As part of the “SeedFast” webinar series, Konsento and Lex Futura present an overview of the most important steps in a financing round. After the legal due diligence was highlighted in the last session, an overview of the investment agreement is presented here.
1. What is an investment agreement?
The investment agreement is a key document in a financing round in which the existing shareholders, the company and the new investors set out the key terms of the financing round in a legally binding contract.
In principle, an investment agreement is agreed after the legal due diligence has been carried out and in parallel to the shareholders' agreement.
2. Contents of the investment agreement
In addition to determining the amount and type of investment and the company shares to be transferred in return, responsibilities and protective clauses for both parties are also agreed in an investment agreement.
Provisions on the capital increase:
- Determination of the number of new company shares to be issued and the issue price
- Determination of whether the investment is to be paid in cash or offset by the conversion of loans
- Agreement on a waiver of subscription rights
- Determination of the expiry of the capital increase, or determination of the dates of the Extraordinary General Meeting, etc.
Determination of the closing conditions
- It is regularly stipulated that all shareholders must sign a shareholders’ agreement
- Freelancers, consultants or employees are often required to sign an intellectual property rights agreement
Warranties
- Assurances by the sellers or founders that the financial statements, reports and other documents provided are true and fair
- Serves to minimize risk and gives investors the opportunity to access certain legal remedies
- Agreement as to whether only the company is liable or whether the founders should be personally liable
- Definition of upper liability limits or limitations of liability
3. Conclusion
In summary, it can be stated that an investment agreement should regulate the modalities of the financing round and thus provide a certain degree of security for all parties involved. Particularly with regard to the waiver of subscription rights, it is worth getting all parties on board so that conflicts that may arise later can be avoided or resolved more easily.
Interested? Then …
… watch the video!
What exactly is an Investment Agreement? What terms should founders be aware of? And how can you negotiate confidently with investors?
Then click your way into our YouTube webinar: Part 5 - Investment Agreement | SeedFast-Webinar financing round
… read the next blog post!
The Investment Agreement is signed – but clear rules are still needed for collaboration with your investors.
In our next blog post, we’ll dive into the Shareholders' Agreement:
- How does it structure the relationship between founders and investors?
- What rights, obligations, and decision-making rules apply?
- And how can founders safeguard their vision?
Read more: Following soon!
… plan your financing round with us!
Thinking about raising capital?
We support you in making your round smooth, investor-ready and compliant – without the legal headaches.
Start your inquiry at www.seedfast.ch.
… and if you have questions: reach out to us!
This format is brought to you by:
- Konsento – the platform for legally secure company documents
www.konsento.ch - Lex Futura – the law firm for innovative legal support for startups
www.lexfutura.ch
