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Future Equity Agreement
"I need a Future Equity Agreement for an Australian tech startup receiving a $500,000 investment from a Singapore-based venture capital firm, with a 20% discount rate and $5M valuation cap, including foreign investment compliance provisions."
1. Parties: Identification of the Company and the Investor(s)
2. Background: Context of the agreement, including the company's business and investor's intention to invest
3. Definitions: Key terms used throughout the agreement, including 'Equity Financing', 'Liquidity Event', 'Dissolution Event', and 'Post-Money Valuation Cap'
4. Investment Amount: Specifies the investment sum and payment terms
5. Conversion Rights: Details when and how the investment converts to equity, including trigger events
6. Company Representations: Company's warranties about its legal status, authority, and capital structure
7. Investor Representations: Investor's warranties about investment capacity and sophistication
8. Terms of Conversion: Calculation method for converting investment to equity, including valuation cap and discount rate
9. Liquidity Events: Treatment of investment in case of sale, IPO, or other liquidity events
10. Dissolution Events: Rights and procedures in case of company dissolution or winding up
11. General Provisions: Standard legal provisions including notices, amendments, governing law, and assignment
1. Most Favored Nation: Ensures investor gets best terms if company issues better terms in future SAFEs - use when requested by sophisticated investors
2. Pro-rata Rights: Gives investor right to participate in future funding rounds - include for strategic investors
3. Information Rights: Grants investors rights to receive financial information - typically for larger investments
4. Board Participation Rights: Gives investor right to board observer status - for significant investments
5. Drag Along Rights: Forces investor to join in company sale if majority agrees - for companies planning exit
6. Tag Along Rights: Allows investor to join in sale of shares by founders - for investor protection
7. Foreign Investment Provisions: Additional terms for foreign investors - required when foreign investment laws apply
1. Schedule 1 - Corporate Information: Details of company structure, capitalization table, and existing shareholders
2. Schedule 2 - Conversion Calculations: Detailed examples and formulas for calculating equity conversion
3. Schedule 3 - Form of Conversion Notice: Template notice for triggering conversion of investment to equity
4. Schedule 4 - Deed of Accession: Template for investor to join shareholders agreement upon conversion
5. Appendix A - Investment Terms Summary: Summary of key commercial terms including investment amount, valuation cap, and discount rate
6. Appendix B - Shareholder Rights: Summary of rights attached to shares upon conversion
Authors
Technology
Fintech
Biotech
Clean Energy
Software Development
E-commerce
Healthcare Technology
Digital Media
Artificial Intelligence
Manufacturing Innovation
Agtech
Education Technology
Space Technology
Quantum Computing
Robotics
Legal
Finance
Executive Leadership
Corporate Development
Compliance
Investment
Business Development
Company Secretariat
Risk Management
Strategic Planning
Chief Executive Officer
Chief Financial Officer
Chief Legal Officer
Startup Founder
Investment Manager
Venture Capital Associate
Angel Investor
Corporate Lawyer
Investment Banker
Company Secretary
Finance Director
Business Development Manager
Startup Attorney
Investment Analyst
Portfolio Manager
Compliance Officer
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