Priced Round

TL;DR

A funding round where investors purchase shares at an agreed price per share, establishing a clear pre-money valuation and cap-table impact.

A priced round is a true equity round: investors buy newly issued shares at a negotiated price, the company's valuation is fixed, and the cap table updates immediately. Priced rounds require more legal work than SAFEs (full equity documents, board consents) and typically take 2 to 6 weeks to close.

Most Series A and later rounds are priced. The convention is that the lead investor negotiates the term sheet and follow-on investors accept those terms; specialty firms or strategics may negotiate side letters.

Worked example

A $5M priced seed at $20M pre-money: 2,000,000 new preferred shares issued at $2.50/share to the lead. Pre-existing 8,000,000 common shares now represent 80% of a 10,000,000-share company, fully-diluted ownership and rights are locked at close.

Common pitfalls

• Trying to run a priced round on early-stage SAFE legal docs.
• Underestimating the time and cost of negotiating preferred terms.
• Letting the lead set terms without understanding their downstream impact.

When this shows up in a pitch deck

Founders preparing for a priced round should expect the deck to be supported by a data room with model, contracts, and references.

Related terms

• SAFE, Y Combinator's Simple Agreement for Future Equity, a contract that gives an investor the right to equity in a future priced round, with no debt or interest.
• Convertible Note, Short-term debt that converts into equity at a future priced round, typically with a discount, a valuation cap, and an interest rate.
• Term Sheet, A non-binding document outlining the principal terms of a proposed financing, used to align investor and founder before legal documents are drafted.
• Lead Investor, The investor who sets the terms of a round, takes the largest check, and typically takes a board seat or significant governance role.
• Preferred Stock, The equity class issued to investors, carrying special rights such as liquidation preference, anti-dilution protection, and protective covenants.

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