If you`re a startup founder looking for funds to grow your business, you may be considering approaching an angel investor. Angel investors are typically high net worth individuals who are willing to invest in early-stage businesses in exchange for equity in the company.
However, before you approach an angel investor, it`s important to have an angel investor agreement template in place. This document outlines the terms and conditions of the investment, as well as the expectations of both the investor and the founder.
Here are a few elements that should be included in an angel investor agreement template:
1. Investment amount and equity percentage: This section of the agreement outlines the amount of money the investor is willing to invest in the company and the percentage of equity they will receive in exchange for their investment.
2. Use of funds: The agreement should include a section outlining how the funds will be used by the company. This helps the investor ensure that their money is being used wisely and in a way that aligns with their investment goals.
3. Terms of the investment: This section outlines the terms of the investment, such as the length of time the investor will hold their equity and any conditions that must be met for the investor to receive their return on investment.
4. Board of Directors: If the investor will have a seat on the company`s board of directors, this should be outlined in the agreement.
5. Redemption and buyout provisions: The agreement should also include provisions for the redemption or buyout of the investor`s equity. This outlines the process by which the investor can sell their equity back to the company or be bought out by other investors.
Having an angel investor agreement template in place can help ensure that both the investor and founder are on the same page in terms of expectations and responsibilities. It can also help prevent any misunderstandings or disputes down the line.
If you`re not experienced in drafting legal agreements, it`s best to work with a lawyer or legal professional to create an angel investor agreement template that meets your specific needs and protects your interests. With the right agreement in place, you can move forward with confidence and focus on growing your business with the support of your new investor.