Investment Agreement Generator

What is an Investment Agreement?

An Investment Agreement is a legal contract between an investor and a company or entrepreneur that outlines the terms and conditions of a capital investment. The agreement defines the investment amount, company valuation, equity stake, investor rights, management provisions, and exit strategies for the investment relationship.

Key Sections Typically Included:

• Parties and Recitals
• Investment Amount and Valuation
• Equity or Security Type Issued
• Ownership Percentage and Structure
• Representations and Warranties
• Investor Rights and Protections
• Information and Inspection Rights
• Board Representation
• Voting Rights and Reserved Matters
• Anti-Dilution Provisions
• Dividend Rights
• Tag-Along and Drag-Along Rights
• Exit and Liquidation Preferences
• Confidentiality and Non-Disclosure
• Restrictive Covenants

Why Use Our Generator?

Our Investment Agreement generator helps you create a comprehensive document that clearly establishes the parameters of capital investment. By defining investment terms, ownership rights, governance provisions, and exit mechanisms upfront, both the investor and the company can establish a mutually beneficial relationship with clear expectations and protections.

Frequently Asked Questions

• Q: What investor rights and protections should be included?
  • A: Common investor protections include pre-emptive rights (right to maintain ownership percentage in future funding rounds), information rights (access to financial statements and reports), anti-dilution protection, board representation or observation rights, and protective provisions requiring investor approval for major corporate decisions like issuing new shares or selling the company.
• Q: How should company valuation be addressed?
  • A: The agreement should clearly state the pre-money valuation (company's value before investment) and post-money valuation (value after investment), and how these figures were determined. It should also specify how the valuation translates to the equity percentage the investor receives and define terms like "fully diluted basis" when calculating ownership.
• Q: What exit provisions should be included?
  • A: Exit provisions should address potential liquidity events like acquisition or IPO, including any liquidation preferences (investors getting paid before common shareholders), participation rights (whether investors can also participate in remaining proceeds after getting their preference), and redemption rights (ability to force company to buy back shares after a certain period).