Today, just as I promised in the recent Venture Voice interview, we’re releasing the various legal documents that we use as a starting point for seed stage financing for our companies. We’ve now done a dozen or so of these, and we thought it would be useful to release the documents to the community. We think that they’re great model documents for an angel or seed financing in the $250k-$2M range. They represent a “light” preferred equity financing and have very simple terms that are generally “balanced” but if anything lean toward the entrepreneurs and represent a great deal of trust in them, which we think is appropriate for angel deals where you are primarily investing in the people at the early stage.

They documents were created by Cooley Godward Kronish, LLP, and we thank them and Michael Platt specifically for allowing us to release them publicly.

Please feel free to use these documents, but please do so responsibly only after retaining your own legal cousel. Don’t use these documents blindly. All of the figures in them are made up, and are not necessarily accurate or consistent. We’ve made best efforts to call out the places that need to be edited based on the situation using brackets. But still, using these documents for a real financing and without good legal advice is just plain foolish. Think of them as a good starting point that can save you some time and money.

TechStars never leads the investment rounds of our companies, but we always provide these documents as a starting point for the entrepreneurs and lead investors. Using these documents as a starting point, our companies have been able to complete equity financings for legal costs in the $5-10k range on a regular basis.

Things usually start with a Term Sheet which describes the basic agreements about the investment. The term sheet lays out the proposed capitalization which includes number and type of shares for each shareholder and their relative ownership percentages, post-financing. It goes on to describe the liquidation preference, mechanics of conversion, how the board of directors will be determined, protective provisions, and other rights and agreements.  The term sheet is not a definitive document – it just describes the basic agreement. This is the one we promote and use.

The other documents come into play at closing. They are:

• The Restated Articles (of incorporation), which are typically needed to properly document the existence and treatment surrounding the new class of preferred stock.
• The Bylaws, which describe in detail how the corporation will be governed.
• The Subscription Agreement, which documents the actual investment.
• And finally, the Board Member Election Consent which elects the board member representing the investors.

We hope that these documents are are useful resource to you. Here is a ZIP file containing all of the documents.

As a reminder, applications for the TechStars 2009 summer program are now open through March 21st.