents.
The structure of Series First revolves around two core documents: the Series First Agreement (a concise stock purchase agreement) and the Amended and Restated Certificate of Incorporation (the “Restated Certificate” or Charter). The Agreement, clocking in at just six pages, mirrors the brevity of a SAFE but formalizes an immediate equity issuance. It begins with a user-friendly table outlining key deal terms: Effective Date, Company and Investor details, Investment Amount, Post-Money Valuation, Post-Money Incentive Pool percentage (typically for employee options), Price per Share, and Number of Series First Shares. This tabular format enhances transparency, allowing all parties to grasp the economics at a glance. The Agreement confirms the filing of the Restated Certificate, which authorizes the Series First Preferred Stock, and outlines mechanics like stock certificate delivery.
Key terms emphasize balance and simplicity. Economically, the liquidation preference is a standard 1x non-participating, meaning preferred holders recoup their investment first in a sale or liquidation but do not “double-dip” by also sharing in remaining proceeds unless converted to common. Dividends are pro rata with common stock on an as-converted basis, declared at the board’s discretion without accrual. Anti-dilution protection employs a broad-based weighted-average formula, protecting against down rounds moderately without the punitive full-ratchet mechanism. Conversion rights are straightforward: optional at any time into common stock at the conversion price (initially the original issue price, adjustable for events like stock splits), and mandatory upon a qualified IPO or majority consent of preferred holders. Voting rights align preferred with common on an as-converted basis, with protective provisions requiring majority preferred approval only for actions adversely affecting their rights, no extensive veto lists.
Governance is minimalistic: no board seats mandated, no pro-rata rights, and no information rights beyond basics. Founder terms avoid re-vesting, preserving existing equity structures. Investor representations affirm accredited status and investment intent, while company reps cover standard warranties like valid organization, capitalization (detailed in a table), and IP ownership. A unique “Next Financing Rights” clause ensures that if a subsequent round offers better terms (e.g., registration rights), Series First holders automatically receive them, excluding economics like liquidation preference, facilitating seamless integration into future deals. Transfer restrictions limit dispositions to comply with securities laws, with legends on certificates. Miscellaneous provisions include entire agreement, notices, severability, governing law (typically Delaware), and spousal consent for community property interests.
The Restated Certificate, attached as Exhibit A to the Agreement, fleshes out these rights in a formal filing with Delaware. It authorizes common and preferred shares, defines “Requisite Holders” as a majority of preferred (as-converted), and details Deemed Liquidation Events (e.g., mergers where control changes or asset sales). It incorporates exemptions for anti-dilution adjustments, like issuances for equity incentives or strategic partnerships. Notably, it waives preemptive rights unless separately agreed and allows bylaw amendments by the board, with director liability limited to the fullest extent under law. This document is designed for easy redlining against templates like Series Seed, ensuring compatibility.
Series First starkly differs from standard priced Seed documents, such as Ted Wang’s Series Seed or NVCA models, by prioritizing brevity and accessibility. Traditional Seed docs often span 15+ pages for the purchase agreement alone, with full suites exceeding 150 pages across multiple agreements (e.g., investors’ rights, voting). This complexity drives legal fees upward of $50,000 per side, involving heavy negotiations over ancillary terms like board composition or drag-along rights. In contrast, Series First condenses everything into a six-page agreement plus a streamlined Charter, with terms in a front-page table for “clearly laid out” visibility. It’s “transparent” by default, avoiding hidden clauses or extensive exhibits, and “easier to understand” through plain language, omitting voluminous reps, covenants, or closing conditions. No separate IRA or voting agreement is required; side letters can add custom terms but are discouraged to maintain standardization. This reduces fees to SAFE-like levels while delivering preferred stock, making it ideal for smaller, early deals where full Seed complexity is overkill.
Compared to SAFEs, Series First offers superior clarity and certainty. SAFEs, while simple and cheap, are debt-like convertibles that defer equity issuance until a priced round, creating ambiguity around ownership percentages, dilution, and cap table projections. Founders risk “crazy dilution” if valuations soar, and investors face uncertainty on conversion triggers or economics. SAFEs also muddy QSBS eligibility (critical for up to $10 million in capital gains exclusions per taxpayer) due to recent IRS scrutiny and tax changes emphasizing stock issuance dates. Series First resolves this by granting actual preferred stock upfront, locking in QSBS start dates and providing “clearer equity terms” via defined preferences, conversion mechanics, and anti-dilution. No maturity dates or interest accrue, avoiding SAFE’s loan-like pitfalls, and the post-money valuation caps dilution predictably, including the incentive pool. This equity-first approach eliminates “conversion uncertainty,” ensuring investors hold voting shares immediately and founders maintain a clean cap table without phantom entries.
In summary, Series First documents democratize preferred stock for early-stage financing, blending SAFE’s speed with equity’s robustness. By slashing complexity, they empower founders to raise on their terms while assuring investors of tax-advantaged, protected positions. As Dirkmaat notes, this fills a market gap post-2013 SAFE dominance, potentially reshaping how startups bootstrap growth amid evolving tax landscapes. With its founder-centric ethos (minimal investor overreach and high flexibility) Series First could become the new standard for sub-Series A rounds, fostering a more equitable ecosystem.
Download the Series First template documents.
The Breakdown:
1. What’s in the Series First Toolkit?
Two core templates:
- Series First Agreement (SFA): a six-ish page stock purchase agreement with a front-page economics table, baseline company/investor reps, transfer restrictions, “Next Financing Rights,” and light boilerplate. It expressly relies on the Restated Certificate for the economics and mechanics of the preferred stock.
- Amended & Restated Certificate of Incorporation (the “Restated Certificate” / “Charter”): establishes the preferred stock (Series First) and sets the rights: liquidation preference, conversion mechanics, anti-dilution, voting, protective provisions, dividends, notice mechanics, forum selection, etc.
Key workflow: The company files the Restated Certificate on or before the Effective Date (so the preferred exists), then issues the Series First shares against the Investment Amount under the SFA. That means actual preferred stock is issued at closing, not a contingent promise to issue stock later.
2. Front-Page Deal Economics (SFA)
The SFA starts with a concise term table so everyone can see the economics at a glance:
- Effective Date
- Company / Investor
- Investment Amount
- Post-Money Valuation
- Post-Money Incentive Pool % (included in the post-money math)
- Price per Share
- Number of Series First Shares
This mirrors the simplicity founders like in a SAFE, but documents a true equity issuance. The agreement confirms the Restated Certificate has been filed and authorizes the Series First Preferred.
Why it matters:
- Clear, “priced-round-like” ownership from day one.
- Predictable dilution (post-money math includes the option pool).
- Clean cap table (no “phantom” convertible overhang).
- For tax planning, issuing stock immediately helps align with QSBS timing expectations (QSBS analysis is fact- and jurisdiction-specific; coordinate with tax counsel).
3. Company & Investor Representations (SFA)
Company reps (streamlined): valid organization and good standing; accurate cap table snapshot (authorized, outstanding, reserved, etc.); valid issuance of Series First shares; compliance with securities laws; authority and enforceability; no conflicts; necessary approvals obtained; and basic IP sufficiency.
Investor reps (lean but standard): accredited investor status; investment intent; transfer restrictions awareness; (if non-U.S.) compliance with home-jurisdiction rules. Certificates may carry customary legends.
Why it matters: You get enough diligence comfort for small checks without negotiating a full NVCA suite and side agreements.
4. “Next Financing Rights” (SFA)
If the next priced round (the “Next Financing”) delivers more favorable rights (e.g., registration, information, voting agreements) to new investors, the company extends substantially equivalent rights to Series First investors, excluding the core economics (liquidation preference multiple, conversion price, dividends), which remain governed by the Series First price. Once a majority of Series First holders sign onto the new package, the SFA rolls into those “Next Financing Documents,” keeping the cap table and rights consistent across the round.
Why it matters:
- Smooth upgrade path to market-standard NVCA/Series Seed documents later.
- Avoids negotiating heavy side letters now.
- Ensures early investors aren’t stranded on inferior governance terms.
5. Transfer Restrictions (SFA)
Holders can’t dispose of the securities unless (i) registered, (ii) within permitted affiliate/family/controlled-entity transfers, or (iii) exempt with an acceptable legal opinion; customary legends apply. This is standard seed-stage hygiene to preserve private-company exemptions.
6. The Preferred Stock: Rights in the Restated Certificate
The Charter is where the “preferred” actually lives. Core provisions include:
6.1 Liquidation Preference & Deemed Liquidation Events
- 1× non-participating preference: on a liquidation or Deemed Liquidation Event (change-of-control merger or sale of substantially all assets/IP), preferred gets the greater of (a) Original Issue Price (plus declared but unpaid dividends) or (b) as-converted value. If proceeds are insufficient, preferred shares share ratably up to their preference. After that, remaining proceeds flow to common.
- Deemed Liquidation Events include certain mergers where control changes and major asset/IP sales. There’s also detailed treatment for escrow/holdback/contingent consideration, allocated between classes as if the transaction paid in tranches.
Practical take:
- Aligns with standard seed conventions (1× non-participating).
- Clear waterfall math and treatment of contingent consideration reduces post-closing disputes.
6.2 Voting & Protective Provisions
- As-converted voting with common (no fractional votes). Preferred and common generally vote together unless law/Charter says otherwise.
- Protective provisions: while ≥25% of the originally issued preferred remains outstanding, the company cannot amend governing documents to adversely affect the preferred without majority-of-preferred (as-converted) consent (defined as Requisite Holders). This is intentionally minimal, no long veto lists.
Practical take:
- Keeps governance founder-friendly: no automatic board seats or extensive veto menus.
- Provides a narrow “do no harm” backstop for investors.
6.3 Conversion Rights & Mechanics
- Voluntary conversion anytime at the Conversion Price (initially equal to the Original Issue Price, subject to adjustments). No fractional shares, cash in lieu.
- Mandatory conversion on a qualified IPO or as approved by the Requisite Holders; detailed procedural notice and surrender mechanics included.
- Reservation of shares and “no further adjustment” language after conversion.
Practical take:
- Straightforward, NVCA-familiar conversion framework with fewer moving parts.
6.4 Anti-Dilution (Broad-Based Weighted Average)
If the company issues Additional Shares of Common below the then-current Conversion Price (with extensive “Exempted Securities” carveouts for option grants, strategic deals, credit/leasing, acquisitions, etc.), the Conversion Price adjusts by the broad-based weighted-average formula:
CP2 = CP1 × (A + B) ÷ (A + C)
where A is fully diluted common pre-issuance, B is the shares that would have been sold at the old price for the same cash, and C is the new shares issued. The Charter also provides the math for “deemed issuances,” revisions to option/security terms, expirations, and “multiple closing dates.”
Practical take:
- Offers sensible down-round protection without the punitive optics of full ratchet.
- The comprehensive “deemed issuance” and “readjustment” rules reduce edge-case gamesmanship.
6.5 Dividends
Dividends are pari passu with common on an as-converted basis, if and when declared (no accrual). This keeps the instrument clean for true early-stage use.
6.6 Notices & Information
There’s a notice of record date clause for reorganizations, reclassifications, DLEs, or liquidations (20-day lead time before the earlier of the record or effective date), plus general notice mechanics to holders.
6.7 Other Charter Provisions You’ll Care About
- No statutory preemptive rights unless separately agreed.
- Bylaw flexibility & board authority to amend bylaws and set director count (subject to Charter).
- Director & officer liability limitation and indemnification to the fullest extent permitted by Delaware law.
- Exclusive forum (Delaware Chancery) with savings and personal jurisdiction clauses.
7. Governance Philosophy: Minimalism by Design
Compared to Series Seed/NVCA, Series First intentionally:
- Does not hard-wire board seats, pro-rata, or information rights into the base package.
- Relies on the Next Financing Rights to upgrade governance when a larger round happens.
- Keeps protective provisions narrow, focused on not harming preferred as a class, rather than a long list of corporate actions that need investor veto.
Why it matters:
- Faster, cheaper, fewer open fronts to negotiate for small early checks.
- Founders don’t import heavyweight governance prematurely.
- If later investors demand the NVCA suite, Series First holders accede via the “Next Financing” roll-in.
8. How Series First Differs from SAFEs and Seed Equity
Versus SAFEs:
- Stock now, not later → avoids cap table ambiguity and “conversion shock.”
- QSBS timing begins upon stock issuance (subject to eligibility), not on a future conversion date.
- Predictable dilution using a post-money framework and an agreed option pool.
- Voting from day one (as-converted), unlike many converts.
Versus full Series Seed/NVCA:
- Condensed agreement + Charter; far fewer documents.
- Cost/time closer to a convertible, with preferred protections and clear liquidation math.
- Upgrade path later via Next Financing Rights, rather than negotiating a heavy suite now.
9. Practical Playbook for Founders & Counsel
When to use Series First
- You want clean equity ownership from day one, but don’t want the NVCA/Series Seed overhead.
- You’re raising in tranches from multiple angels/funds and want “high-resolution” financing with predictable cap math.
- You want to minimize legal cost & time while still issuing preferred equity with standard protections.
How to run it
- Set the post-money valuation and pool in the SFA table; compute Price per Share and Number of Shares.
- File the Restated Certificate (or confirm it’s already filed and effective).
- Close on the SFA, receive funds, issue certificates (or book-entry) within a commercially reasonable time.
- Keep a clean cap table: Series First is already equity, no conversion modeling required.
- On the Next Financing, extend equivalent rights (excluding economics) and let the SFA roll into the standard package.
Negotiation tips
- Protective provisions: They’re already narrow; try to keep them that way to preserve the speed advantage.
- Anti-dilution: Broad-based weighted average is market; avoid ratchet requests to keep signaling founder-friendly norms.
- Information rights & pro-rata: If a specific investor truly needs them now, add narrowly tailored side-letter terms, but remember the philosophy is to keep this light and rely on the Next Financing uplift.
10. Frequently Asked Questions
Q: Can we stack multiple closes easily?
A: Yes. The SFA’s table makes each close straightforward, and the Charter’s anti-dilution math includes “multiple closing dates” readjustment to treat a series of issuances as if they occurred on the first date for calculation purposes.
Q: What happens if we do an M&A instead of a priced round?
A: The Charter treats qualifying mergers and major asset/IP sales as Deemed Liquidation Events with waterfall math and escrow/contingent consideration allocation rules, so proceeds split is predictable.
Q: Are there information rights by default?
A: Not in the base package, by design. These typically arrive in the Next Financing via upgraded documents and will flow to Series First holders then.
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Q: Do we get pre-emptive rights?
A: The Charter waives statutory pre-emptive rights unless separately agreed. If pre-emptive/pro-rata is desired, add it narrowly now or rely on the Next Financing.
Q: Does Series First support QSBS?
A: Because stock is issued at closing, Series First is compatible with QSBS planning in a way most convertibles are not, but eligibility depends on many tax criteria (entity type, asset tests, gross receipts, five-year holding, etc.). Coordinate with tax counsel early.
11. Bottom Line
Series First blends the speed and simplicity founders expect with the clarity and protections of an equity round. You get:
- a short, legible Agreement with a front-page economics table, Next Financing Rights, and lightweight reps; and
- a Charter that provides standard, well-understood preferred mechanics (1× non-participating liquidation, as-converted voting, broad-based weighted-average anti-dilution, clean conversion rules, and lean protective provisions).
Used thoughtfully, Series First can reduce legal cost and time, de-risk cap table math, and smooth your path into a later institutional round, without importing full NVCA complexity before you truly need it.