Sample Equity Investment Agreement

For example, the founders of Magnificent Puzzles have decided to turn their small business into an international chain, and they are looking for $500,000 in stakes. The company was valued at $2 million. Venture capital firm Equity Excitement decides to invest $250,000, which means they earn 12.5 percent of equity through The Magnificent puzzles. In the future, when the value of Magnificent puzzles doubles, the value of Equity`s initial investment will also have doubled. Equity Excitement`s investment is now worth $500,000. An equity investment agreement occurs when investors agree to give money to a company in exchange for the possibility of a future return on their investment. Equity is one of the most attractive types of capital for entrepreneurs, thanks to wealthy investor partners and no repayment plan. However, it requires the most effort to find it. Fundraising with equity means that investors offer money to your business in exchange for a stake in the business, which will probably be more valuable if your business succeeds. The entity does not have the right to cede, sell, modify or amend the agreement unless the client`s explicit written consent may be withheld for any reason.

The customer may freely transfer the client`s rights and obligations under this contract. An equity investment agreement is reached when investors agree to give money to a company in exchange for the possibility of a future return on their investment.3 min: “For all the company`s services under this agreement, the customer must compensate the company at USD 80 per hour, including $60 in cash and $20 in shares. Include relevant information about the types of actions or their transfer here. Example: Series E preferred shares, subject to adjustment to dilution, in accordance with the common share social agreement. During the lifetime (as defined below), the client accepts relevant information about the types of shares or their transfer by the customer to replace equity offsets in the form of an insert. Examples: Series E shares preferred shares at $price per share and in accordance with the agreement on the following related common shares, etc. For all services provided by the company under this contract, the customer must compensate the company in accordance with Schedule A (cash/equity payment). On the other hand, adopting investment funds from family and friends can create tensions in relationships, especially if you are not able to offer a return on their investments.

Finding the right investor can also take much more time and effort than applying for a loan.