Instruments
Priced round
Also called Equity round, Series Seed, Series A
A financing in which the company and its investors agree a valuation, set a price per share, and issue shares immediately — as opposed to deferring the price to a later round.
In plain English
In a priced round everything is settled on the day. The parties agree a pre-money valuation, divide it by the fully diluted share count to get a price per share, and issue new shares at that price. You become a shareholder with a certificate, a fixed percentage, and a place in the company's constitution. There is no conversion to wait for and no ambiguity about what you own.
The cost of that clarity is paperwork. A priced round needs a term sheet, a subscription or stock purchase agreement, a shareholders' agreement, amended articles, board and shareholder approvals, and a disclosure exercise. Legal fees run from a few thousand at the smallest end to well into five figures at Series A, and the company usually pays for both sides — which is why founders resist doing one for small amounts.
Priced rounds almost always create a new class of preferred shares that sit above the ordinary shares held by founders and employees. That class is where liquidation preferences, anti-dilution and protective provisions live. As an angel you may be offered those preferred shares or, in smaller rounds, ordinary shares at the same price — a distinction that matters enormously in a bad exit and not at all in a good one.
The threshold at which a priced round becomes worth doing has risen with the popularity of SAFEs and notes. Below roughly $1m raised it is often uneconomic; above $2m it is close to standard.
What it means for your cheque
A priced round is the friendliest structure for a small cheque, because it removes every unresolved question. You know your percentage, you know your price, and your rights are written into documents that bind the company rather than into a promise about a future negotiation you will not be part of.
Where the small cheque is exposed is share class. If the round issues preferred shares to the lead and ordinary shares to the angels, you have taken the same price with worse terms — you sit behind the preference in a bad exit while paying the valuation that the preference was meant to justify. Ask, in one sentence, whether you are getting the same class as the lead. If the answer is no, ask why.
Do the arithmetic
A €50,000 cheque into a €3m pre-money round
The company raises €1m at a €3m pre-money valuation. There are 3,000,000 shares outstanding before the round, on a fully diluted basis including the option pool.
| Pre-money valuation | €3,000,000 |
|---|---|
| Shares outstanding, fully diluted | 3,000,000 |
| Price per share | €3,000,000 ÷ 3,000,000 = €1.00 |
| New shares issued for the €1m round | 1,000,000 |
| Post-money valuation | €4,000,000 |
| Your €50,000 buys | 50,000 shares |
| Your ownership | 50,000 ÷ 4,000,000 = 1.25% |
Note that your percentage is calculated on the post-money share count, not the pre-money one. Getting this backwards is the most common arithmetic error angels make, and it always errs in the optimistic direction.
At the table
What to negotiate
- Ask whether you are being issued the same share class as the lead investor. Same price, worse class is a real and common outcome for small cheques.
- Check that the pre-money valuation is calculated on a fully diluted basis including the option pool — if the pool is created post-money, the founders bear the dilution rather than you.
- Confirm who pays the legal costs. Companies customarily pay the lead investor's reasonable fees; individual angels pay their own.
- Read the shareholders' agreement for drag-along thresholds before you sign, not after.
- If the round is small, ask whether a streamlined template is being used — the British Private Equity and Venture Capital Association and the National Venture Capital Association both publish free model documents that cut fees substantially.
Around the world
How this differs by market
NVCA model documents are the reference point. Delaware C-corporation, preferred stock, 1× non-participating preference is the seed default.
LATAMUsually done at a US or Cayman holding company. A priced round at the local operating entity brings notarisation and registration steps that add weeks.
EUBVCA model documents in the UK; German rounds require notarisation, which adds cost and calendar time that surprises first-time investors.
APACSingapore rounds follow broadly US-style documents. Indian rounds face pricing rules under foreign-exchange regulations — take local advice before agreeing a price.
Priced round: common questions
How small is too small for a priced round?
Why is my percentage calculated on the post-money number?
Do I get preferred shares as a small angel?
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