Investment Contract Template

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Investment Agreement Page 1
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Updated Dec 13, 2023
~ 9 pages
An investment agreement is a customizable document outlining essential terms and conditions of the investment, such as the amount of money invested, the anticipated return, and any restrictions. The investor agrees to provide financial support to the company, hoping to make a financial profit in the future. Create your investment agreement template on Lawrina and download a ready-made PDF document in minutes.
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This is an equity investment agreement that is entered into between an investor and a company outlining the main terms and conditions of equity investments, such as purchasing shares in a company in exchange for ownership rights.

Investment agreements are contracts between a company and an investor. The investor agrees to provide financial support to the company, hoping to make a financial profit in the future. 

An investment agreement template is a customizable document outlining essential terms and conditions of the investment, such as the amount of money invested, the anticipated return, and any restrictions.

Our investor agreement template includes the vital clauses and provisions and provides a starting point for creating your own contract. 

What Is an Investor’s Agreement?

An investor’s agreement is a legal contract including the terms and conditions under which an investor will provide capital to a business in exchange for an ownership stake. The cash investment contract  template typically contains provisions related to the following:

  • The amount and timing of the investment

  • The ownership percentage the investor will receive

  • The rights and obligations of the investor

Parties of the Investment Agreement

The short form investment agreement template usually involves two parties: the investor and the company seeking capital.

  • The individual or entity providing the funds to the business. The investor can be an individual, a group of individuals, or a company.

  • The business seeking capital from the investor. The company may be a startup, sole proprietor, small business, or large corporation.

Key Terms

The essential terms of an investment agreement sample typically include:

  • Investment amount and transfer date;

  • Valuation of the company; 

  • Return on investment; 

  • Procedure for resolving disputes;

  • Warranties made by the business to the investor; and

  • Conditions and restrictions attached to the investment.

Why Is a Business Investment Agreement Template Important?

A business investment agreement template helps all parties to know and understand the risks and benefits of the contract. Having a legally valid LLC investor agreement template can be crucial for several reasons, including:

  1. Legally protecting the investor and the business.

  2. Providing a clear understanding of both parties’ roles and responsibilities.

  3. Spelling out how to resolve disputes between the investor and the company.

Types of Investment Contracts

While there are several types of investment agreement templates, the most common include:

Stock Purchase Agreement

A stock purchase agreement is a contract for the purchase of company stock. Among other provisions, the contract includes details such as:

  • The stock purchase price

  • The number of shares being purchased

  • Representations and warranties

  • Conditions or restrictions attached to the purchase

Stock Option Agreement

A stock option agreement allows specific investors, commonly employees or prospective employees, to purchase company stock at a predetermined price within a particular time frame. The contract includes specifics, such as the exercise price, the effective and expiration dates, and other conditions.

Convertible Debt Agreement

A convertible debt agreement is a contract between an investor and a company for a loan that can be converted into shares later. The agreement includes specific repayment or conversion details, including the interest rate, conversion rate, maturity date, and other conditions. 

Restricted Stock Agreement

In a restricted stock agreement, the investor buys company shares subject to certain restrictions. One such restriction can be a vesting period, determining how long investors must keep hold of shares before they are allowed to sell or transfer them. Restricted stock agreements are often used in startups that need to raise capital but are not yet ready to offer more traditional investments.

Deferred Compensation

In deferred compensation agreements, investors agree to delay receiving a payout for their investments. A business may consider using such a contract when it is in the early stages of development and lacks cash flow to pay investors. Deferred compensation allows the company to continue operating and potentially provides the investor with a larger return later.

What Is the Difference Between Investment Agreements and Shareholder Agreements?

Both contracts for investing in a small business and shareholder agreements are legal contracts governing investments. However, while both protect investors’ interests, there are some critical differences between the two types of documents.

Each Document’s Main Purpose

An investment agreement template, as we have seen, is a contract between an investor and a business outlining the terms and conditions of the transaction, such as the amount of money invested and the expected return on investment. 

On the other hand, a shareholder agreement sets out the rights and obligations of shareholders in the company, including how the business is run and how crucial decisions are made.


Investment agreement templates typically involve the company and investor(s). On the other hand, shareholder agreements usually only concern the shareholders. While the investor is a party to the investment agreement, they may not necessarily be a party to the shareholder agreement.

Impact on the Business

The impact on the business depends on whether the parties enter into an investment or shareholder agreement. Investment agreements usually only govern investment terms and how they will be used to grow the business. On the other hand, shareholder agreements can have a longer and deeper impact on a business as they establish how the company is managed.

To summarize, investment agreements and shareholder agreements are entered into by different parties and serve quite different purposes. While investment agreements primarily focus on the terms of investment, shareholder agreements determine the rights and obligations of shareholders and can have wide-reaching consequences for a company’s governance. 

What To Include in an Investor Agreement Template

According to the U.S. Chamber of Commerce, an investor agreement must include the names and addresses of the parties, the sum invested, and all parties’ signatures, among other clauses. Here’s what an investment agreement template should include in detail:

The Identity of the Parties

The parties involved in a free investment agreement, including the business and the investor, must be properly identified. The investment agreement template should include both parties’ full names and addresses, among other information.

Tranche Payments

Tranche payments are a way to divide an investment into smaller parts and release funds over time rather than the entire amount at once. If the investment is made in tranches, the agreement must outline payment details, such as the amount of each tranche and the date of each payment.


In a free investment agreement template, the company issues warranties to the investor. Such warranties may include the following:

  • Assurances that the company has the legal right to conduct business;
  • Declaration that the financial statements are accurate; and
  • Details of liabilities and contracts.

Including warranties in investment agreements allows investors to help fund a company with confidence and knowledge that their investment is secure.

Board Representation

Some investors prefer to be involved in managing the businesses they invest in. Board representation clauses in an investor agreement allow investors to attend board meetings and have a say in important decisions.

Restrictive Covenants

Restrictive covenants can protect the interests of investors by limiting what a business can and cannot do. Such covenants could include:

  • Restricting a company’s ability to accrue debt

  • Limiting mergers and acquisitions

  • Restricting contracts with competitors

  • Limiting payouts


Confidentiality provisions in investment agreements protect sensitive company specifics, such as intellectual property, financial information, and customer details. The investor agreement must specify the confidential information and illustrate how the company seeks to protect it.

Exit Strategy

Your investment agreement template should contain exit strategies for investors. An exit strategy can include clauses for selling shares, requiring a buy-back, or taking the company public. Investor agreements with exit strategies give investors greater confidence and certainty about their potential returns. 

How To Write an Investor Agreement

A legally enforceable investment agreement must be comprehensive, clear, and it must adhere to the applicable federal and state laws. Key elements to consider when drafting an investor agreement include:


An investment agreement template must clearly describe the contract’s terms and the rights and obligations of the two parties. The document must also adhere to the relevant laws and regulations in your jurisdiction and include instructions on how and under what conditions the parties can modify or terminate the agreement.


Consider including a provision for tranche payments in your investment agreement template. Tranches can be crucial for more significant investments. An investor may decide to stagger payments as and when a company reaches certain milestones or goals. Tranche payments can provide an investor with some security and incentivize a business to achieve its goals.


Warranties are an essential component of an investment agreement template. Depending on the type of business, warranties can cover various issues, from financial performance to legal compliance.

Investor Rights

An effective free investment agreement must clearly outline the rights and obligations of the investor. When creating an investment agreement template, you may want to include rights such as receiving regular updates, financial reports and participating in key decision-making processes.

Participation rights

Participation rights can provide an essential incentive for investors and should be included in an investment agreement template. Participation rights can consist of:

  • Attending board meetings

  • Voting

  • Nominating a representative to the board


Consider including a confidentiality clause when drafting an investment agreement, which should spell out the information considered confidential and how it will be protected.

Covenants Not to Compete

You may wish to include covenants not to compete in your investment agreement template. Such covenants are agreements by the company not to engage in business or activities competing with an investor’s activities.

Financial Information

When writing an investment agreement template, consider including provisions for sharing financial information with the investor, such as:

  • Regular financial reports

  • Audited financial statements

  • Sharing other critical financial metrics

Board Representation

Your free investment agreement template should outline the process for nominating and electing board members and the rights and obligations of these members.

Boilerplate Clauses

Boilerplate clauses can cover governing law, jurisdiction, and dispute resolution, among other issues. Inserting such clauses into the investment agreement template can ensure that the contract is enforceable.

Why Use an Investment Agreement

An investment agreement can be a critical tool to help companies find funding from investors. 

Common Use Cases

Here are some common use cases where an investment agreement is recommended:

  • Startups
    Startups typically need significant capital to begin operations. An investment agreement can provide a framework that helps secure investment from angel investors or venture capitalists.
  • Expansion
    Sometimes, an established company requires extra funding to expand into new markets or develop a new product line. An investment agreement helps the business secure the capital needed for expansion while protecting the interests of investors.
  • Real Estate
    Commercial property owners and real estate developers may need to secure considerable investments to fund large-scale projects. An investment agreement can help secure financing from private equity firms, hedge funds, or other potential investors.

When Not To Use an Investment Agreement

While an investment agreement can be critical for securing funds, there are some instances where such an agreement is unnecessary or inappropriate:

  • Small Investments: An investment agreement template will be too complex and time-consuming for most small investments, such as crowdfunding campaigns or personal loans. 

  • Friends and Family: A simple loan agreement or promissory note is typically sufficient when seeking investment from friends or family members.

  • Publicly Traded Companies: Publicly traded companies may not require an investment agreement as they have access to capital markets and are subject to securities regulations.

To summarize, using great care can be critical in writing investment agreements, as they are legally binding contracts, which can have significant consequences for both investors and businesses. 

Also Read

Frequently Asked Questions

What does an investor’s rights agreement do?

An investor’s rights agreement can include provisions protecting an investor’s contribution, such as anti-dilution rights, information rights, and voting rights. The contract can also include provisions related to the company’s governance, such as board representation and consent rights.

Generally, an investor’s rights agreement helps to spell out clear terms between investors and the company, reducing the risk of disputes or misunderstandings.

What is a SAFE investor agreement?

Startups often use a SAFE (Simple Agreement for Future Equity) agreement to raise capital. The contract allows investors to provide funding to companies in exchange for the promise of future equity in the company without requiring a company valuation at the time of investment. SAFE agreements are particularly popular with startups as they are usually simpler and less demanding than investment agreements.

Do you have to pay back your investors?

Whether or not you have to pay back your investors depends on the details of the investment agreement. In many cases, investors receive a return on their investment in a share of the company’s profits or when it is eventually sold. However, depending on the clauses in the investment agreement, companies must sometimes repay the investment principal plus interest.

What is an investment agreement in private equity?

Institutional investors, such as private equity firms or pension funds, typically make private equity investments. Such investments usually involve significantly larger sums than angel or venture capital investments. Private equity agreements generally include provisions involving the company’s governance, management, and control, including terms relating to investors’ investment returns. 

Does an investment contract need to be notarized?

Whether an investment contract needs to be notarized will depend on the applicable state laws. Notarization is not usually required for an agreement to be legally binding. However, notarizing the contract can be an excellent way to verify the parties’ identities and provide evidence that the contract was signed in good faith. Consulting with an attorney can ensure that your investment contract meets the legal requirements in your jurisdiction.