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How do angel investors typically deal with the legal agreements and similarly how would they help deal with legal issues for a startup they’ve invested in?

All investments by angels (and everyone else) in a company are made according to detailed legal documents that specify everything about the relationship among the various parties, the terms of the value exchange and the various rights and responsibilities of everyone involved. The paperwork can range from 5-10 pages for a pretty straightforward convertible note, up to 120 pages or

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When should a convertible note be treated as a replacement for an equity round, and take on characteristics of an equity financing?

It doesn’t work that way. A convertible note and an equity round are two different things, done for different reasons. In most cases, the former is a quick way to get some money in the door in anticipation of the latter.

What percentage of a Series A round is typically invested by the lead investor?

This is changing as the whole world of venture/angel/seed funding is rapidly morphing, but typically a ‘real’ Series A round is small enough for one traditional venture fund to do the whole thing itself. Very occasionally, they might split it with another fund, but that would probably be the exception.

What we are often seeing, however, is large-ish “seed” rounds

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Are convertible notes typically issued along with stock in Series A?

No, because they are, by definition, two completely different things.

“Series A” is a shorthand way of referring to what is typically the first institutional round of investment in a company, made in the form of purchasing Convertible Preferred Stock. A “Convertible Note” is a loan to the company, in which the principal (and often the interest earned to date)

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Angel Group Syndication of Series A Rounds

Posted by on May 8th, 2013

US angel investors have been a robust source of seed stage capital for years.  More recently, we have experienced significant growth in the number of funded seed stage deals, due to the emergence of accelerators, super angels and new seed stage funds.  Unfortunately, we are now suffering a Series A startup funding crunch, that is, a lack of seed stage

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