Investor agreement

What the agreement is for

While arrangements are verbal, each side remembers them differently.

The agreement makes the relationship clear: who contributes what, who decides what, how profit is shared and what happens if things go off plan.

For the founder it protects control of the project; for the investor it gives clear rights and reporting.

What an agreement usually covers

1. Parties, definitions, purpose of the partnership.
2. Funding terms: amount, instrument, tranches and milestones, use of funds.
3. Stake, valuation, profit and loss sharing, dividends.
4. Governance and control: who takes strategic decisions, veto rights, reporting.
5. Confidentiality and intellectual property.
6. Dispute resolution, exit and termination.

Term sheet: what it is and what goes in it

A term sheet is a short 2–5 page document with the key deal terms that the parties agree before the investor’s review and the full agreement.

Most of its clauses do not commit anyone to the deal, but they commit the parties to the agreed terms if the deal happens.

Usually only confidentiality and exclusivity are binding: while the review runs, the founder does not negotiate with other investors.

After the term sheet come the investor’s review, the shareholders’ agreement (pacto de socios) and the formal entry: in a Spanish SL, a capital increase before a notary and registration in the commercial register.

What a term sheet usually covers

1. The investment amount, the instrument (shares, convertible loan) and the pre-money valuation.
2. The investor’s stake after the round and the option pool for the team.
3. Liquidation preference on a sale or wind-down, and anti-dilution protection.
4. Governance: a board seat, veto rights on key decisions, reporting.
5. Founder vesting, right of first refusal, tag-along and drag-along rights.
6. Exclusivity, confidentiality and how long the offer stands.

What we do and what the lawyer does

The costliest mistakes in an agreement are not legal wording but economics: a valuation that is too low, a stake that gets diluted in the next round, milestones the project cannot hit in time, investor rights that block decisions. That is our area.

1. Us: deal economics, round structure, valuation and stake, milestones and use of funds, the parties’ rights and obligations in business terms, a term sheet and a draft for the lawyer.
2. The lawyer: legal drafting, compliance with local law, corporate documents, notary and registration.