Are you starting a business? Starting one is a huge gamble and you need to prepare countless things before you can commence operating your business. One of the things you need to prepare is the funding for your startup. You need to look for people to help you fund your startup, such as angel investors (which consist of close friends or family or relatives who have extra funds to help you out or any investors who are interested to pursue startup ventures) and convince them to invest in your business by providing a detailed financial and business plan. If you’ve impressed these angel investors enough to convince them to invest in your business, you need to create a contract that will signify their involvement in your business and spell out the obligations you need to do for the startup business. Read the article to know how to make a startup investor contract.
5+ Startup Investor Contract Samples
1. Startup Investor Agreement Contract
2. Company Startup Investor Contract
3. Startup Provision Investor Contract
4. Sample Startup Investor Contract
5. Startup Legal Services Investor Contract
6. Standard Startup Investor Contract
What is a Startup Investor?
A startup business is a newly established private company, usually less than five years old that starts with very small operations is designed to upgrade quickly.
A startup investor is a person who can help a business push through and open successfully since they buy a certain portion of the business that will serve as their investment. They provide capital to a business owner in exchange for equity, which means that the portion they bought of the business is now owned by them and they have the right to receive future profits of the business.
How to Make a Startup Investor Contract
1. Write the Opening Sections of the Contract
The first part of the contract must state the date that the agreement is entered into including the names and addresses of the parties involved in the contract.
When you write the following articles of the contract, list them one at a time. For example, they should be listed as “Article 1”, “Article 2”, etc.
2. Note the Payment Terms
This section should discuss how pay will be given and received. Discuss the details of how the investment is given, how much the amount will be given, when the amount will be given, and what bank account details will be listed here. If needed, you can attach documents that list the dates and amounts of each payment transfer into the receiving bank account.
3. Identify Any Deliverables
This section should identify what obligations both parties need to comply with. These will serve as the deliverables. Don’t forget to include the due date for the deliverables too.
4. State the Terms and Termination of the Contract
This section must state the length of time that the contract is valid and the length of time for the investor to make the financial contribution and to receive the agreed-upon return on investment. You also need to explain the details regarding the termination of contract and in what manner the parties can end the contract early.
5. Sign the Contract
Conclude the contract by putting the signature lines where the parties can sign the contract, include their names, titles, addresses, and contact information that validates the contract.
FAQs
What are the different types of investments?
The different types of investments are:
- Growth investments
- Shares
- Property
- Defensive investments
- Cash
- Fixed interest
How do investors get paid back?
Investors are usually paid back with their equity in the company they invested in, or the amount they own of the business that they own based on their investment.
How much do investors invest in startups?
Typical investments made by investors on startups can vary between $15,000 to $25,000 but they can go lower or higher than these numbers, depending on what the investor is willing to invest in.
Do investors get their money back if the business fails?
Unfortunately, investors will lose their money if a business flops unless a small portion of their investment can be redeemed through sales of the business assets.
Once you’re done drafting the contract, make sure to review it first and check to see if there are any errors or wrong information that you’ve accidentally input. Discuss the contract with your investors first before and go over all the terms before you sign the contract to avoid miscommunications and misunderstandings. To help you get started making the contract, download our free sample templates above to use as your guide!
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