Investment Agreement

“Fledgling” companies or beginner entrepreneurs often attract investor-partners at the beginning stage of their ventures. This is done in order to obtain the funds to open a business and continue developing it. In this case, it's prudent for the parties to conclude an investment agreement.

An investment agreement entails an agreement to provide funds or property in order to support a particular project. The participants of the transaction agree on what amount the investor will provide said support and under which conditions while the recipient agrees on what the obtained funds will be used for and under which conditions they will return the funds.

The following are core features of an investment agreement:

• a description of how exactly the provided funds will be used;
• an indication of the form of taxation (operations with property or funds obtained within the bounds of such agreements are not subject to VAT);
• an indication of how various employed professionals will be utilized;

The terms of the investment agreement must envisage:

• the scope of the agreement;
• the goals in entering the partnership;
• the conditions for managing the company and decision-making;
• the amount of and conditions for obtaining income;
• the goal and conditions for admitting new partners;
• the entry of additional investors;
• conditions for exiting the partnership.

The procedure for concluding an investment agreement:

• Write up the investment agreement: The agreement must feature the goals for which the finances will be spent; a chart for the completion of works and the entry of financial funds; the conditions for distributing income after project works are completed, liability limitations, the procedure for providing reports, and the procedure for using financing funds.
• Coordinate the terms of the agreement: At this stage, the parties discuss the agreement project, create their own versions of it, and correct the terms in consideration of each other's comments.
• Getting the agreement signed: After it's signed, the achieved agreement acquires legal force and a countdown begins of the allocated time to complete the project.

Starting a business without startup capital is not always an easy feat and it really isn't for all businesses. But finding an investor is easy as can be. When taking that route, you also need to properly outline your cooperation with them and “solidify” the achieved accords with them in writing as thoroughly as possible.

The Investor needs to weigh all the positives and negatives before risking their money, ensure the ability to monitor the project during the course of its implementation, and guarantee their rights to obtain income.

The lawyers at Word and Law, LLC, are prepared to provide you assistance in writing up a proper, detailed agreement tailored to your request. This will not be a “standardized” template agreement, like many which are just downloaded off the internet, but one that corresponds to the realities of your business, a working tool that can protect your rights and will stand up in court. Don't wait. Give us a call or shoot us a message!