Trends in Financing Document Sets at Seed

What financing documents are companies preferring for initial priced rounds?

The NVCA model documents provide well-established, comprehensive investor protections and remain the standard for many financings. The growing adoption of SeriesSeed.com forms reflects a shift toward streamlined documentation that supports faster closings and lower upfront costs, while preserving flexibility to address additional terms and protections in later financings. Notable takeaways:
• SeriesSeed.com frequency more than doubled in the last five years
• NVCA remains the expectation, particularly in later-stage financings

Questions to consider
• Founders: Are you prioritizing faster closings or long-term deal structure?
• Investors: Do lighter templates meet your expectations for early-stage protections?
• Counsel: Do you default to NVCA for consistency, or adjust based on deal dynamics?

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New Investor Terms Superior > Convertibles

How often do SAFEs and Notes convert into less favorable shares than those issued to new investors?

In a review of our last 50 equity rounds involving SAFEs and convertible notes, we found that in over 14% of financings, convertible holders received materially inferior terms relative to new money investors:

10.3% of rounds involved conversion into a junior liquidation class relative to new investors, including—
- 7.2% junior to new money but senior to prior preferred, yet
- 3.1% junior to new money and pari passu with prior preferred
10.1% received non-participating preferred while new money received participation rights
6.7% received a lower liquidation multiple than new investors

Why it matters:

Despite standard provisions in convertible instruments providing for conversion into the same (or substantially similar) series of preferred stock as issued in the next equity financing, lead investors in priced rounds frequently structure terms to allocate converted securities into “parallel” series that are economically subordinate. This practice reflects a growing divergence between the form of “next round” conversion rights and the substance of negotiated deal economics.

Founders and investors drafting convertible instruments should be mindful that “same terms” language is not self-executing—and is frequently overridden through the mechanics of deal structuring and board negotiation at the equity round. Note: Although the structure is usually proposed by lead investors, SAFE and Note holders actively consent to the conversion terms during the equity round closing.

Questions to consider:

Founders: Does “same terms” still protect your earliest backers?
Convertible Investors: Do you consider downside protections when signing SAFEs or Notes?
Lead Investors: If you had to adjust one term for converting securities, would you choose priority, participation, or liquidation multiple?

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Participation Rights Are Increasing Post-2022

In addition to decreased valuations and less capital being deployed, what other market signals are forming?

We looked at our last 50 deals among companies with multiple equity financings and compared them to the height of the venture market in 2021-2022. We found that investors are negotiating for participation rights far more frequently – increasing from 9% to 16% since 2022. Where non-participating stock affects down and flatter exits for founders and investors lower in the capital stack, having investors with participating preferred stock affects exit outcomes across the board.

Capped participation increased 57%
Participating preferred increased 33%
Non-participating stock remains the expectation

Questions to Consider:

Founders: Are you willing to accept an investment with participation rights or would you look for alternate forms of capital?
Investors: Would you trade a lower valuation for a participation rights?

VW Signals

Most published venture data often reflect only a portion of the market. These datasets are skewed toward the coasts, where reporting is more consistent and venture capital is more concentrated. That means early-stage trends from the middle of the country often go underreported or unnoticed.

VW Signals is Vela Wood’s answer to that gap. Based in Texas and deeply embedded in the early-stage ecosystem, we see the deals that don’t always make the headlines—especially at the Pre-Seed, Seed, and Series A stages. VW Signals highlights the patterns we’re seeing across our venture practice and aims to offer a clearer view into early-stage investing between the coasts.

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