Skip to content.

Understanding Funding and Finance through the CVCA – Part 1: What are the CVCA Model Documents?

MT❯Ventures welcomes you to the first installment of our series aimed at educating startups and founders on the Canadian Venture Capital & Private Equity Association (CVCA) model documents – a comprehensive framework of documents for venture capital transactions, aiming to streamline processes, reduce costs, and establish industry standards in Canada. In this series, we'll delve into the intricacies of these documents, offering insights, and strategies to help you navigate the venture capital landscape effectively.

Why should you learn about the CVCA Model Documents?

The CVCA model documents were developed with the objective of providing startups and their investors with a model investment framework that guides, standardizes and simplifies key aspects of venture financing, in turn promoting the following characteristics across the startup financing landscape:

Efficiency – By establishing industry standards, the CVCA model documents promote consistency and efficiency in transactions, reducing the likelihood of delayed closings due to disputes or misunderstandings on legal jargon. 

Cost Reduction – Standardized documents help lower legal costs associated with drafting and negotiating tailored agreements, making transactions more accessible for startups and investors alike. Moreover, the documents are comprehensive and consider a wide range of options allowing companies to customize a transaction.

Market Standards – As the CVCA model documents become increasingly adopted in Canadian transactions, they have become the market standard for venture capital transactions, providing parties with a familiar and trusted framework.

The CVCA model documents are based on the model legal documents prepared by the National Venture Capital Association (NVCA), the U.S. equivalent to the CVCA. Today, these documents are promoted by both startup lawyers and venture capital firms throughout Canada as the go-to templates for Seed to Series D+ equity financings.

Key Components

The CVCA model documents encompass various legal agreements essential for equity financing transactions. These include:

Term Sheet: The term sheet is a preliminary agreement, negotiated and entered into by the startup and the lead investor, outlining the key terms and conditions of a potential investment. While not legally binding, it serves as a roadmap for negotiations and lays the groundwork for drafting the final definitive agreements.

Share Purchase Agreement (SPA): The SPA is the definitive agreement for the investor’s purchase of shares in the startup and covers aspects such as purchase price, number of shares, and closing conditions. It's a core document in financing transactions and sets the stage for the relationship between investors and the company.

Unanimous Shareholders' Agreements: The CVCA version of the shareholders’ agreements govern post-closing relationships among parties, addressing matters such as board composition, share restrictions, and investors’ rights. They establish the rights and responsibilities of shareholders, ensuring clarity and alignment of interests. The CVCA offers several variations of a standard shareholders’ agreement: (i) a standalone unanimous shareholders’ agreement, or (ii) three separate agreements that together, form the key components of a unanimous shareholders’ agreement.

Share Terms: Share terms, or Articles of Amendment as referred to by the CVCA, describe the characteristics and rights associated with the type of shares being sold to investors. These terms include provisions related to dividends, liquidation preferences, voting rights, and conversion rights, among others. Clarifying these terms is crucial for investors protecting their interest in the company and for startups ensuring alignment between the parties.


In this introductory article, we've explored the reasons why startups and investors should learn about the CVCA model documents and have briefly explored their purpose and key components. In the upcoming articles in this series, we'll delve deeper into each document, offering practical insights and strategies for navigating negotiations effectively.

Whether you're a startup founder navigating your first financing or an experienced investor seeking to refine your understanding, stay tuned for insights and guidance in our ongoing exploration of the CVCA model documents. In the meantime, if you should have any questions about the CVCA model documents and their use, you can contact anyone in the MT❯Ventures group and we are happy to walk you through them.



Stay Connected

Get the latest posts from this blog

Please enter a valid email address