What is an accredited investor and why does it matter?

An 'accredited investor' under SEC Regulation D is an individual with a net worth exceeding $1 million (excluding their primary residence) or annual income exceeding $200,000 ($300,000 jointly with a spouse) in the past two years, or certain institutional investors and knowledgeable employees of investment funds. Securities sold under Regulation D Rule 506(b) can be sold to up to 35 non-accredited sophisticated investors, but Rule 506(c) permits only accredited investors. Selling unregistered securities to non-accredited investors without meeting specific disclosure requirements is a serious securities law violation.

What is the difference between a convertible note and a SAFE?

Both instruments allow an investor to invest now and receive equity in the future. A convertible note is structured as a debt instrument — it has a principal amount, interest rate, and maturity date. If the company hasn't raised a qualifying round by maturity, the investor can demand repayment. A SAFE is not debt — it has no interest, no maturity date, and no right to repayment. A SAFE only converts to equity upon a qualifying event (like a priced funding round or sale of the company). SAFEs are simpler and cheaper to execute, but investors have fewer protections if the company struggles to raise its next round.

What are anti-dilution provisions?

Anti-dilution provisions protect an investor's ownership percentage if the company later raises money at a lower valuation (a 'down round'). Without anti-dilution protection, if an investor buys 10% of a company at a $1 million valuation, and the company later sells shares at a $500,000 valuation, the investor's effective price per share is much higher than new investors are paying. Anti-dilution provisions adjust the investor's conversion price (or issue additional shares) to compensate. 'Broad-based weighted-average' anti-dilution is the most investor-friendly common form, while 'full ratchet' anti-dilution (which adjusts the price down to the lowest price issued) is more aggressive and less commonly used.

Does an investment agreement need to be filed with the SEC?

The investment agreement itself does not need to be filed, but if securities are sold in a Regulation D offering, the company must file a Form D notice with the SEC within 15 days of the first sale. Many states also require a notice filing under their Blue Sky laws. These are relatively straightforward administrative filings that put regulators on notice of the offering. They are different from full registration (which requires an extensive prospectus). Failure to file Form D is technically a violation, but the SEC's primary concern is with the substantive requirements of the exemption, not the filing.

Should I get a lawyer to review this agreement?

Yes — for any investment agreement involving significant amounts of money, consulting a securities attorney is strongly recommended. Securities law violations can result in the investor having the right to rescind (undo) the investment and get their money back, plus civil and potentially criminal penalties for the company and its founders. An experienced securities attorney can ensure the offering is properly structured under Regulation D or another applicable exemption, confirm that the investor is accredited, prepare appropriate disclosure documents, and review the agreement terms to protect both parties' interests.

What governance rights should I give an early investor?

The level of governance rights depends on the size of the investment and the investor's role. For small early-stage investments (under $100,000), information rights (access to financial statements) and pro-rata rights are typically sufficient. For larger investments or lead investors, a board observer seat (non-voting attendance at board meetings) is common. A full voting board seat is generally reserved for lead investors in a priced round who are contributing significant capital and strategic value. Granting too many governance rights too early can complicate future fundraising and reduce the founders' ability to run the company.

Free Investment Agreement Template — Fill Out & Download Instantly

Free — No Sign-Up RequiredPDF & WordUpdated April 6, 2026

⚠️ Legal Disclaimer: This template is attorney-reviewed and built to US legal standards. It does not substitute for professional legal advice. For complex situations, we recommend consulting a licensed attorney.

What Is a Investment Agreement?

An investment agreement is a legally binding contract between an investor and a company (or individual) that documents the terms and conditions under which the investor is providing capital. The agreement covers the investment amount, the type of investment (equity stake, loan, convertible note, or SAFE), governance rights, information rights, anti-dilution protections, and exit provisions. Investment agreements are essential for private placements, angel investments, and early-stage startup funding, providing both the investor and the company with clear, enforceable terms for one of the most important financial transactions in a company's life..

When Do You Need It?

Use an investment agreement when an investor is contributing capital to a company or business venture in exchange for an equity stake, a promissory note, a convertible note that may convert to equity, or a SAFE (Simple Agreement for Future Equity). This agreement is appropriate for friends-and-family rounds, angel investments, and early-stage seed rounds. For larger institutional rounds (Series A and above), more sophisticated term sheets and definitive agreements prepared by securities counsel are typically used.

What's Included in This Template

Investor and company full legal names and addresses
Investment amount and investment type (equity / loan / convertible note / SAFE)
Equity percentage or loan/conversion terms
Use of funds description
Governance rights (board seat, observer rights)
Information rights (quarterly, annual, or on-demand reports)
Anti-dilution protection provisions
Pro-rata rights for future rounds
Exit provisions and liquidity events
Representations and warranties by the company
Signature blocks

How to Fill It Out

Identify the Parties — Enter the full legal names and addresses of the investor and the company receiving the investment. For companies, use the full legal entity name (e.g., 'Acme Technologies, Inc.' not just 'Acme').

Set Investment Amount and Type — Enter the total investment amount and select the investment type. The type determines what the investor receives in return: an equity stake (ownership percentage), a promissory note (loan to be repaid), a convertible note (loan that converts to equity), or a SAFE (right to future equity without immediate conversion).

Configure Type-Specific Terms — Depending on investment type: for equity, enter the ownership percentage; for loans, enter the interest rate and repayment terms; for convertible notes, enter the conversion discount rate and valuation cap; for SAFEs, describe the conversion trigger events.

Define Governance and Information Rights — Specify whether the investor receives a board seat, observer rights, or other governance participation. Set the information rights frequency — how often the investor receives financial reports.

Set Protective Provisions — Enable anti-dilution protection to preserve the investor's ownership percentage if the company issues stock at a lower valuation. Enable pro-rata rights to allow the investor to participate in future funding rounds to maintain their ownership stake.

Legal Requirements & Notes

Investment agreements involve the offer and sale of securities, which is heavily regulated under federal and state law. Critical legal considerations:

Securities Law — Federal Registration: The offer and sale of securities (including equity interests, convertible notes, and SAFEs) in the United States must be registered with the SEC under the Securities Act of 1933, unless an exemption applies. The most common exemption for private placements is Regulation D, particularly Rule 506(b) (up to 35 non-accredited investors, no general solicitation) or Rule 506(c) (accredited investors only, general solicitation permitted). Failure to comply with securities laws can result in civil and criminal liability.

Accredited Investor Requirement: Under SEC Regulation D, an 'accredited investor' generally includes individuals with a net worth exceeding $1 million (excluding primary residence) or annual income exceeding $200,000 ($300,000 jointly with a spouse) in each of the two most recent years. Entities with over $5 million in assets may also qualify. Securities sold to non-accredited investors face additional disclosure requirements.

State Blue Sky Laws: In addition to federal securities law, each state has its own securities registration and exemption requirements ('Blue Sky laws'). Most states have adopted the Uniform Securities Act and provide exemptions for Regulation D offerings, but issuers must typically file notice with the state securities regulator.

SAFE Instruments: SAFEs (Simple Agreements for Future Equity) were developed by Y Combinator as an alternative to convertible notes. They are not debt instruments — they have no maturity date, no interest, and no right to repayment. A post-money SAFE (Y Combinator's current standard form) calculates the ownership percentage at the time of signing based on a post-money valuation cap. Using the Y Combinator standard SAFE forms is recommended for simplicity and investor familiarity.

This template is a starting point only. Investment agreements for any significant amount should be reviewed by a securities attorney experienced in private placements before execution.

Frequently Asked Questions

This agreement covers four common types of early-stage investments: (1) Equity — the investor receives an immediate ownership stake in exchange for the investment; (2) Loan — the investor lends money that the company must repay with interest; (3) Convertible Note — a loan that is intended to convert to equity (rather than be repaid) upon a future funding round or other trigger event; and (4) SAFE (Simple Agreement for Future Equity) — a right to receive equity in a future round without the debt features of a convertible note. Each type has different risk profiles, accounting treatments, and legal implications.

Free Investment Agreement Template — Fill Out & Download Instantly

INVESTMENT AGREEMENT

INVESTOR:

COMPANY:

1. INVESTMENT

2. INVESTOR RIGHTS

3. COMPANY REPRESENTATIONS AND WARRANTIES

4. INVESTOR REPRESENTATIONS AND WARRANTIES

5. GENERAL PROVISIONS

INVESTOR:

COMPANY:

What Is a Investment Agreement?

When Do You Need It?

What's Included in This Template

How to Fill It Out

Legal Requirements & Notes

Frequently Asked Questions

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