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Series A Preferred Stock Term Sheet
A non-binding Series A preferred stock term sheet setting out the pricing, preferences, governance, and investor rights for a priced venture financing, with only the exclusivity, expenses, and confidentiality provisions binding.
What is a Series A Preferred Stock Term Sheet?
A Series A Preferred Stock Term Sheet is the non-binding summary of pricing, preferences, governance, and investor rights for a priced venture financing, with only the exclusivity, expenses, and confidentiality provisions binding.
Built for founders and CFOs of venture-backed startups negotiating a priced Series A round with an institutional lead investor, and the lead investor's deal team preparing to memorialize principal terms before drafting the definitive stock purchase agreement, charter amendment, and ancillary investor agreements.
Series A Preferred Stock Term Sheet template, current for 2026
The 2026 form integrates SAFE and note shadow-series conversion mechanics, expands the CFIUS, HSR, sanctions, and export-controls diligence covenants, updates the D&O insurance limits to the current premium market, and sets the market-standard 1x non-participating liquidation preference and broad-based weighted-average anti-dilution as defaults.
How HDAi does this differently
Unlike a static form, HDAi runs a guided interview and assembles your Series A Preferred Stock Term Sheet as you answer. When you want it finished, a licensed Hart David Carson attorney reviews it and tailors it to your facts before you sign. The interview and the first draft are automated. The judgment belongs to an attorney.
What you’ll be asked
A short interview in plain language that asks only what this document needs.
- What is the exact legal name of the company? Use the full legal name as it appears on the certificate of incorporation. This name will populate every reference to the Company throughout the document.
- In which state is the company incorporated? Most venture-backed U.S. startups are Delaware C-corps because Delaware corporate law and the Court of Chancery are the market standard for institutional investors.
- What is the series designation for this financing? Nearly every priced institutional round after seed is labeled Series A, B, C, and so on. Select 'Series Seed' only if this is a small priced seed with light preferences.
- Who is the lead investor? The lead investor typically negotiates the term sheet, takes the board seat, and sets pricing. Use the legal fund name rather than the management-company brand.
- List any other investors participating in the round (one per line). Include co-investors, strategic investors, and any existing seed investors exercising pro-rata. Leave blank if the lead is the sole investor at signing.
- Total amount to be raised in this round (USD)? This is the aggregate cash the Company will receive at closing, before deducting expenses. Do not include prior SAFE or convertible-note principal that will convert (those are handled separately).
- Pre-money valuation (USD)? Pre-money is the agreed value of the Company immediately BEFORE the new investment. Post-money = pre-money + amount raised. Investors' ownership = amount / post-money.
- Price per share (USD)? Price per share = pre-money valuation divided by the fully-diluted capitalization (including the expanded option pool). Use four decimal places.
- Post-closing unallocated option pool as a percentage of post-money fully-diluted? Investors almost always require the pool to be topped up BEFORE closing so the dilution falls on existing holders. Ten percent is the market default for a Series A; larger if key hires are pending.
- Are there outstanding SAFEs or convertible notes that will convert at closing? SAFEs and notes typically convert into a shadow series (e.g., Series A-1) at their discounted price. This affects the effective pre-money and the option-pool math.
- Describe the converting instruments (aggregate principal, valuation caps, discounts). Counsel needs the caps and discounts to model the shadow-series price and the resulting fully-diluted cap table.
- Preferred dividend treatment? Non-cumulative dividends payable when declared is market standard for U.S. venture Series A. Cumulative dividends behave like a hidden liquidation preference and are unusual outside of growth or crossover rounds. A non-compounding (simple) cumulative dividend is a more founder-favorable middle position than annual compounding.
- Liquidation preference structure? 1x non-participating is the U.S. venture standard: the investor takes back 1x their money OR converts to common and shares pro-rata, whichever is greater. Participating preferred (double-dip) is founder-unfriendly and disfavored in healthy markets.
- Anti-dilution protection? Broad-based weighted average is the market standard. Full-ratchet is investor-favorable and rare outside of distressed rounds; it re-prices the entire preferred to the lowest down-round price.
- Include a pay-to-play provision? A pay-to-play requires investors to participate pro rata in future down-rounds or lose protective terms, most commonly by forced conversion of their preferred to common (or to a shadow non-participating class). It is uncommon at signing in healthy markets but increasingly requested by leads to guarantee future support.
- Post-closing board composition? The 2-1-2 (2 common, 1 preferred, 2 independent) and 3-1-1 structures are the most common Series A configurations. Founders typically want to retain the common majority.
- Pro-rata (right of first offer) rights? Major Investors (typically those buying above a stated threshold) get to maintain their percentage in future rounds. This right usually terminates at IPO.
- Founder and employee vesting? Four-year monthly vesting with a one-year cliff is the market standard for U.S. venture-backed startups. Founders' unvested shares typically re-set at closing unless they have significant credit for time served.
- Change-of-control acceleration for founders/executives? Double-trigger (change of control plus involuntary termination) is market standard. Single-trigger is founder-favorable and often resisted by acquirers.
- Include a redemption right? Redemption rights let investors force the company to buy back the preferred after a period (usually 5-7 years). Most U.S. venture rounds omit them; growth and crossover funds sometimes require them.
- Include an AI, data, and privacy diligence covenant? For companies that build or materially rely on machine-learning models or process significant personal data, leads increasingly require diligence on training-data provenance and license compliance, ownership of model weights and outputs, open-source and third-party-model compliance, and privacy posture (GDPR, CCPA/CPRA, BIPA). Include this if the Company develops AI/ML systems or handles regulated personal data.
- Include an ESG/DEI board-reporting covenant? Some institutional and LP-driven funds require periodic board reporting on environmental, social, and governance metrics and diversity, equity, and inclusion progress. This is a reporting obligation only; it does not create substantive operating mandates.
- Exclusivity (no-shop) period in days? The Company agrees not to solicit competing financing offers during this window. Thirty to sixty days is typical; leads sometimes ask for longer on complex deals.
- Cap on investor legal-fee reimbursement (USD)? The Company reimburses the lead investor's legal counsel up to this cap at closing. Fifty to eighty thousand dollars is standard for a straightforward Series A.
- Target closing date? This is aspirational; actual closing depends on diligence, documentation, and any regulatory filings (HSR, CFIUS). Sixty to ninety days from term-sheet signing is realistic.
- Directors and Officers (D&O) insurance at closing? Investors require D&O coverage before allowing their partners to join the board. Three to five million dollars in limits is typical for a Series A company.
- Key-person(s) subject to the key-person clause? If a named key person departs, investors typically get enhanced information rights or a trigger to reconsider further investment. Name only the founder or founders the company cannot do without.
- Name of the company signatory?
- Title of the company signatory?
Frequently asked
About the Series A Preferred Stock Term Sheet and how HDAi works.
What is a Series A Preferred Stock Term Sheet? +
A Series A Preferred Stock Term Sheet is the non-binding summary of pricing, preferences, governance, and investor rights for a priced venture financing, with only the exclusivity, expenses, and confidentiality provisions binding. It is written for founders and CFOs of venture-backed startups negotiating a priced Series A round with an institutional lead investor, and for the lead investor's deal team preparing to memorialize principal terms before drafting the definitive stock purchase agreement, charter amendment, and ancillary investor agreements.
Is HDAi's Series A Preferred Stock Term Sheet legally binding? +
A term sheet is generally non-binding on the economic terms and binding only in the provisions it marks as binding, typically confidentiality, exclusivity, expenses and governing law. The definitive agreements that follow are what bind the parties; have a licensed Hart David Carson attorney draft or review those before you sign.
Do I need a lawyer to use this Series A Preferred Stock Term Sheet? +
You can generate and download the Series A Preferred Stock Term Sheet in minutes, free of charge. A licensed Hart David Carson attorney can then review it and tailor it to your facts before you sign, which is the part no template can do.
What makes this Series A Preferred Stock Term Sheet current for 2026? +
The 2026 form integrates SAFE and note shadow-series conversion mechanics, expands the CFIUS, HSR, sanctions, and export-controls diligence covenants, updates the D&O insurance limits to the current premium market, and sets the market-standard 1x non-participating liquidation preference and broad-based weighted-average anti-dilution as defaults.
How long does the Series A Preferred Stock Term Sheet take? +
Estimated time about 15 min (29 questions), depending on how much you already know. The document assembles as you answer. Export it as PDF or Word, or send it to a Hart David Carson attorney for review.
Does this Series A Preferred Stock Term Sheet work in my state? +
HDAi's interview is state-aware. If you ask an attorney to finish the draft, a licensed Hart David Carson attorney confirms it against your state's requirements before you rely on it. Validity and required formalities vary by state.