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How to Track Pay to Play After a Down Round Closes
How to track pay to play is the angel-side ledger you keep after the round already closed: whether you participated, the required amount, the amount you funded, the resulting conversion (full, shadow, or none), new as-converted shares, and last evidence. It is not the down-round price-and-mark row. Raziel's down-round tracking page is pre-round shares, new price, anti-dilution type, adjusted shares, new ownership percent, and mark versus last preferred. This page is six fields on the pay-to-play event itself.
This is not legal, tax, or investment advice. Raziel does not provide it. Copy the participation notice, the signed stock purchase agreement, the amended certificate of incorporation, and the post-close cap table. Do not invent a conversion haircut.
What this ledger is (and is not)
Carta's follow-on page (September 17, 2025): the company and lead investors may require existing investors to participate in the new funding round to keep preferred stock rights; if they do not invest their pro rata share, existing preferred stock automatically converts to common stock. NVCA's Model Certificate of Incorporation (updated October 2025) includes a sample that converts some or all of a non-participating holder's Preferred Stock into Common Stock. Goodwin (August 18, 2025) notes that a down round does not necessarily imply pay-to-play terms. Store the clause you signed.
Six columns on one closed-round row
Open one row per issuer after the pay-to-play close. Copy each field from the closing pack. If a field is missing, store that it was missing. Do not collapse this event into the down-round mark row.
Whether you participated. Yes, no, or partial, dated from the notice and the wire. NVCA Section 5A.1 tests whether you purchased your Pro Rata Amount of the Qualified Financing. Partial is not a yes.
Required amount. Copy the dollars or share count the notice printed as the Pro Rata Amount. Do not invent a percent.
Amount you funded. What you actually purchased in that Qualified Financing. Zero if you sat out. This is not extra preferred from an anti-dilution adjustment.
Resulting conversion (full / shadow / none). None if you bought the Pro Rata Amount. Full if remaining preferred converted into Common Stock (NVCA sample). Shadow only if your charter converts into a junior or stripped series.
New as-converted shares. After close: new preferred you bought, preferred that did not convert, and Common issued on conversion. Copy the cap table. Do not invent a ratio.
Last evidence. The dated notice, stock purchase agreement, amended certificate, or cap table. NVCA 5A.2: the Corporation sends written notice of the Special Mandatory Conversion.
Conversion is the charter, not a haircut you invent
Copy the conversion that closed. If some shares convert and some do not, store both counts. Anti-dilution adjustment of Conversion Price lives on Raziel's down-round tracking page. This row stores whether pay-to-play conversion happened, and into what.
Required amount is the notice, not a market pro rata
Copy the notice's Pro Rata Amount. NVCA Qualified Financing is a defined issuance after the Original Issue Date, unless Requisite Holders elect it not be treated as one. Those brackets are fill-ins. NVCA Section 5A.1 expects at least 10 days written notice and the opportunity to purchase. Goodwin's 30 to 60 day rights-offering window is a process description, not that 10-day floor. Store the clock that closed. Carta's ownership-percentage line is not the Pro Rata Amount formula.
When the ledger holds
The row holds if participation is dated from the notice and the wire, required amount is the notice's Pro Rata Amount, amount funded is what you purchased, conversion is full or shadow or none as the charter used, new as-converted shares match the pack, and last evidence is a dated document. It fails when you invent a conversion haircut or treat anti-dilution extra as-converted common as a pay-to-play conversion. Raziel's startup investment tracker is the book those preferred rows already sit on: cash dates, documents, cap tables, IRR and MOIC. Raziel does not interpret your charter and does not give investment advice. Copy the six columns. Leave the conversion math to the COI and the closing pack.
