Newly launched Series Seed 4.0 is a comprehensive standard seed financing documentation for the Finnish market

The prior generation of documents served its purpose well, blending the established Finnish standard with elements of the Nordic template to facilitate cross-border transactions within the Nordics. However, investor expectations have evolved, regulatory requirements have intensified, and transactional practice has advanced to a point where a wholesale revision was warranted.

Series Seed 4.0, prepared by Castrén & Snellman Attorneys on behalf of Startup Foundation and published in May 2026, represents a generational step change in the quality and sophistication of the document suite. The revision was driven by practitioner and investor feedback from real transactions, updated regulatory requirements on sanctions, anti-money laundering, and data protection and the ongoing alignment of Finnish market practice with international venture capital standards.

The updated package comprises

• a Term Sheet
• an Investment Agreement (which replaces the former Subscription Agreement), and
• a Shareholders’ Agreement.

Summary of the most significant changes

1. Introduction of a Three-Tier Leaver Classification

One of the most consequential changes for founders and key employees is the introduction of a three-tier leaver classification system. Where the previous version recognised only two categories (Bad Leaver and Good Leaver) version 4.0 introduces an intermediate “Early Leaver” category. Under the new framework, the classifications are as follows:

• Bad Leaver: Departure arises in circumstances where the employer would be entitled to cancel or terminate the employment relationship for cause under the Finnish Employment Contracts Act.
• Early Leaver: Resignation or termination of employment or service relationship on employees own initiative, without grounds attributable to the employer.
• Good Leaver: Person’s employment or service relationship terminates for any other reason.

The introduction of the Early Leaver category addresses a well-recognised gap in prior market practice, as a voluntary resignation without cause is a materially different event from gross misconduct or termination for cause, yet both were previously treated as “Bad Leaver” events in the absence of specific negotiation. The 4.0 framework brings Finnish practice closer to the international standard, where voluntary departure is treated with greater economic fairness to the departing founder while still permitting the company and investors to recover unvested equity.

The pricing consequences escalate accordingly. A Bad Leaver forfeits all common shares at a steep discount, with pricing pegged to the lower or higher (as applicable) of the original subscription price or just 25% of fair market value. This 25% discount is a notably punitive provision that is new to version 4.0, replacing the simpler original-subscription-price approach used in version 3.0.

An Early Leaver is likewise subject to a purchase right over all common shares, but on materially better terms: the pricing is based on the original subscription price or full fair market value (whichever is lower for unvested shares and higher for vested shares).

A Good Leaver, by contrast, retains all vested shares and is only required to sell unvested shares, priced at the higher of the original subscription price or fair market value — the most favourable outcome. Notably, feedback from industry participants has confirmed that it remains necessary to be able to purchase all shares from a departing shareholder — a principle reflected in the Bad Leaver and Early Leaver categories, where both vested and unvested shares are subject to the purchase right. The Good Leaver provision strikes a different balance, permitting the departing shareholder to retain vested shares whilst still subjecting unvested shares to purchase. The overall effect is a graduated regime that more effectively disincentivises departures for cause whilst ensuring that Early Leavers and Good Leavers are not unduly penalised.

2. Structured Primary and Secondary Liability Regime

The liability regime for warranty breaches has been significantly reworked. The company now bears primary liability and the founders’ liability is secondary. In practice, an investor must first pursue the company and can only look to the founders if the company has failed to satisfy the losses despite investor’s reasonable steps to recover.

The founders’ aggregate liability is capped at 30% of the amount invested by the relevant investor. The documents also include customary de minimis and basket thresholds. The new structure reflects a deliberate compromise: investors rightly want founders to have skin in the game, but founders are understandably reluctant to accept material personal liability. The layered approach, with the company bearing primary responsibility and the founders’ exposure capped and subject to thresholds, gives both sides considerably more certainty on where they stand.

3. Sanctions and AML Compliance Provisions

Reflecting the dramatically changed geopolitical and regulatory environment since the previous version was published in 2020, version 4.0 introduces comprehensive sanctions-related provisions. The company and founders are required to represent and warrant that neither the company nor any founder is a designated target of, or otherwise subject to, sanctions. In addition, the shareholders’ agreement also introduces a new obligation for each shareholder to deliver KYC and AML documentation to the company upon request. These provisions reflect the increasingly stringent regulatory expectations on venture-backed companies and their investors, and their inclusion in the standardised documents means that parties no longer need to negotiate these terms from scratch.

4. Compensatory Issue and Compensatory Sale Mechanisms

Version 4.0 introduces two new mechanisms for enforcing warranty claims: the compensatory issue and the compensatory sale. If the company is liable to compensate an investor for a breach of representations and warranties, the investor may, at its sole discretion, elect to receive compensation by way of issuance of new preferred shares rather than in cash.

The number of shares to be issued is calculated by dividing the loss amount by a per-share price derived from the pre-money valuation, adjusted for the loss. Similarly, if a founder is liable, the investor may require the founder to transfer common shares (which are converted into preferred shares upon transfer) under the compensatory sale mechanism. The practical benefit is straightforward – warranty claims can be resolved without draining the company’s cash at a stage when every euro counts.

5. Streamlined Material Breach and Remedies Framework

Version 3.0 tried to address breach and exit scenarios through a long catalogue of specific redemption events — material breach, change of control, insolvency, division of joint property, death, criminal conviction — each with its own procedure and pricing formula. Version 4.0 consolidates this into a single, more workable framework. A material breach now covers the essentials – breaches of non-competition and non-solicitation provisions, breaches of share transfer restrictions, and any other material breach that is not rectified within thirty (30) days.

6. Detailed Exit Transaction Cost Allocation

Exit transaction costs are a perennial source of disagreement, and version 4.0 now addresses them head-on with a specific cost allocation provision for trade sales. Transaction costs incurred on behalf of the company or all shareholders collectively are to be borne by the company. However, if for tax or other reasons the costs cannot be borne by the company, they will be deducted from the total consideration before any distribution pursuant to the liquidation preference. Each shareholder bears its own individually incurred costs. The approach is consistent with prevailing Nordic market practice and should reduce one common area of friction in exit negotiations.

7. Refined Participation Rights

Participation rights in future financing rounds have been recalibrated. Under version 3.0, both investors and existing shareholders held a pro rata right to participate in subsequent issuances of shares or equity instruments. Version 4.0 narrows this, as the pro rata participation right now sits exclusively with the holders of the preferred shares, not with all shareholders. In addition, version 4.0 introduces an explicit overallotment right — if an investor chooses not to take up its full pro rata portion, the other investors may subscribe for the remainder. The term sheet mirrors this, confirming that exercising holders will also have an overallotment right if any other holder does not exercise its pre-emptive right. The change is meant to streamline what was often a cumbersome process. In practice, working shareholders at the seed stage rarely have the capital to defend their pro rata in a follow-on round, so the previous two-tier allocation added procedural complexity without much practical benefit.

8. Holding Company Provisions and Enhanced Transfer Mechanics

Finnish founders frequently hold their shares through a personal holding company, and version 4.0 now addresses this directly with comprehensive holding company provisions. The new provisions permit transfers to holding companies but impose strict conditions. The holding company must agree to be bound by the agreement, must not engage in activities other than holding the shares, must not have other shareholders or holders of convertible instruments, must not hold other assets, and must not incur debt or liabilities. If a holding company ceases to be wholly owned by the relevant shareholder, it must retransfer the shares.

The version 4.0 documents also introduce a clear qualified majority concept for the drag-along provision: at least two-thirds of all shares, always including the holders of more than fifty per cent of the preferred shares. This provides greater certainty than the previous formulation, which required the lead investor to be included in the dragging group.

9. A General Structural Overhaul

Beyond the headline changes, the entire document suite has had a thorough structural reworking. The version 3.0 templates served the market well for several years, but as Finnish seed deals grew in size and complexity and as more international investors came to the table certain limitations became apparent.

Version 4.0 addresses this with a ground-up reorganisation. Definitions have been consolidated and expanded, related provisions sit together in a more intuitive order, and the drafting is tighter and more internally consistent throughout. Cross-referencing between the investment agreement, shareholders’ agreement, and term sheet has also been improved, so the documents work together more seamlessly as a suite. None of this changes the commercial substance of the deal, but it should make the documents quicker to navigate, easier to negotiate, and more robust when put to the test.

Series Seed 4.0 was developed through extensive dialogue with founders, investors, and other key players across the market

Series Seed 4.0 represents the most substantive revision to the Finnish standard seed financing documentation in several years. Developed through extensive dialogue with founders, investors, and other key players across the market, the updated suite is materially more structured, more aligned with international VC practice, and better equipped to accommodate the complexity of real-world transactions than its predecessors.

For founders, the new documents provide clearer and fairer rules on leaver economics, vesting acceleration, and liability limits. For investors, whether Finnish business angels or institutional VC funds, the updated framework offers enhanced protections across warranty coverage, sanctions compliance, drag-along mechanics, and exit economics. For the Finnish startup ecosystem as a whole, the widespread adoption of 4.0 as the market standard should reduce negotiation friction, lower transaction costs, and further cement Finland’s reputation as a jurisdiction with a mature and predictable venture financing infrastructure.

At Castrén & Snellman, we have a long track record of advising on the transactions that shape the Finnish startup ecosystem, from pre-seed rounds through to growth-stage financings and exits.

We are proud to have prepared Series Seed 4.0 on a pro bono basis in collaboration with Startup Foundation — a deliberate choice, and one that reflects our conviction that investing in the foundations of the ecosystem is every bit as important as advising on the individual transactions that take place within it. Giving back to the community of which our clients and our firm are a part matters to us, and we hope that these documents will make a genuine and lasting difference to the thousands of founders and investors who rely on them in the years ahead.

High-quality, freely available standard documentation is one of the most powerful tools an ecosystem can have — reducing friction, lowering costs, and sending a clear signal to international investors that Finland is a place where deals get done efficiently and on predictable terms.

The documents are now available at seriesseed.fi under a Creative Commons licence. For further information, please contact the Castrén & Snellman Attorneys Private Equity team.