The other day I heard about the Series Seed documents for the first time. What, you ask, are the Series Seed documents? This is how they’re described on the Series Seed website:
The Series Seed Documents are a standardized set of documents that can be quickly and easily deployed for a seed investment: to help get a company financed properly, legally, quickly, and intelligently.
The Series Seed documents are by Fenwick & West attorney Ted Wang, with input from Andreessen Horowitz and other heavyweight seed investors. They were launched in 2010; for some background, see this peHUB article. The current version is version 3.1; anyone can suggest comments at this GitHub site.
I spent a few minutes looking at the Series Seed preferred stock investment agreement. In my bumptious way, I then sent the following tweet to Ted:
.@twang Series Seed documents full of problematic usages of traditional contract drafting. Why not clean them up?
— Ken Adams (@KonciseD) September 4, 2013
I followed up with another tweet, to which Ted responded:
@KonciseD “problematic” is a bit strong. If you have suggestions to improve, I am all ears https://t.co/iowB4amR2X or just email me.
— Ted Wang (@twang) September 4, 2013
Because the Series Seed documents use traditional contract language, readers have to work harder than necessary, with greater risk of confusion. What’s the alternative? Following MSCD guidelines. The result would be documents that are clearer and shorter.
Another limitation of the Series Seed documents is that they’re offered as static documents. I’d have thought they’d be more useful as document-assembly templates, so that some customization could be built in.
I took Ted up on his suggestion and sent him an email about this.
Why am I harassing poor Ted in this way? Simply because it’s mildly disappointing to see an ambitious initiative expressed in such a business-as-usual way. Yes, the crowdsourcing angle is commendable, but it’s not enough. (See this post about the limits of crowdsourcing as a means of compiling rigorous contract language.)
It would be gratifying to have a set of “open-source, ” Silicon-Valley-sponsored documents that are, in the language used, as cutting edge as the industry they’re intended to serve.
Why don’t I take Ted up on his offer and simply join those making suggestions on GitHub? Because it would involve real work on a scale that their GitHub setup probably wasn’t intended to accommodate.
[Update: It was pointed out to me, both before and after I published this, that @rickcolosimo recently submitted a round of MSCD-inspired changes, here. (See Rick’s comment below.) I should have taken more note of that, but I’m a stranger to GitHub, so I limited my review to the version 3.1 documents on the Series Seed website. They’re from June 18, 2013, so it’s not like they’re old news, and I don’t feel that I’ve been terribly remiss. And in an initiative such as the Series Seed documents, ideally one would use optimal contract language in a given version from the get-go, rather than relying on an enthusiastic volunteer to retrofit it.]
6 thoughts on “The Series Seed Documents: Could Be Improved”
Ken, one great thing about these being on GitHub is that, if you don’t want to work with Ted, you can just fork them and create Series Adams.
That’s good to know. But the fact remains that it would involve real work, with no prospect of my being paid. I do this stuff for a living, so doing it for free wouldn’t make sense.
Ken, I can add some background on your major points.
First, Ted started this project a while ago, and I was able to add comments on the structure of the documents before the first version (my longstanding vision was fully embodied by the docs in the most recent major version, when their underlying structure changed dramatically so that revisions were almost non-existent). At that time, I, at least, hadn’t even heard of your work. Ted and his team deserve praise for rethinking the documents in this way – it’s definitely not the same style as was prevalent in the Valley back in 2006, or, as you know, even today.
Second, I recently submitted revisions (https://github.com/seriesseed/equity/pulls) on each of the docs, section by section, to implement MSCD usages and clean up the “traditional” language even further. I expect that those revisions will be adopted because they clarify without changing meaning — that’s a Pareto improvement that is hard to pass up.
Finally, the value in these documents is that they can be almost entirely static, with the customization limited to a set of specific defined terms – price, liquidation preference, board composition. By adopting conventions for the expression and implementation of these provisions, the docs free lawyers up to spend time on those material provisions and on explaining the provisions to nervous first-time entrepreneurs (yes, that’s redundant). Their value lies in NOT being customized except through the definitions.
Similarly, the Twitter-derived Innovator’s Patent Agreement had already had several rounds of MSCD improvements in forked versions (https://github.com/rickcolosimo/innovators-patent-agreement/commits/master) before I got around to taking a look and making further updates. There, I doubt that the language will make its way into the original; it just seems less likely to change.
In this model, it’s less like crowdsourcing and more like successive rounds of edits by different eyes. I think all of us reading you have realized that there are always more improvements to be made when we try to read our own documents with your eyes!
Rick: Thank you for this. @cwmatx mentioned that you had submitted MSCD-inspired changes; I wish I had had the wit to check in with you before publishing this.
In any event, I tried hard not to sound like a jerk. I hope I didn’t fail too badly!