TL;DR. The Series Seed Stock Purchase Agreement (SPA) is the master contract for your first priced round. It papers the sale of preferred stock, sets out the company’s representations and warranties to investors, and lists the closing conditions. It’s the document where deals go sideways if anyone gets lazy with the reps.
What this document actually does
When a startup raises its first priced round — not a SAFE, not a convertible note, but an actual sale of preferred stock — four documents travel together. This is the first and most important of them. The SPA does three jobs: it documents the mechanics of the sale (how many shares, at what price, closing when), it captures a full set of company representations and warranties (organization, capitalization, IP, litigation, taxes, financials, related-party transactions — the things investors rely on when they write the check), and it sets out the conditions that must be satisfied before closing.
When you’ll encounter it
You’ll meet the SPA when you move from SAFE/convertible-note fundraising to your first priced round — typically a Series Seed or sometimes straight to Series A. The lead investor’s counsel usually drafts it from a standard form (the Series Seed form or an NVCA-style template), and your counsel redlines. The heavy negotiation focuses on the reps and warranties, the disclosure schedules, and the closing conditions. Everything else is relatively mechanical.
The narrative
The SPA sits on top of an Amended & Restated Certificate of Incorporation that establishes the Series Seed Preferred with a 1x non-participating liquidation preference and broad-based weighted-average anti-dilution. The big-law drafting levers are (1) the scope and qualifiers on the reps (“knowledge,” “material,” disclosure-schedule carve-outs), (2) the conditions to closing (especially the bring-down of reps and the delivery of ancillary documents), (3) the survival of reps and the indemnification backstop, and (4) the “most favored nation” and pro rata parity items that get pushed into side letters.
The four levers your lawyer will push on
Lever 1 — The scope and qualifiers on the reps
Every representation in Section 2 of the SPA is a statement the company is making as true. Investors want clean, unqualified statements; founders want every rep qualified by “to the knowledge of the company” and “in all material respects.” The fight is almost always over which reps get which qualifiers. Fundamental reps (organization, authorization, capitalization) should stay clean. Everything else is negotiable.
Lever 2 — Conditions to closing
The reps have to be “brought down” — restated as true — at closing. Between signing and closing, the company has to deliver a compliance certificate, a secretary’s certificate, the Restated Certificate filed in Delaware, and executed copies of the IRA, Voting Agreement, and ROFR/Co-Sale. Miss any of these and the investors can walk.
Lever 3 — Survival and indemnification
For seed rounds, most practitioners let reps expire at closing with no post-closing indemnity — the deal is too small to justify an escrow. Some lead investors push for a short survival period on fundamental reps only. This is worth knowing so you can push back politely if your lead is asking for more.
Lever 4 — MFN and pro rata in side letters
“Most favored nation” language and pro rata rights don’t usually sit in the SPA — they get pushed into an investor side letter. Know where they live, because an investor who asks for MFN in the SPA itself is either inexperienced or trying something.
Traps for the unwary
- Capitalization rep vs. pro-forma cap table. The numbers in Section 2.2 have to match the cap table on the closing date exactly. An off-by-one in the option pool reserve is the #1 reason deals slip.
- 83(b) confirmations. Section 2.19 reps that all founders timely filed their 83(b) elections. If someone missed the 30-day deadline, this rep is false and you need a disclosure-schedule carve-out.
- Board AND stockholder approval. The issuance and charter amendment both need board approval; the charter amendment also needs stockholder approval. Missing either is fatal.
- Pre-incorporation activity. Any fundraising or “offer” activity before the Company legally existed can trip a Section 3(a)(11) intrastate exemption issue. If you had investor conversations before filing the Certificate of Incorporation, flag it.
How this fits in the Series Seed stack
The SPA is document #1 of four. The Investor Rights Agreement handles ongoing investor rights (registration, information, pro rata). The Voting Agreement handles board composition and drag-along. The ROFR and Co-Sale Agreement restricts founder share transfers. All four close together.
Get this reviewed
Raising a round? Montague Law offers flat-fee Series Seed packages for founders — all four documents reviewed, customized to your deal, and paired with a one-hour call to walk you through every lever. Email John →
This post is for general information only and is not legal advice. No attorney-client relationship is formed by reading it. If you’re raising a round, talk to a lawyer — preferably one who’s seen at least a hundred of these.
