Priced Round

A priced round is a formal equity financing where the startup issues new shares (typically preferred stock) at a negotiated price per share. This sets a definitive valuation for the company and triggers the conversion of any outstanding SAFEs or convertible notes. Priced rounds involve significantly more legal complexity than SAFEs, including negotiating a term sheet, drafting stock purchase agreements, and often creating or modifying a board of directors.

Priced rounds are named by series: Series Seed, Series A, Series B, and so on. Each round typically involves a lead investor who sets the terms and often takes a board seat. The lead investor performs due diligence and negotiates on behalf of all investors in the round, which is why securing a lead is often the hardest part of fundraising.

The legal costs for a priced round typically range from $15K-$50K (split between company and investor counsel), compared to near-zero for a SAFE. This is why most startups use SAFEs for their earliest fundraising and only do a priced round once they have enough traction to justify the overhead.