Investment agreement: early-stage investment

by Practical Law Corporate

A standard document that is a comprehensive investment agreement for an early-stage venture capital investment in a private company limited by shares. This standard document records the terms on which an investor subscribes for new shares, and regulates the ongoing contractual relationship between the investor, the founders, and the company. It provides a robust framework covering key aspects of the investment, including extensive warranties from the company and (optionally) its founders, and limitations on liability for warranty claims. The agreement establishes crucial investor protection mechanisms such as information rights, board representation through an Investor Director, and a list of reserved matters requiring Investor Consent. Furthermore, this standard document includes undertakings and restrictive covenants from the founders, provisions for future funding rounds, and a framework for an eventual exit, such as a sale or an Initial Public Offering (IPO). It is designed to work alongside new articles of association and requires new shareholders to be bound by its terms by executing a Deed of Adherence. For an aligned set of articles of association, see Standard document, Articles of association (Model Articles): early-stage investment.