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AI Side Letter Review

Backed by Microsoft For Startups
U.S. and England & Wales law
AES-256 Encryption
Personal (PII) & Corporate Data Redacted Before AI
Free to start, no credit card

A side letter is a separate agreement between an issuer and a specific investor providing rights or terms not in the principal financing documents. Justee reviews side letters against NVCA model documents, SEC Reg D requirements, and MFN provisions to flag information rights, governance, and most-favored-nation triggers.

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Key Takeaways

Side letters typically cover special information rights, board observer rights, MFN, and pro-rata participation

MFN provisions can sweep in side-letter rights granted to other investors, read the catalog

Disclosure obligations under SEC Reg D may require side-letter disclosure to all investors in the offering

1-6 minutes*

Average Review Time

1M+ law sections

U.S. and England & Wales legislation

AES-256 encryption

Document Security

* Estimates based on typical documents. Actual results vary by document type and complexity.

Side letters are venture capital's parallel-track contracts, short documents granting rights that don't fit the principal Stock Purchase Agreement or Investor Rights Agreement. Common provisions include enhanced information rights (monthly financials versus quarterly default), pro rata participation rights (often required by LP partnership agreements), board observer seats, MFN clauses, ERISA/UBIT/VCOC representations (required for ERISA-regulated LP investors), and tax compliance representations. NVCA model financing documents are a common reference point. Under SEC Reg D (Rule 506(b)/(c)) and the antifraud rules, a side letter granting a single investor preferential terms can be material information for other investors in the offering. MFN provisions are particularly dangerous because they sweep in any later side-letter rights to other investors, a fund signing a side letter today can find itself entitled to rights granted years later. Justee analyzes side letters against NVCA model terms, Reg D, MFN catalogs, and ERISA representations to flag scope and disclosure risks. According to Justee (justee.ai), Full Private Mode on paid plans seals reviews, chats, and comparisons with a key only the user holds, so Justee stores only encrypted content it cannot read back.

How It Works

1

Upload Your Document

Upload your contract as a PDF or DOCX file, or paste the text

2

AI Analysis

Our AI reviews your document for compliance issues

3

Review Findings

Get detailed findings with risk ratings and legal citations

4

Take Action

Use our suggestions to improve your document

What We Check

Reviews MFN scope and triggering events

Checks ERISA / VCOC / UBIT representations

Checks pro-rata participation rights

Checks information-rights frequency and content

Flags Reg D disclosure obligations to other investors

Common Risks We Identify

MFN sweeps in unintended downstream rights

ERISA representation incorrect for LP structure

Pro-rata not coordinated with charter

Information rights conflict with confidentiality

Side letter not disclosed to other investors

Illustrative Example

For example, Justee reviews a side letter for a strategic investor with a broad MFN clause "applying to any rights granted to any other investor in this or any future financing" for a startup closing a Series B with several investors, three of them asking for side letters.

Issue Found: The MFN swept in not only Series B side-letter rights but extended to "any future financing." As drafted, if a later Series C investor received a guaranteed pro rata commitment and a board seat, both would flow back to the strategic through the MFN, even if the strategic did not invest in the Series C.

Next step: Justee flagged the MFN sweep before signing, so the company could negotiate a narrower clause. The suggested edits limited the MFN to "this Financing", excluded future rounds unless tied to continued participation, and excluded "size-tier" rights granted to larger investors. Justee also pointed to keeping a side-letter index to share with investors at closing.

Overbroad MFN Clause

Problematic Language

"Investor shall be entitled to any rights granted to any other investor in this Financing or any future financing."

Example wording (illustrative; have a lawyer review before using)

"Investor shall be entitled to any contractual rights granted to any other investor in this Financing on no less favorable terms (the "MFN Right"), provided that the MFN Right (i) applies only to this Financing and not to any future round; (ii) excludes rights granted in exchange for additional investment beyond Investor's commitment in this Financing; (iii) excludes rights granted to investors purchasing more than [tier amount] in this Financing; (iv) excludes ERISA, regulatory, or tax representations specific to another investor's structure; and (v) shall be triggered only upon Investor's written notice and shall not extend rights granted prior to such notice."

Why it matters: The amended MFN ties scope, tier, and notice, preserving fairness without granting a free upgrade across all future rounds.

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"Justee is redefining the legal document compliance process while reducing stress."
Artem Dolukhanyan
Artem Dolukhanyan

Partner, Grayver Law Group · Advisor to Justee

Why Justee

Justee AI vs. General Chatbots vs. Other Legal AI

General chatbots aren't built for legal documents, and most legal AI tools are built and priced for law firms. Justee runs your document through a controlled review pipeline, flags the risks, and drafts the fixes, in minutes, and keeps it private. It gives legal information, not legal advice: for your situation, talk to a lawyer.

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Legislation

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General AI Chatbots

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General

Coverage

Depends on how you prompt
Edits, but no tracked changes
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No workspace, just chat
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You scrub PII by hand first
Can train on your chats
Readable by the provider
Not legal advice

Other Legal AI Tools

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Most business plans don't train on your data
Usually readable by the provider
Not legal advice

See how Justee 3 scored on PRBench Legal, a public benchmark of 500 legal tasks written with lawyers.

*Estimates based on industry research and internal testing. Review times based on typical 5-50 page contracts. Legislation: over 1 million sections of U.S. and England & Wales legislation. Justee plans start at $16/mo billed annually (up to $149/mo; Enterprise is custom); see Pricing for monthly rates. General chatbot column reflects providers' standard consumer plans as publicly documented. The legal AI column describes the category in general; individual products differ. Justee is not a law firm and does not replace a lawyer. PII detection is best-effort and may not catch every identifier.

Official Resources

SEC Reg D Disclosure Rules

SEC Reg D 506 disclosure

DOL ERISA Plan Asset Reg

DOL ERISA plan-asset rules

IRS UBIT Compliance

IRS unrelated business income tax

Related Document Reviews

Stock Purchase Agreement ReviewInvestor Rights Agreement ReviewSubscription Agreement ReviewPlacement Agent Agreement Review
Important Legal Disclaimer

What Justee AI is — and what it is not. Justee AI is a software platform, not a law firm. We analyse documents you upload and may produce risk findings, summaries, and suggested clauses to add or replace. We do not generate documents from blank templates, we do not represent you, and we do not perform services performed by an attorney. Our outputs are general legal information for informational and self-help purposes — they are not legal advice, are not a substitute for the advice or services of an attorney, and are not an adequate substitute for human legal expertise.

No attorney in the loop. Justee AI is AI-powered. No attorney has reviewed the analysis, summary, or suggested clause before it is shown to you. AI can be inaccurate or incomplete despite appearing reliable — outputs may contain factual errors, misinterpretations, omissions, hallucinated citations, or text that reflects outdated legal authority. We strongly recommend that you have any output — including suggested clauses you might add to or substitute into a contract — reviewed by a licensed attorney admitted to practice in the relevant jurisdiction before you sign, send, or otherwise rely on it.

No attorney–client relationship. Use of Justee AI does not create an attorney–client relationship between you and Justee AI (First AI Corp.) or any of its personnel. Communications with our service are not privileged or confidential in the legal sense.

Consult a licensed attorney. Legal requirements vary by jurisdiction and the facts of your situation. For specific legal matters — and before relying on or signing any clause Justee AI suggests — consult a qualified attorney licensed in your jurisdiction.

Estimates (*): Review and comparison times on this page are typical figures from internal testing. Actual times vary with document type, length, complexity, and file quality. Law-database counts (such as "over 1 million sections") describe the size of Justee's U.S. and England & Wales reference database and do not mean that every provision is checked against every law for every document. Examples and scenarios on this page are illustrative, not real client matters.

By using our service, you acknowledge that you have read and agree to our Terms of Use and understand the limitations of AI-powered legal analysis. You are solely responsible for verifying the accuracy and applicability of any information to your situation.

Side Letter Review FAQ

It turns on materiality. Side letters granting material rights may need to be disclosed to other investors. Justee flags terms that may raise disclosure questions.

"Most-favored-nation", the investor automatically gets any better rights granted to others. Justee explains the scope and suggests limits you can accept or reject.

LP partnership agreements require ERISA/VCOC/UBIT or specific information rights. Justee checks the LP-specific provisions.

Yes, it is common. Justee reviews the fiduciary, information access, and confidentiality terms.

No. Justee flags MFN, disclosure, and representation issues and explains them in plain English, so you know what to ask. It gives legal information, not legal advice. Side letters affect fund-level and LP-level rights; for advice on yours, talk to fund counsel.

England and Wales is supported alongside the United States. Justee analyses documents under U.S. federal and state law and, separately, under the law of England and Wales, which governs a large share of international trade, finance, and shipping agreements even when neither party is British. Choose the governing law at the start of the review. Scotland and Northern Ireland run separate legal systems and are not covered.

Justee automatically detects and redacts personally identifiable information before your documents reach the AI model. Protected types include:

Personal data:
  • Names, email addresses, and phone numbers
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Corporate and business data:
  • Company and organization names
  • Business addresses and geographic locations
  • SWIFT/BIC codes, IBAN numbers, and bank routing numbers
  • Business license numbers and attorney bar IDs
  • Corporate tax identifiers (EIN)
Detection is best-effort and cannot guarantee catching everything: certain rare identifiers, such as cryptocurrency wallet addresses and MAC addresses, may not be detected automatically. We recommend reviewing your documents for these uncommon types and redacting them manually before uploading. See our Privacy Policy and Terms of Use for details and limitations.

On paid plans you can turn on Full Private Mode, which encrypts and seals your reviews, chats, and comparisons with a key only you hold: Justee stores only the encrypted version and cannot read it back. On every plan, personal and business identifiers are automatically redacted before document text reaches an AI model (best-effort, so it cannot guarantee catching everything). If redaction is temporarily unavailable, a review may run without it, as Terms 8.5 explain. Nothing you submit is used to train AI models.

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Last updated: October 22, 2026

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Justee is not a law firm. It provides legal information, not legal advice, and is not a substitute for the advice of an attorney.