In the case of an investment contract, the individual must not be a new shareholder, but may be a shareholder or an external investor. An investment agreement and a shareholders` pact are two often confusing legal documents, often used by large and small businesses. The distinction between the two allows you to fully integrate the investment efforts of new shareholders and consolidate the ownership rights of your company. An investment agreement primarily governs the rights and obligations of the investor who arrives. It protects the incoming investor from entering a dubious start-up and defines the payment method of the new investor or investors. The investor may decide not to invest in the business (or in additional tranches) if it does not meet certain requirements. In principle, it is a contract between business owners and investors who wish to acquire ownership of the business. It is rare for startups to be able to self-finance, as most growing companies have to burn capital at a rate that goes far beyond the financial possibilities of their founders, family and friends. Although the safe may not be suitable for all financing situations, conditions must be balanced with the interests of the start-up and investors in mind. As with the original safe, there are always trade-offs between simplicity and completeness, so that while not all Edge cases are addressed, we believe that the safe covers the most relevant and common issues.
Both parties are encouraged to have their lawyers` safes checked if they wish, but we believe it provides a starting point that can be used in most situations without change. We believe in our first-hand experience, seeing and helping hundreds of companies raise funds each year, as well as the thoughtful feedback we received from founders, investors, lawyers and accountants with whom we shared the first designs of the post-money safe. Since we are focusing here on start-ups, the following discussion assumes that the investment will be in a private environment. A commitment clause is one of the most common provisions found in investment agreements that require subsequent takers of the action to be subject to the terms of the agreement.