Investment clause: Copy, customize, and use instantly
Introduction
An investment clause outlines the terms under which one party will provide financial resources or capital to another party. It defines the amount, purpose, and conditions of the investment, as well as the rights and obligations of both parties in relation to the investment.
Below are templates for investment clauses tailored to different scenarios. Copy, customize, and insert them into your agreement.
Standard investment clause
This variation applies when outlining a standard investment arrangement.
[Party Name] agrees to invest [amount] in [other party’s company/project] for the purpose of [specific purpose, e.g., business expansion, product development]. The investment will be made in the form of [equity/debt] and is subject to the terms and conditions set forth in this Agreement.
Equity investment clause
This variation applies when the investment is in the form of equity.
[Party Name] agrees to make an equity investment of [amount] in exchange for [X]% ownership in [other party's company]. The investment will be made on or before [date], and [Party Name] will be entitled to [specific rights, e.g., voting rights, dividends] as a shareholder.
Debt investment clause
This variation applies when the investment is in the form of a loan.
[Party Name] agrees to provide a debt investment of [amount] to [other party], with an interest rate of [X]% per annum, payable on [payment schedule]. The loan will be repaid in full by [date], and failure to meet the repayment schedule will result in [penalties, interest increases, or other consequences].
Convertible investment clause
This variation applies when the investment is convertible into equity.
[Party Name] agrees to make a convertible investment of [amount] in [other party], which will convert into equity ownership at a later date upon the occurrence of [specific trigger event, e.g., next funding round, company acquisition]. The conversion rate will be [conversion ratio], and the terms are subject to [further agreements or conditions].
Conditional investment clause
This variation applies when the investment is contingent on certain conditions.
[Party Name] agrees to invest [amount] in [other party], contingent upon [specific conditions, e.g., reaching a particular milestone, securing additional funding, regulatory approval]. If these conditions are not met by [date], the investment will be rescinded, and no funds will be transferred.
Investment with milestone-based release clause
This variation applies when the investment is released in stages based on milestones.
[Party Name] agrees to invest [total amount], with the investment to be released in stages as follows:
- [X amount] upon completion of [milestone 1].
- [X amount] upon completion of [milestone 2].
- [X amount] upon completion of [milestone 3]. Each milestone must be met and verified before the subsequent investment installment is made.
Investment for equity buyback clause
This variation applies when the investment includes an option for equity buyback.
[Party Name] agrees to invest [amount] in exchange for [X]% equity in [other party]. [Other party] may repurchase this equity at a valuation agreed upon by both parties after [X] years from the date of investment. The buyback price will be [agreed-upon formula or valuation method].
Investment for joint venture clause
This variation applies when the investment is part of a joint venture agreement.
[Party Name] agrees to invest [amount] into the joint venture formed between [Party Name] and [other party]. The investment will be used for [specific purpose], and both parties will share profits and losses in proportion to their equity stakes in the joint venture, which is [X]% for [Party Name] and [Y]% for [other party].
Investment for future rounds clause
This variation applies when the investment is committed for future funding rounds.
[Party Name] agrees to invest [amount] in [other party] with the understanding that additional investments will be made in future funding rounds based on [other party]’s performance and growth. The terms for these future investments will be negotiated at the time of each round.
Investment with exit strategy clause
This variation applies when the investment includes an exit strategy for the investor.
[Party Name] agrees to invest [amount] in [other party] with the understanding that the investment will be exited through [specific exit strategy, e.g., public offering, acquisition] within [X] years from the date of investment. [Party Name] will be entitled to a [specified share or percentage] of the proceeds from the exit event.
Investment for specific project clause
This variation applies when the investment is intended for a specific project.
[Party Name] agrees to invest [amount] for the purpose of funding [specific project], including [project components]. The investment is designated solely for this project and any unused funds must be returned or repurposed with [Party Name]'s approval.
Investment with preferred return clause
This variation applies when the investor receives a preferred return on the investment.
[Party Name] agrees to invest [amount] in [other party], with the understanding that [Party Name] will receive a preferred return of [X]% on the investment prior to any distribution of profits to other stakeholders.
Investment in exchange for royalties clause
This variation applies when the investment is made in exchange for royalties.
[Party Name] agrees to invest [amount] in [other party], in exchange for [X]% royalty payments on [specific products or services] for [X] years. Royalties will be calculated based on gross revenue and paid quarterly.
Investment with exit rights clause
This variation applies when the investor has specific rights to exit.
[Party Name] agrees to invest [amount] in [other party], and [Party Name] will have the right to exit the investment at any time after [X] years, through a sale of equity, merger, or liquidation, at a price agreed upon by both parties or determined by an independent valuation.
Investment with board seat clause
This variation applies when the investment entitles the investor to a seat on the board.
[Party Name] agrees to invest [amount] in exchange for [X]% equity in [other party]. As part of this investment, [Party Name] will be entitled to appoint one representative to [other party]’s board of directors, which will hold [X]% of voting power.
Investment with anti-dilution protection clause
This variation applies when the investment includes anti-dilution protection.
[Party Name] agrees to invest [amount] in [other party] and will receive anti-dilution protection. If [other party] issues new shares at a price lower than the original investment price, [Party Name]’s equity will be adjusted to maintain their percentage ownership.
Investment with no immediate repayment clause
This variation applies when the investment does not require immediate repayment.
[Party Name] agrees to provide a loan investment of [amount] to [other party] with no immediate repayment required. The principal and interest shall be due at the end of [X] years, with the interest rate set at [X]% per annum.
Convertible debt investment clause
This variation applies when the investment is a convertible debt that may be converted into equity.
[Party Name] agrees to provide a convertible debt investment of [amount] to [other party]. This debt will convert into equity upon [trigger event], with a conversion price of [X] per share. The conversion terms will be reviewed and mutually agreed upon prior to the conversion.
Investment with milestone-based funding clause
This variation applies when investment funding is provided based on milestones.
[Party Name] agrees to invest [amount] in [other party], with the investment being released in stages as the following milestones are met:
- Milestone 1: [amount upon completion of milestone]
- Milestone 2: [amount upon completion of milestone] Each milestone must be completed to [Party Name]’s satisfaction before subsequent funds are released.
Investment for product development clause
This variation applies when the investment is for product development.
[Party Name] agrees to invest [amount] for the sole purpose of funding the product development efforts of [other party], including research, prototyping, and initial production. The investment will be used exclusively for this purpose, and [Party Name] will receive regular updates on the progress of the project.
Investment with limited partnership clause
This variation applies to an investment structured as a limited partnership.
[Party Name] agrees to invest [amount] in [other party] in the form of a limited partnership, with [Party Name] acting as a limited partner. The partnership will allow [Party Name] to share in profits and losses but limits their liability to the amount of their investment.
Investment in exchange for profit-sharing clause
This variation applies when the investment is in exchange for a profit-sharing arrangement.
[Party Name] agrees to invest [amount] in [other party], in exchange for [X]% of the net profits generated by [specific business activities or products]. The profit-sharing arrangement will continue for [X] years or until the investment is repaid, whichever occurs first.
Investment with liquidation preference clause
This variation applies when the investor has liquidation preference.
[Party Name] agrees to invest [amount] in [other party] in exchange for equity, with a liquidation preference. In the event of a liquidation, sale, or merger, [Party Name] will be entitled to receive their initial investment back, plus a [X]% return, before any remaining proceeds are distributed to other shareholders.
Investment with redemption rights clause
This variation applies when the investor has the right to redeem the investment.
[Party Name] agrees to invest [amount] in [other party], with the right to redeem the investment at any time after [X] years at the original investment amount, plus any accrued interest. Redemption must be requested in writing at least [X] days prior to the desired redemption date.
Investment in exchange for convertible preferred shares clause
This variation applies when the investment is in exchange for convertible preferred shares.
[Party Name] agrees to invest [amount] in [other party] in exchange for convertible preferred shares. These shares will carry [X]% annual dividends and can be converted into common shares at a conversion rate of [X] per share, at the investor's discretion.
Investment with return on investment (ROI) target clause
This variation applies when the investment includes a target ROI.
[Party Name] agrees to invest [amount] in [other party], with the expectation of a minimum return on investment (ROI) of [X]% annually. If the agreed ROI is not achieved, [Party Name] reserves the right to renegotiate the terms of the investment or exit the agreement.
Investment with non-compete clause
This variation applies when the investment includes a non-compete condition.
[Party Name] agrees to invest [amount] in [other party], on the condition that [other party] agrees not to engage in any business that directly competes with [Party Name] for the duration of the investment period and for [X] years following the investment's exit.
Investment with annual review clause
This variation applies when the investment includes an annual review.
[Party Name] agrees to invest [amount] in [other party], with the terms of the investment being subject to an annual review. At the end of each year, both parties will meet to discuss the performance of the investment and any adjustments that may be necessary for the ongoing agreement.
Investment with specific use of funds clause
This variation applies when the investment is designated for specific uses.
[Party Name] agrees to invest [amount] in [other party], with the funds allocated solely for [specific purpose, e.g., capital expenditures, marketing, hiring staff]. Any deviation from this specified use must be approved by [Party Name] in writing.
Investment with exit clause for investor clause
This variation applies when the investment includes an exit clause for the investor.
[Party Name] agrees to invest [amount] in [other party], with the understanding that [Party Name] has the right to exit the investment at any time after [X] years by selling the shares to [other party] or a third party at a price based on the fair market value of the company at the time of exit.
Investment with operational involvement clause
This variation applies when the investor has operational involvement.
[Party Name] agrees to invest [amount] in [other party] in exchange for the right to be involved in the day-to-day operations of the business. [Party Name] will have the right to appoint a member to the management team and participate in strategic decision-making processes.
Investment with right of first refusal clause
This variation applies when the investor has a right of first refusal.
[Party Name] agrees to invest [amount] in [other party], with a right of first refusal for any future equity offerings. If [other party] decides to issue additional shares or securities, [Party Name] will have the option to purchase them before they are offered to any third party.
Investment in exchange for debt service clause
This variation applies when the investment is in exchange for debt service.
[Party Name] agrees to invest [amount] in [other party], with the condition that [other party] makes regular payments to service the debt. The payment terms will include [interest rate] and a repayment schedule that concludes no later than [X] years from the investment date.
Investment with annual dividend clause
This variation applies when the investment includes an annual dividend payment.
[Party Name] agrees to invest [amount] in [other party], in exchange for preferred shares that pay an annual dividend of [X]% of the invested amount. Dividends will be paid annually on [specific date], and if dividends are not paid, the payment will accrue interest at [X]% annually.
Investment for strategic partnership clause
This variation applies when the investment is made as part of a strategic partnership.
[Party Name] agrees to invest [amount] in [other party] to form a strategic partnership. This investment will enhance both parties' capabilities in [specific area], and [Party Name] will be entitled to [specific benefits, e.g., co-marketing opportunities, shared technology].
Investment with limited liability clause
This variation applies when the investment is structured with limited liability for the investor.
[Party Name] agrees to invest [amount] in [other party], and its liability in connection with this investment will be limited to the amount invested. [Party Name] will not be responsible for any additional financial obligations or debts incurred by [other party].
Investment for intellectual property development clause
This variation applies when the investment is designated for developing intellectual property.
[Party Name] agrees to invest [amount] in [other party] for the exclusive purpose of funding the development of intellectual property, including patents, trademarks, or proprietary technology, as outlined in the investment schedule.
Investment with return on exit clause
This variation applies when the investment has an exit return condition.
[Party Name] agrees to invest [amount] in exchange for equity in [other party], with the condition that upon an exit event (e.g., acquisition, IPO), [Party Name] will receive [X]% of the proceeds from the sale or liquidation, subject to the agreed exit strategy.
Investment with profit-based interest clause
This variation applies when the investment carries a profit-based interest component.
[Party Name] agrees to invest [amount] in [other party] at an interest rate based on the net profits of the business. The rate will be [X]% of the annual profits, and payments will be made on [frequency], with a maximum interest cap of [X]%.
Investment for expansion clause
This variation applies when the investment is made for business expansion.
[Party Name] agrees to invest [amount] for the purpose of expanding [other party]’s operations into new markets. The funds will be used to cover costs such as infrastructure, staffing, and marketing efforts related to expansion.
Investment with voting rights clause
This variation applies when the investment grants voting rights.
[Party Name] agrees to invest [amount] in [other party] in exchange for [X]% equity, which will grant [Party Name] the right to vote on certain corporate matters, including board decisions, financial strategies, and business operations.
Investment for operational improvements clause
This variation applies when the investment is for operational improvements.
[Party Name] agrees to invest [amount] to fund operational improvements at [other party], including upgrading technology, improving processes, and enhancing workforce training. The investment will be used to increase efficiency and reduce costs.
Investment with performance milestones clause
This variation applies when the investment is contingent on meeting performance milestones.
[Party Name] agrees to invest [amount] in [other party], with the full amount released upon the successful completion of the following performance milestones:
- Milestone 1: [date]
- Milestone 2: [date] If [other party] fails to meet these milestones, the investment will be withheld until they are achieved.
Investment with guaranteed return clause
This variation applies when the investment guarantees a fixed return.
[Party Name] agrees to invest [amount] in [other party] with a guaranteed return of [X]% per annum, payable quarterly. In the event that [other party] fails to meet its financial obligations, [Party Name] will receive the guaranteed return regardless of [other party]'s financial performance.
Investment for technology development clause
This variation applies when the investment is intended for technology development.
[Party Name] agrees to invest [amount] in [other party] for the specific purpose of funding the development and commercialization of [specific technology]. The investment will be used for research, product development, and market testing.
Investment with due diligence clause
This variation applies when the investment is contingent on completing due diligence.
[Party Name] agrees to invest [amount] in [other party], subject to the successful completion of due diligence. This includes verifying [other party]'s financial statements, legal compliance, and business model. If the due diligence process reveals issues, the investment will be rescinded.
Investment with governance rights clause
This variation applies when the investment grants governance rights.
[Party Name] agrees to invest [amount] in exchange for [X]% equity in [other party], which includes governance rights such as the ability to appoint members to the board of directors and participate in key decision-making processes.
Investment for capital expenditure clause
This variation applies when the investment is intended for capital expenditures.
[Party Name] agrees to invest [amount] in [other party] specifically for capital expenditures, including the purchase of new equipment, facilities, or assets that will be used to grow and scale operations.
Investment with dividend payout clause
This variation applies when the investment includes a dividend payout structure.
[Party Name] agrees to invest [amount] in exchange for preferred shares in [other party], which will entitle [Party Name] to receive dividends at a rate of [X]% annually, subject to the company’s profitability and board approval.
Investment for future expansion clause
This variation applies when the investment is intended for future expansion.
[Party Name] agrees to invest [amount] to support the future expansion of [other party] into new geographical markets. The funds will be used exclusively for this purpose, and any unused funds will be returned to [Party Name] or repurposed for the expansion of other projects.
Investment for marketing and branding clause
This variation applies when the investment is for marketing and branding efforts.
[Party Name] agrees to invest [amount] in [other party], with the understanding that the funds will be allocated to marketing, branding, and customer acquisition efforts. The investment will be used to increase the visibility and market share of [other party] in its target industry.
Investment with exit window clause
This variation applies when the investment includes a specified exit window.
[Party Name] agrees to invest [amount] in [other party], with the understanding that [Party Name] may exit the investment within [X] years. The exit option will be available through either the sale of shares, company buyback, or a public offering.
Investment for restructuring clause
This variation applies when the investment is used for company restructuring.
[Party Name] agrees to invest [amount] to assist [other party] in restructuring its operations, including the closure of non-profitable divisions, employee reorganization, and realignment of business strategies to improve profitability.
Investment for employee stock options clause
This variation applies when the investment includes an employee stock option program.
[Party Name] agrees to invest [amount] to fund an employee stock option program, allowing employees of [other party] to purchase stock at discounted prices as a part of their compensation package. The funds will be used to cover the costs associated with administering the program.
Investment for debt repayment clause
This variation applies when the investment is used to repay existing debt.
[Party Name] agrees to invest [amount] in [other party], which will be used exclusively to repay outstanding debts. The investment will be repaid on the same terms and conditions as the original debt, with [Party Name] entitled to [X]% interest on the repayment amount.
Investment with preferential distribution rights clause
This variation applies when the investment includes preferential distribution rights.
[Party Name] agrees to invest [amount] in exchange for preferred shares in [other party], which will entitle [Party Name] to receive a preferential distribution of profits, dividends, or assets ahead of other shareholders.
Investment for strategic growth clause
This variation applies when the investment is intended for strategic growth.
[Party Name] agrees to invest [amount] in [other party] with the primary purpose of supporting the company’s strategic growth plans. The funds will be directed towards [specific goals, e.g., entering new markets, expanding product offerings].
Investment for startup capital clause
This variation applies when the investment is for a startup company.
[Party Name] agrees to invest [amount] as seed capital for [other party], a startup business. This initial investment will help [other party] cover early-stage expenses, including product development, marketing, and operational costs.
Investment with audit rights clause
This variation applies when the investor has audit rights.
[Party Name] agrees to invest [amount] in [other party], with the right to audit [other party]'s financial statements and operations on an annual basis. These audit rights will ensure the investment is being used according to the terms of this Agreement and in the best interests of the parties involved.
Investment for infrastructure development clause
This variation applies when the investment is for infrastructure development.
[Party Name] agrees to invest [amount] for the purpose of funding infrastructure development at [other party], including the construction of new facilities, the upgrading of existing systems, and the enhancement of operational capabilities.
Investment with annual performance reviews clause
This variation applies when the investment is tied to annual performance reviews.
[Party Name] agrees to invest [amount] in [other party], with the understanding that the performance of [other party] will be reviewed annually. The terms of the investment, including continued funding or adjustments, will be based on these annual reviews.
Investment for capital restructuring clause
This variation applies when the investment is used for restructuring capital.
[Party Name] agrees to invest [amount] in [other party] to facilitate capital restructuring, including the refinancing of existing debt, the issuance of new equity, or the reallocation of assets to improve the financial position of the company.
Investment with liquidity preference clause
This variation applies when the investor has a liquidity preference.
[Party Name] agrees to invest [amount] in [other party], with a liquidity preference. In the event of a liquidation, merger, or sale, [Party Name] will be entitled to receive their investment back plus a preferred return of [X]% before any distributions are made to common shareholders.
Investment for expansion into new markets clause
This variation applies when the investment is intended for market expansion.
[Party Name] agrees to invest [amount] in [other party] to facilitate the company’s expansion into new geographical markets. The funds will be allocated to market research, local partnerships, and establishing a presence in [target market(s)].
Investment with guaranteed minimum interest clause
This variation applies when the investment guarantees a minimum interest.
[Party Name] agrees to invest [amount] in [other party], with a guaranteed minimum interest rate of [X]% per annum. The interest will be paid quarterly, even if [other party] does not generate sufficient profits.
Investment in return for exclusive rights clause
This variation applies when the investment provides exclusive rights to the investor.
[Party Name] agrees to invest [amount] in [other party] in exchange for exclusive rights to [product, service, or market]. These exclusive rights will remain in effect for [X] years, with the possibility of renewal upon mutual agreement.
Investment with risk-sharing clause
This variation applies when the investment involves shared risk.
[Party Name] agrees to invest [amount] in [other party] under a risk-sharing arrangement, whereby both parties will share the financial risks associated with the investment equally. This includes any losses incurred during the course of the project.
Investment for research and development clause
This variation applies when the investment is designated for research and development (R&D).
[Party Name] agrees to invest [amount] in [other party] for the sole purpose of funding research and development activities. The funds will be directed towards product innovation, prototyping, and testing, with regular progress reports provided to [Party Name].
Investment for debt conversion clause
This variation applies when the investment is used to convert debt into equity.
[Party Name] agrees to invest [amount] in [other party], which will be used to convert existing debt into equity. The investment will be converted at a ratio of [X] equity shares per [Y] amount of debt, at a price per share of [Z].
Investment for product manufacturing clause
This variation applies when the investment is intended for product manufacturing.
[Party Name] agrees to invest [amount] to support the manufacturing process of [specific product(s)]. The investment will cover costs such as raw materials, equipment, labor, and manufacturing infrastructure.
Investment with exit rights for both parties clause
This variation applies when both parties have exit rights.
[Party Name] agrees to invest [amount] in [other party], with the understanding that both parties have the right to exit the investment under specific conditions, such as [trigger events]. [Party Name] will be entitled to a portion of the exit proceeds based on their investment percentage.
Investment in intellectual property rights clause
This variation applies when the investment is used to acquire or develop intellectual property.
[Party Name] agrees to invest [amount] for the acquisition or development of intellectual property rights, including patents, trademarks, and copyrights. The investment will be used for filing, protection, and commercialization of these assets.
Investment with co-investment clause
This variation applies when the investment involves co-investment with other parties.
[Party Name] agrees to invest [amount] in [other party] as part of a co-investment arrangement, where additional investments will be made by other parties. The total investment will be [X] amount, and [Party Name] will hold [X]% of the total equity.
Investment for brand development clause
This variation applies when the investment is used for brand development.
[Party Name] agrees to invest [amount] in [other party] for the purpose of brand development, including marketing campaigns, public relations efforts, and visual identity creation to increase brand recognition in the target market.
Investment with board observer rights clause
This variation applies when the investor has observer rights on the board.
[Party Name] agrees to invest [amount] in [other party] in exchange for the right to attend board meetings as a non-voting observer. This right allows [Party Name] to participate in discussions but does not grant voting authority on board decisions.
Investment with an annual exit review clause
This variation applies when the investment includes an annual review for potential exit.
[Party Name] agrees to invest [amount] in [other party], with an annual exit review to assess the performance of the investment and determine if conditions warrant an exit. The review will take place every [X] years, with options for buyout or sale at the conclusion of each review.
Investment for acquisition of assets clause
This variation applies when the investment is intended for acquiring assets.
[Party Name] agrees to invest [amount] in [other party] for the purpose of acquiring specific assets, including [type of assets]. The investment will be used to facilitate the acquisition and integration of these assets into the company’s operations.
Investment for joint development project clause
This variation applies when the investment is for a joint development project.
[Party Name] agrees to invest [amount] in [other party] to fund a joint development project aimed at [project goal]. The investment will be shared equally between both parties, and all intellectual property resulting from the project will be co-owned.
Investment for new product launch clause
This variation applies when the investment is for a new product launch.
[Party Name] agrees to invest [amount] in [other party] to fund the launch of a new product. The investment will be used for market research, product design, advertising, and distribution efforts to ensure the successful launch and market penetration.
Investment for restructuring of management clause
This variation applies when the investment is for management restructuring.
[Party Name] agrees to invest [amount] in [other party] to fund the restructuring of its management team. This will include hiring new leadership, restructuring existing teams, and implementing new operational strategies to increase efficiency and profitability.
Investment with fixed repayment schedule clause
This variation applies when the investment is structured as a loan with a fixed repayment schedule.
[Party Name] agrees to invest [amount] in [other party] as a loan, with a fixed repayment schedule. The principal and interest will be paid in [X] equal installments over [Y] months, beginning on [date], with an interest rate of [X]% per annum.
Investment for operational expenses clause
This variation applies when the investment is used for operational expenses.
[Party Name] agrees to invest [amount] in [other party], with the understanding that the funds will be used exclusively for operational expenses, including payroll, utility costs, and day-to-day business operations necessary to keep the company running.
Investment with milestone-based exit clause
This variation applies when the investment includes an exit based on achieving certain milestones.
[Party Name] agrees to invest [amount] in [other party], with the exit condition based on achieving the following milestones:
- Milestone 1: [date or event]
- Milestone 2: [date or event] Once these milestones are achieved, [Party Name] will have the option to exit the investment through a sale or buyback at a pre-agreed price.
Investment for sustainable development clause
This variation applies when the investment is intended for sustainable development initiatives.
[Party Name] agrees to invest [amount] in [other party] for the purpose of supporting sustainable development practices. The funds will be allocated toward eco-friendly initiatives, green technologies, and other projects aimed at reducing environmental impact.
Investment for market research clause
This variation applies when the investment is used for market research purposes.
[Party Name] agrees to invest [amount] in [other party] to conduct in-depth market research, including surveys, competitor analysis, and customer feedback. The investment will be used to gather actionable data for improving product offerings and marketing strategies.
Investment for franchise expansion clause
This variation applies when the investment is intended for franchise expansion.
[Party Name] agrees to invest [amount] in [other party] to support the expansion of its franchise operations. The funds will be used to open new franchise locations, market the franchise opportunity, and provide support to franchisees.
Investment for working capital clause
This variation applies when the investment is for working capital.
[Party Name] agrees to invest [amount] in [other party] to provide working capital for day-to-day operations. The funds will be used to cover operational costs, including inventory management, employee wages, and other necessary expenses to keep the business functioning.
Investment with rights to future funding clause
This variation applies when the investment includes rights to participate in future funding rounds.
[Party Name] agrees to invest [amount] in [other party], with the right to participate in future funding rounds. [Party Name] will have the opportunity to maintain their equity stake by investing in subsequent rounds at the same terms as the original investment.
Investment for intellectual property licensing clause
This variation applies when the investment is in exchange for intellectual property licensing.
[Party Name] agrees to invest [amount] in [other party] in exchange for a non-exclusive license to use [specific intellectual property]. This license will be valid for [X] years, and the terms of use will be governed by the licensing agreement.
Investment for revenue-sharing agreement clause
This variation applies when the investment is tied to a revenue-sharing agreement.
[Party Name] agrees to invest [amount] in [other party], in exchange for [X]% of the revenue generated from the sales of [product/service]. The revenue-sharing agreement will remain in effect for [X] years or until the investment has been repaid with a [X]% return.
Investment for debt conversion option clause
This variation applies when the investment includes an option to convert debt into equity.
[Party Name] agrees to invest [amount] in [other party], in the form of debt, which may be converted into equity at [Party Name]’s discretion after [X] years. The conversion price will be based on the fair market value of the company at the time of conversion.
Investment for market share growth clause
This variation applies when the investment is intended to increase market share.
[Party Name] agrees to invest [amount] in [other party] to drive market share growth, specifically in [target market]. The funds will be used for strategic initiatives including targeted marketing campaigns, sales team expansion, and partnerships aimed at capturing additional market share.
Investment with preferred repayment terms clause
This variation applies when the investment includes preferred repayment terms.
[Party Name] agrees to invest [amount] in [other party] with the condition that repayment will be made preferentially, meaning [Party Name] will receive repayment before other creditors, at a rate of [X]% per annum, with payment terms agreed upon in the investment agreement.
Investment with pro-rata distribution rights clause
This variation applies when the investment includes pro-rata distribution rights.
[Party Name] agrees to invest [amount] in exchange for pro-rata distribution rights. If additional funds are raised or profits are distributed, [Party Name] will receive their share based on the percentage of their investment relative to the total capital raised.
Investment for real estate acquisition clause
This variation applies when the investment is for real estate acquisition.
[Party Name] agrees to invest [amount] in [other party] for the purpose of acquiring real estate properties. The investment will be used to purchase properties, manage renovation costs, and facilitate rental or sale for profit.
Investment with performance-linked payout clause
This variation applies when payouts are linked to performance metrics.
[Party Name] agrees to invest [amount] in [other party], with a payout structure linked to performance milestones. If [other party] achieves the agreed financial or operational goals, [Party Name] will receive additional payouts based on the level of success achieved.
Investment with equity conversion option clause
This variation applies when the investment includes an option for equity conversion.
[Party Name] agrees to invest [amount] in [other party], with the option to convert the investment into equity at any time after [X] years. The conversion rate will be determined based on the valuation at the time of conversion, subject to mutual agreement.
Investment for brand acquisition clause
This variation applies when the investment is for the acquisition of a brand.
[Party Name] agrees to invest [amount] in [other party] to acquire the rights to the brand, including trademarks, logos, and associated intellectual property. The investment will fund the purchase and transfer of all relevant assets.
Investment for operational scalability clause
This variation applies when the investment is intended to improve scalability.
[Party Name] agrees to invest [amount] in [other party] to enhance operational scalability. The funds will be directed towards upgrading infrastructure, hiring additional staff, and improving systems that will support scaling the business effectively.
Investment for merger and acquisition clause
This variation applies when the investment is intended to fund mergers or acquisitions.
[Party Name] agrees to invest [amount] in [other party], specifically to fund mergers and acquisitions as part of [other party]’s strategic growth plan. The funds will be used to identify, acquire, and integrate new companies into the portfolio.
Investment with exit timeline clause
This variation applies when the investment includes a defined exit timeline.
[Party Name] agrees to invest [amount] in [other party], with an agreed exit timeline of [X] years. The exit will be structured as [exit option, e.g., IPO, acquisition], with the understanding that the investor will exit the investment once the target value is reached.
Investment for product expansion clause
This variation applies when the investment is aimed at expanding product offerings.
[Party Name] agrees to invest [amount] to fund the development and launch of new products within [product category]. The investment will be used for product research, design, testing, and go-to-market strategies.
Investment with shareholder rights clause
This variation applies when the investment grants specific shareholder rights.
[Party Name] agrees to invest [amount] in [other party], acquiring [X]% of the equity in [other party]. As a shareholder, [Party Name] will be entitled to [voting rights, dividend payments, etc.], as well as any other rights granted to shareholders under applicable laws.
Investment for customer acquisition clause
This variation applies when the investment is for customer acquisition.
[Party Name] agrees to invest [amount] in [other party] for the purpose of customer acquisition. The funds will be used for marketing efforts, lead generation, and sales activities aimed at acquiring new customers within [target market].
Investment for debt servicing clause
This variation applies when the investment is used for servicing existing debt.
[Party Name] agrees to invest [amount] in [other party], with the funds specifically allocated for the servicing of existing debt. The investment will be used to make scheduled debt payments, reducing interest expenses and overall liability.
Investment for working capital injection clause
This variation applies when the investment is to inject working capital into the business.
[Party Name] agrees to invest [amount] in [other party] as a working capital injection. The funds will be used to cover day-to-day operational expenses, ensuring that [other party] has sufficient liquidity to meet its ongoing business obligations.
Investment with governance participation clause
This variation applies when the investor has a role in governance.
[Party Name] agrees to invest [amount] in [other party] in exchange for participation in governance, including the right to appoint [X] members to [other party]’s board of directors. The investor will have voting rights on key decisions affecting the company.
Investment for market research and strategy clause
This variation applies when the investment is for market research and strategic planning.
[Party Name] agrees to invest [amount] in [other party] to conduct market research and develop a comprehensive strategic plan. The funds will be used to analyze market trends, customer needs, and competitive positioning, guiding future business decisions.
Investment with loss-sharing clause
This variation applies when the investment includes a loss-sharing agreement.
[Party Name] agrees to invest [amount] in [other party], with the understanding that any losses incurred from the investment will be shared equally between both parties. If the investment does not generate the expected returns, the losses will be allocated based on the agreed percentage.
Investment for exit buyback option clause
This variation applies when the investor has the option to sell the investment back.
[Party Name] agrees to invest [amount] in [other party], with the option for [Party Name] to sell the investment back to [other party] at any time after [X] years. The buyback price will be based on [specific valuation method] and mutually agreed upon at the time of buyback.
Investment for franchise system development clause
This variation applies when the investment is for the development of a franchise system.
[Party Name] agrees to invest [amount] in [other party] to support the development of its franchise system. The investment will be used to create franchise materials, train franchisees, and develop the operational systems necessary for franchise expansion.
Investment for team expansion clause
This variation applies when the investment is to fund team expansion.
[Party Name] agrees to invest [amount] in [other party] to expand its team, including the hiring of additional staff in [specific departments]. The investment will be used to cover recruitment, salaries, and training for new hires who will contribute to the company’s growth.
Investment with milestone-based return clause
This variation applies when the investment return is tied to milestones.
[Party Name] agrees to invest [amount] in [other party], with the return on investment structured as follows:
- Milestone 1: [amount of return upon completion]
- Milestone 2: [amount of return upon completion] Returns will be paid out as each milestone is achieved.
Investment for company diversification clause
This variation applies when the investment is to support company diversification.
[Party Name] agrees to invest [amount] in [other party] to support the diversification of its product or service offerings. The investment will be used for research, development, and marketing of new products or services that expand the company’s reach into new markets.
Investment for sustainability initiatives clause
This variation applies when the investment is for environmental sustainability initiatives.
[Party Name] agrees to invest [amount] in [other party] to fund sustainability initiatives, including reducing carbon emissions, implementing green technologies, and supporting environmental conservation efforts. The investment will be used to meet sustainability goals within [X] years.
Investment with guaranteed exit option clause
This variation applies when the investment includes a guaranteed exit option for the investor.
[Party Name] agrees to invest [amount] in [other party], with the guaranteed option to exit the investment at a fixed price of [X] after [Y] years. The exit will occur either through a buyback by [other party] or a sale to a third party, as specified in the agreement.
Investment with dividend reinvestment clause
This variation applies when the investment includes a dividend reinvestment option.
[Party Name] agrees to invest [amount] in [other party] with the option to reinvest any dividends earned from the investment into additional shares of [other party]. This reinvestment option will be available annually and will increase [Party Name]’s equity stake.
Investment for technology commercialization clause
This variation applies when the investment is intended for the commercialization of technology.
[Party Name] agrees to invest [amount] in [other party] to fund the commercialization of proprietary technology. The funds will be used to move the technology from development to market, including regulatory compliance, production scaling, and marketing efforts.
Investment with milestone-based returns clause
This variation applies when the return on investment is tied to the completion of milestones.
[Party Name] agrees to invest [amount] in [other party], with the following milestone-based returns:
- Milestone 1: [return upon completion]
- Milestone 2: [return upon completion] The return on investment will be calculated and paid after each milestone is met and verified.
Investment for strategic acquisition clause
This variation applies when the investment is used for strategic acquisitions.
[Party Name] agrees to invest [amount] in [other party], with the funds specifically designated for the acquisition of strategic assets, businesses, or intellectual property that will enhance [other party]’s market position and capabilities.
Investment for real estate development clause
This variation applies when the investment is for real estate development.
[Party Name] agrees to invest [amount] in [other party] for the purpose of developing real estate properties. The investment will be used for purchasing, renovating, and managing residential or commercial properties to generate income or capital appreciation.
Investment for operational improvements clause
This variation applies when the investment is for operational improvements.
[Party Name] agrees to invest [amount] in [other party], with the understanding that the funds will be used to improve [other party]’s operational efficiency, including upgrading systems, processes, and staffing to drive cost savings and profitability.
Investment with forced buyback option clause
This variation applies when the investment includes a forced buyback option.
[Party Name] agrees to invest [amount] in [other party], with the condition that after [X] years, [Party Name] has the option to force [other party] to buy back the investment at a pre-agreed price or upon the occurrence of specific events, such as a sale of the company.
Investment with convertible equity clause
This variation applies when the investment is in convertible equity.
[Party Name] agrees to invest [amount] in [other party] in exchange for convertible equity. This equity may be converted into common shares at a rate of [X] per share, subject to the occurrence of a [specified event, such as a funding round].
Investment for market research funding clause
This variation applies when the investment is designated for market research.
[Party Name] agrees to invest [amount] in [other party] to fund comprehensive market research, including competitive analysis, consumer surveys, and focus groups, to gather data that will inform [other party]’s business strategies and product development.
Investment for staff training and development clause
This variation applies when the investment is intended for staff training.
[Party Name] agrees to invest [amount] in [other party] to fund staff training and development initiatives. The investment will be used to enhance employee skills, improve job performance, and foster leadership growth within [other party].
Investment with right of first refusal clause
This variation applies when the investor has a right of first refusal for future investments.
[Party Name] agrees to invest [amount] in [other party] and will have the right of first refusal on any future investment opportunities or equity offerings by [other party], allowing [Party Name] to maintain or increase its stake in future rounds of funding.
Investment for debt reduction clause
This variation applies when the investment is used for debt reduction.
[Party Name] agrees to invest [amount] in [other party], with the funds used exclusively for reducing existing debt. The goal of this investment is to improve [other party]’s financial health by lowering outstanding liabilities and reducing interest payments.
Investment for joint innovation clause
This variation applies when the investment is used for joint innovation efforts.
[Party Name] agrees to invest [amount] in [other party] for the purpose of co-developing innovative products or solutions. Both parties will contribute resources, expertise, and intellectual property to drive innovation in [specific industry or field].
Investment for international expansion clause
This variation applies when the investment is for expanding operations internationally.
[Party Name] agrees to invest [amount] in [other party] to facilitate the company’s international expansion into new markets. The funds will be used to establish operations, legal compliance, and marketing efforts in [target countries or regions].
Investment with exit cap clause
This variation applies when the investment includes an exit cap.
[Party Name] agrees to invest [amount] in [other party], with the understanding that the maximum payout upon exit (whether through a sale, IPO, or other liquidity event) will be capped at [X] times the initial investment amount.
Investment for product prototyping clause
This variation applies when the investment is used for prototyping products.
[Party Name] agrees to invest [amount] in [other party] for the purpose of funding product prototyping. The investment will cover design, materials, and production costs required to develop a working prototype for market testing.
Investment for workforce expansion clause
This variation applies when the investment is used to expand the workforce.
[Party Name] agrees to invest [amount] in [other party] to fund the expansion of its workforce, including the hiring of additional employees, contractors, and consultants required to meet the company’s growth objectives.
Investment for marketing campaign funding clause
This variation applies when the investment is designated for funding a marketing campaign.
[Party Name] agrees to invest [amount] in [other party] to fund a comprehensive marketing campaign. The investment will be used to cover digital and traditional advertising, public relations, events, and other promotional efforts.
Investment with liquidity event clause
This variation applies when the investment includes a specific liquidity event.
[Party Name] agrees to invest [amount] in [other party], with the understanding that the investment will be repaid or converted into equity upon the occurrence of a liquidity event, such as a public offering, acquisition, or other market event that provides an exit opportunity.
Investment with partner equity clause
This variation applies when the investment grants partner equity.
[Party Name] agrees to invest [amount] in [other party] in exchange for [X]% equity in the company. This equity will grant [Party Name] a percentage of ownership and a share in any profits, dividends, or other benefits generated by [other party].
Investment for diversification strategy clause
This variation applies when the investment supports a diversification strategy.
[Party Name] agrees to invest [amount] in [other party], with the investment specifically aimed at supporting the company’s diversification strategy. This may include entering new markets, developing new products, or expanding the company’s offerings beyond its current scope.
Investment for equity buyout clause
This variation applies when the investment is structured for an equity buyout.
[Party Name] agrees to invest [amount] in [other party] in exchange for the option to buy out [other party]’s equity at a later date. The buyout will be based on a pre-agreed valuation formula, which will be reviewed after [X] years.
Investment with performance-based equity clause
This variation applies when the investor’s equity stake is based on performance metrics.
[Party Name] agrees to invest [amount] in [other party], with the equity stake to be determined based on [specific performance metrics, such as revenue, profit growth, or market share] after [X] months. The final equity stake will be adjusted based on the performance achieved.
Investment with option to increase stake clause
This variation applies when the investor has the option to increase their stake.
[Party Name] agrees to invest [amount] in [other party] and has the option to increase its equity stake by [X]% after [X] years or upon the occurrence of specific milestones. The terms of the increased investment will be mutually agreed upon at the time of increase.
Investment for regulatory compliance clause
This variation applies when the investment is used for regulatory compliance.
[Party Name] agrees to invest [amount] in [other party] to ensure that [other party] meets all necessary regulatory compliance requirements, including [specific regulations or certifications] to continue operations in [target markets].
Investment with anti-dilution rights clause
This variation applies when the investment includes anti-dilution protection.
[Party Name] agrees to invest [amount] in [other party], with anti-dilution rights to protect its equity stake in the event of future capital raises. If additional shares are issued, [Party Name]’s equity will be adjusted to maintain its original percentage ownership.
Investment for talent acquisition clause
This variation applies when the investment is for acquiring talent.
[Party Name] agrees to invest [amount] in [other party] to fund talent acquisition efforts, including hiring key executives, managers, and technical staff. The investment will support recruitment, compensation, and onboarding for critical roles within the company.
Investment with guaranteed ROI clause
This variation applies when the investment includes a guaranteed return on investment (ROI).
[Party Name] agrees to invest [amount] in [other party], with a guaranteed ROI of [X]% annually, payable at the end of each fiscal year. If the ROI is not met, [Party Name] will have the option to receive their principal investment back, plus any earned interest.
Investment for working capital reserves clause
This variation applies when the investment is used for working capital reserves.
[Party Name] agrees to invest [amount] in [other party] to establish working capital reserves. The funds will be used to ensure liquidity for day-to-day operations and provide a buffer against unforeseen financial challenges.
Investment for patent acquisition clause
This variation applies when the investment is used for acquiring patents.
[Party Name] agrees to invest [amount] in [other party] to acquire patents and intellectual property rights related to [specific technology or product]. The investment will facilitate the purchase and legal registration of intellectual property assets.
Investment with minimum holding period clause
This variation applies when the investment includes a minimum holding period.
[Party Name] agrees to invest [amount] in [other party], with the understanding that [Party Name] will not sell, transfer, or otherwise exit the investment for a minimum period of [X] years, unless both parties mutually agree to an earlier exit.
Investment for technology infrastructure clause
This variation applies when the investment is for building or upgrading technology infrastructure.
[Party Name] agrees to invest [amount] in [other party] to build or upgrade technology infrastructure, including server capacity, network enhancements, and software systems. This investment will be used to improve operational efficiency and scalability.
Investment for workforce training program clause
This variation applies when the investment is for a workforce training program.
[Party Name] agrees to invest [amount] in [other party] to fund a workforce training program, including skills development, leadership training, and career advancement opportunities for employees. The goal of the program is to increase overall employee productivity and retention.
Investment with profit-sharing mechanism clause
This variation applies when the investment is tied to a profit-sharing mechanism.
[Party Name] agrees to invest [amount] in [other party], with a profit-sharing mechanism where [Party Name] will receive [X]% of the net profits generated by [specific product or service] for [X] years. The profits will be calculated annually and paid within [X] days of the end of each fiscal year.
Investment for product commercialization clause
This variation applies when the investment is for product commercialization.
[Party Name] agrees to invest [amount] in [other party] to fund the commercialization of [product], including manufacturing, distribution, marketing, and sales efforts. The investment will enable [other party] to bring the product to market and scale operations effectively.
Investment with restricted use of funds clause
This variation applies when the investment can only be used for specific purposes.
[Party Name] agrees to invest [amount] in [other party], with the funds restricted for use solely in the following areas: [specific purpose, such as R&D, marketing, capital expenditures]. Any deviation from the specified use of funds will require written approval from [Party Name].
Investment for expansion of distribution network clause
This variation applies when the investment is for expanding the distribution network.
[Party Name] agrees to invest [amount] in [other party] to expand its distribution network. The funds will be used for establishing new distribution channels, increasing warehousing capacity, and improving logistics to reach a broader customer base.
Investment with exit after fixed period clause
This variation applies when the investment includes an exit option after a fixed period.
[Party Name] agrees to invest [amount] in [other party], with the exit option available after a fixed period of [X] years. At that time, [Party Name] may choose to exit the investment by selling its stake or through a company buyback.
Investment with conditional buyback clause
This variation applies when the investment includes a conditional buyback option.
[Party Name] agrees to invest [amount] in [other party], with the condition that [Party Name] has the right to require [other party] to buy back the investment at a pre-determined price if certain conditions are met, including [specific condition, such as performance targets].
Investment for expansion of product line clause
This variation applies when the investment is used for expanding the product line.
[Party Name] agrees to invest [amount] in [other party] to expand the existing product line. The investment will be allocated towards developing new products, improving existing offerings, and increasing inventory to meet market demand.
Investment for social impact initiatives clause
This variation applies when the investment is intended for social impact.
[Party Name] agrees to invest [amount] in [other party] to fund social impact initiatives, including [specific causes, such as community development, environmental sustainability, or education]. The investment will help [other party] meet its corporate social responsibility (CSR) goals.
Investment with repurchase option clause
This variation applies when the investment includes a repurchase option for the investor.
[Party Name] agrees to invest [amount] in [other party], with the option for [Party Name] to repurchase the investment at the same price plus accrued interest after [X] years. The repurchase option must be exercised within [X] months prior to the end of the term.
Investment for patent enforcement clause
This variation applies when the investment is intended to enforce patents.
[Party Name] agrees to invest [amount] in [other party] for the enforcement of patents and intellectual property rights. The funds will be used to initiate legal action against potential infringers and defend against any challenges to the validity of the patents.
Investment with market share growth target clause
This variation applies when the investment includes market share growth targets.
[Party Name] agrees to invest [amount] in [other party], with the condition that [other party] achieves a specific market share growth target of [X]% within [Y] years. If the target is met, [Party Name] will receive additional equity or a percentage of profits.
Investment for customer support infrastructure clause
This variation applies when the investment is for building customer support infrastructure.
[Party Name] agrees to invest [amount] in [other party] to build and enhance customer support infrastructure, including hiring support staff, expanding call center capacity, and implementing customer service technologies to improve customer satisfaction and retention.
Investment for reducing operational costs clause
This variation applies when the investment is aimed at reducing operational costs.
[Party Name] agrees to invest [amount] in [other party] for the specific purpose of reducing operational costs. The investment will be used to streamline business processes, automate systems, and improve operational efficiency, with the goal of increasing profitability.
Investment for cross-border expansion clause
This variation applies when the investment is intended for cross-border expansion.
[Party Name] agrees to invest [amount] in [other party] to fund cross-border expansion. The funds will be used to establish operations in international markets, including legal fees, market research, and local marketing efforts to gain a foothold in [specific country or region].
Investment for employee stock ownership plan (ESOP) clause
This variation applies when the investment funds an employee stock ownership plan.
[Party Name] agrees to invest [amount] in [other party], with the funds allocated to establish and fund an employee stock ownership plan (ESOP). This plan will grant employees the opportunity to purchase company stock, aligning their interests with the company’s success.
Investment for improving supply chain efficiency clause
This variation applies when the investment is for supply chain improvements.
[Party Name] agrees to invest [amount] in [other party] to improve supply chain efficiency, including enhancing supplier relationships, automating procurement processes, and reducing shipping costs, with the goal of increasing overall profitability.
This article contains general legal information and does not contain legal advice. Cobrief is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.