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What is an Investor Agreement?

Investor agreements are agreements where a party invests money with the expectation of securing a return on investment. Small business owners use investor agreements when they want to bring outside investors into their business.

Why is it Important?

1. Start-up companies going through an initial stage of investment enter into an investor agreement to assure that all parties are risk-free on what the investor is authorised to do, both in present and in the future.

2. An investor agreement creates a legally binding settlement that directs how the parties to the investor agreement are not uncertain by formulating the obligations and rights of each party.

3. It creates terms to make certain that all parties know their duties and if circumstances go wrong and a party has a right to raise a dispute or to terminate the investor agreement.