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New NVCA legal templates address token offerings

The National Venture Capital Association is addressing cryptocurrencies in a set of model legal documents it has updated for the first time since 2014.

The updates, guided by the NVCA’s general counsel advisory board, address a variety of issues in addition to the emergence of blockchain technology and cryptocurrencies. These issues include life-science transactions, harassment and discrimination, and drag-along and redemption rights.

The association provides 11 free legal templates, including a term sheet, stock-purchase agreement, right of first refusal, certificate of incorporation, and model human-resources policy.

The certificate-of-incorporation document now provides investors a veto over “token, crypto-currency and blockchain related offerings,” since the preexisting veto rights did not clearly apply to or cover these new types of offerings, a news release from the association says.

Blockchain technology startups have increasingly turned to initial coin offerings, or ICOs, to raise funds outside the typical venture model. For existing investors, this can create a host of questions, including how to modify their LPAs to hold tokens in a fund, how to maintain their stakes in a company, and how to distribute profits from token sales to LPs.

Some firms prefer to avoid investing in token offerings altogether. The updated model certificate of incorporation requires investors’ consent before a blockchain company can hold an ICO.

Under the updated template policy, a corporation cannot “sell, issue, sponsor, create or distribute any digital tokens, cryptocurrency or other blockchain-based assets … including through a pre-sale, initial coin offering, token distribution event or crowdfunding …” without the written consent or affirmative vote of the requisite Series A preferred-stock holders.

Action Item: The full set of model legal documents is available at

Photo of investment portfolio documents courtesy of c-George/iStock/Getty Images.