32+ Sample Investment Agreement Templates

What Is an Investment Agreement?

According to an article from Chron, the law requires private businesses that intend to sell shares and stocks to have a written business agreement. A legally binding contract will help protect both the business owner and the investor, including their resources, from potential conflicts. So, before you start engaging in an investment business transaction, it is important to have a written business agreement first. This is where an investment contract comes into play. An investment agreement is a legally binding contract that outlines information about the investment deal. It is a joint agreement between a business and an investor that present terms of sales, roles, and responsibilities of both parties. Basically, the business investment agreement sets forth the parameters of the investment. There are also specific clauses that should be present in the contract that will both protect the business and the investor. 

According to Statista figures, 55 percent of adult Americans invested in the stock market as of 2020.

In another Statista report, 26 percent of respondents ages 35 to 54 considered stocks as one of the best long-term investment options.

Statista also reported that the NYSE is the largest stock exchange operator in 2019, with over 23.21 trillion U.S. dollars market capitalization.

What are the Basic Elements of an Investment Agreement?

No matter how well-written your investment agreement is, if it does not have the exact content, it will still not justify its purpose. That is why it is important to know what makes such a document. An investment agreement is a business document that presents important data regarding an investment deal. A formal and essential business contract, like an investment agreement, should contain specific information. These basic elements include information about the participating parties, basic structure of investment, payment terms, the purpose of the contract, date of the agreement, and signature from both parties. It also includes clear information about how much the investor will provide, the form of investment, and when to transfer investments. Writing an investment agreement should not be about how it looks, but what the content in the agreement speaks. So, make sure to have these details in your business investment agreement to make sure that it is valid, informative, and accurate.

The Different Types of Investment Agreement

There are multiple investment options that you may choose for your company, depending on the situation you are in. These types of investment agreements include stock purchase, nonstatutory stock option, statutory stock option, convertible debt, and restricted stock agreement. To fully understand the purpose of each type, read the following descriptions below.

Stock Purchase Agreement: The stock purchase agreement is the simplest form of the investment agreement. It refers to the exchange of money for stock. It is a legally binding agreement that stipulates the agreement between a seller and purchaser of company stock. It includes information about the overall process of the investment transaction.Nonstatutory Stock Option Agreement: A nonstatutory stock option agreement or NSO is a type of investment agreement that outlines information about giving stock options to an investor or a business employee. This agreement is also classified as the nonqualified stock option agreement that contains details about the stock option grant and the terms and conditions of the option.Statutory Stock Option Agreement: Another type of investment agreement is the statutory stock option agreement, also called as incentive stock options or qualified stock options agreement. This type of agreement is made to present information about beneficial tax treatment but with strict restrictions.Convertible Debt Agreement: The convertible debt agreement is a written document between an investor and a business owner. This type of investment agreement highlights the terms and conditions of the two parties. It displays details about the debt payment agreement, whether to convert the debt into an ownership interest in the company.Restricted Stock Agreement: This type of investment agreement outlines provisions and restrictions and places limitations on the investor’s ability to claim ownership. The restricted stock agreement points out terms and conditions regarding the business transactions. For example, if the shareholder failed to comply with their obligations, he or she will not be eligible to own the stock.

How To Make a Formal Investment Agreement

An investment agreement is one of the important business documents that companies should have when engaging in an investment deal. This business agreement is a written agreement that highlights and represents the interests of the parties involved. This contract will protect both the business and investors from any misunderstandings.

Hence, the agreement should be well-written and show accurate information. Writing an investment agreement can be in various formats, so there is no problem in using a ready-made agreement template online. With that, you may check out our sample investment agreement templates above and choose the template that suits your needs. Nevertheless, here are some tips on how to make a formal investment agreement for your business. Here’s how.

Step 1: Write an Opening Statement

Start making a formal investment agreement by writing an opening statement. This section should state what the agreement is about and who are the parties involved in the transaction. Here, write the full name of the company and the investor and include the address of both parties. Write also the date the agreement is written. The opening statement usually read as “This Investment Agreement made on (insert date) between (insert full name of every party),” depending on how you want your investment agreement looks. Information about the parties involved is necessary to make the agreement more valid.

Step 2: Include Whereas Statements

After the opening recital, the next thing you need to include in the investment agreement is whereas statements. Basically, “whereas” statements present information about the objective or purpose of each party in making the deal. For example, the first whereas statement may state that the first party is seeking investment, then the second “whereas” statement may state that the second party is willing to provide the investment. You may also add other “whereas” statements if applicable. Then, follow the therefore statement.

Step 3: Add the Articles of the Agreement

Once that is done, it is time to add and list down the articles of the investment agreement. The articles of the agreement usually contain every information that has been discussed and agreed upon by both parties. This typically includes how to use the investment, the amount of money invested, what can the investors expect in return, and more. Each article should be discussed in the investment agreement one at a time. Make sure that each detail is clearly defined and well-presented in the investment agreement.

Step 4: Specify Payment Terms

Now that you have already presented the articles for the agreement, the next thing to write is the payment and service terms. Usually, the payment terms differ from the nature of the company and depend on how large the company is. So, specify the payment terms that you want in the investment contract. However, make sure that the parties involved are well-aware of it. Define in the agreement the mode of payment and how often the payment should take place. This, too, shall be explained well.

Step 5: State Terms and Termination of Contract

The following information to include in the investment agreement is the terms and termination of the contract. The term refers to the period the agreement is valid an in effect. The term also indicates the length of time the investor must provide his or her financial contribution to the company and receive the return of investment (ROI) agreed by both parties. On the termination of the contract, define in the investment contract, the grounds that will end the deal. Make sure that this information is well-presented in the agreement to avoid any confusion.

Step 6: Secure a Signature

There are two main reasons why any type of business contracts need a signature, to know the parties involved and to identify that both parties read, understood, and agreed on the content of the agreement. So, for your investment agreement, make sure that you get the signature of each involved party. Signing the investment contract shows that everyone is on the same page. However, before you do that, you have to evaluate the agreement first and ask a professional business lawyer to review it. This is to ensure that every information written in the investment contract is favorable to each party’s interests. Once everything is clear, then proceed with the signing of the contract.


Is an investment agreement a legally binding agreement?

Yes. An investment agreement is a legally binding partnership agreement between a business and an investor that stipulates the overall structure of the business investment deal, terms and conditions, and the roles and obligations of the parties involved.

What is the fair percentage for an investor?

The average percentage that investors get is ranging from 10% to 20%. However, venture capitalists usually get more about 40%, according to an article from Chron.

What are the main types of investment?

There are three main types of investments in a business, which include stocks, cash, and bond equivalent. These types of investments have different characteristics and benefits that may help develop your business.

Can an investor take part in managing a business?

Yes. An investor may take an active part in running your business and may provide action plans that will have an impact on the business.

What is an investment?

In a commercial setting, investment refers to purchasing or acquiring an asset or item from a business with the purpose of generating an income from it. Financially, investment refers to purchasing of bonds, stocks, or real estate properties.

There is no doubt having a written document that binds the agreement between two parties is important. According to an article from Chron, business contracts are important in business because it secures the rights of each party. It also gives the parties involved information about their rights and obligations during the business deal. So, when engaging in business investment, it is imperative to secure a legally binding investment agreement. It is a document that outlines details about the overall business transaction. With this, both parties will feel secure that everyone will do their end of the bargain. Are you looking for a professionally written investment agreement template? Check out our sample templates above!