Series A, B & Growth-Stage Rounds
“A seed round is a bet on a founder. A Series A is a bet on a business. The legal structure has to reflect that shift—because the investors at this stage are underwriting risk with a very different lens.” — John Montague
Priced equity rounds change everything. The moment a lead investor puts a term sheet on the table for a Series A, the founder is no longer negotiating a simple instrument—they’re negotiating the governance architecture of their company for the next several years. Board composition, protective provisions, anti-dilution mechanics, liquidation preferences: these terms compound. Getting them wrong at Series A creates structural problems that echo through every subsequent round.
I’ve been working with technology companies and their investors for over 15 years—first at Locke Lord LLP (now Troutman Pepper Locke), an AM Law 200 firm where I focused on venture capital and private equity transactions, and now through my own practice at Montague Law. That experience spans both sides of the table: I’ve represented founders defending their cap tables and institutional investors deploying capital. The pattern I’ve seen repeatedly is that the founders who fare best in growth-stage rounds are the ones whose earlier rounds were structured with discipline.
What I Handle in Priced Equity Rounds
Term sheet negotiation and markup. The term sheet sets the framework for the entire deal. I advise founders on what’s market, what’s aggressive, and what’s a red flag. For investors, I draft term sheets that protect downside while keeping the deal attractive enough to close. The National Venture Capital Association (NVCA) model documents serve as the industry baseline—I know them inside and out, and I know where sophisticated parties deviate from them and why.
Charter and stockholder agreement drafting. A priced round requires an amended and restated certificate of incorporation, an investors’ rights agreement, a right of first refusal and co-sale agreement, and a voting agreement. These four documents—plus the stock purchase agreement—constitute the core of a venture financing. Each one interlocks with the others. I draft and negotiate the full suite.
Board governance structuring. Series A investors typically take a board seat. The question is how the board is composed, what decisions require board approval versus stockholder approval, and what protective provisions the preferred stockholders hold. These governance mechanics determine who actually controls the company’s major decisions going forward. I advise on structures that balance investor protection with founder operational freedom.
Anti-dilution and liquidation preference analysis. Broad-based weighted-average anti-dilution is standard. Full ratchet is aggressive. Participating preferred with a cap is different from non-participating preferred. I walk clients through the economics of each structure—what it means in a good outcome and what it means in a down scenario. My accounting background from Stetson University means I model this quantitatively, not just conceptually.
Management option pool sizing. Investors almost always require an option pool “refresh” or expansion as part of a priced round—and they want it created pre-money, which means the dilution falls on the founders and existing holders, not the new investors. I negotiate pool size based on actual hiring plans, not arbitrary percentages.
The Dynamics of Growth-Stage Financing
The venture capital market in the United States has matured significantly. According to the NVCA, U.S. venture capital investment has consistently exceeded $150 billion annually in recent years, with Series A and B rounds accounting for a substantial share of that capital. The terms have become more standardized—but standardization doesn’t mean simplicity.
Series B and later rounds introduce additional complexity: multiple classes of preferred stock with different rights, pay-to-play provisions that force existing investors to participate or face conversion to common stock, and increasingly sophisticated liquidation waterfalls. I’ve structured rounds where three classes of preferred stock each had different participation rights and different anti-dilution formulas. The cap table math in these situations requires precision.
For founders, the critical issue at each stage is maintaining enough ownership and control to stay motivated and effective. For investors, it’s ensuring that their capital is protected and that governance mechanisms exist to course-correct if the business underperforms. These interests aren’t inherently opposed, but they require careful alignment—and that alignment happens in the legal documents.
As a visiting professor of Entrepreneurial Law at the University of Florida’s College of Business, I teach students how these structures work in practice—not just in theory. That teaching discipline informs how I explain complex deal terms to founders who are seeing them for the first time.
Frequently Asked Questions
What is the difference between a Series A and a Series B round?
A Series A is typically a company’s first priced equity round, led by an institutional venture capital firm, and usually raises between $5 million and $20 million. Series B rounds are subsequent financings that fund scaling—expanding the team, entering new markets, or accelerating growth. Each round creates a new class of preferred stock (Series A Preferred, Series B Preferred) with its own set of rights and preferences. The legal complexity increases with each round because the new terms must interact with all existing classes of stock.
What are protective provisions and why do they matter?
Protective provisions are veto rights held by preferred stockholders over certain company actions—such as issuing new stock, taking on debt, selling the company, or changing the charter. They exist to protect investors from management decisions that could impair the value of their investment. The scope of these provisions is one of the most negotiated aspects of any venture financing, and founders should understand exactly what decisions they can and cannot make unilaterally after the round closes.
Should I use NVCA model documents for my Series A?
The NVCA model legal documents are the industry standard starting point for priced venture financings. They’re well-drafted, widely understood, and reduce negotiation time because both sides know the baseline. That said, they’re templates—not finished documents. Every deal requires customization based on the specific commercial terms, the parties’ relative leverage, and the company’s particular circumstances. I use NVCA forms as the foundation and negotiate from there.
How does anti-dilution protection work?
Anti-dilution provisions protect investors if the company raises a future round at a lower valuation (a “down round”). The most common form is broad-based weighted-average anti-dilution, which adjusts the investor’s conversion price based on a formula that accounts for the size of the down round relative to the company’s total capitalization. Full ratchet anti-dilution is more aggressive—it resets the conversion price to the new lower price regardless of the round size. The type of anti-dilution protection significantly affects founder dilution in a down scenario.
About John Montague
John Montague is a venture capital, M&A, and technology transactions attorney who has worked with technology companies and their investors for over 15 years. He earned his J.D. from the University of Florida’s Fredric G. Levin College of Law and holds an accounting degree from Stetson University. John serves as a visiting professor of Entrepreneurial Law at the University of Florida’s College of Business. Prior to founding Montague Law, he structured venture capital, M&A, and private equity transactions at Locke Lord LLP (now Troutman Pepper Locke), an AM Law 200 firm. He advises founders, investors, and businesses from offices in Fernandina Beach and Coral Gables (Miami), Florida.
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