A seed capital agreement refers to a document that clearly defines the terms of a given investment. Its length varies between one and five pages, and it is usually a non-binding document. The only mandatory parts may be confidentiality or exclusivity clauses. Please consider pre-emption rights granted to investors or any right of approval for future financing cycles. If you have several angels, you can create a corporate governance regime that will include an independent assessment of the alternatives available and would offer some protection against investor appreciation or opportunism. These types of agreements are used by entrepreneurs, large law firms and investors at all stages of start-up creation and financing, from the development of ideas to the sale of shares and banknotes. Ideas Phase: For example, if you and a friend are working on an idea that could turn into a start-up, you can sign a cooperation contract with the founders, in which you will expose your working relationship, confirm the expectation that the work you are doing together will belong to a future entity, and outline steps of communication and conflict resolution that you will take to get you through all the quarrels that may occur. If you invest money in your potential business, you can sign a business creation contract (or a joint purchase agreement if you already have a contract) outlining precisely how much money each founder invests in the potential business, what shareholding everyone receives one after the other and who owns the intellectual property that was created. If you have a mentor or advisor, you can sign a standard model for the founding advisors with them and determine how they will help you and what compensation they will receive. Early stage: When you find a small amount of capital to start things, usually by friends, family or angels, it is customary to use convertible bonds, starting with a convertible credit note sheet and a Memorandum of Terms for Sale of Convertible Promissory Notes.
From the point of view of a start-up founder, a seed investor agreement is almost always necessary when it comes to people or companies that want to invest in your idea. When writing, it is important that the founder has a few clear things in mind: a seed investor agreement refers to a document that clearly defines the terms of a given investment. Read 3 min This is a simple terminology sheet for use when a company takes capital from friends and investors in family seeds.