Pre-seed Angel investment agreement Template for India

A Pre-seed Angel investment agreement sets the terms when angel investors provide early funding to Indian startups, typically before their first formal funding round. It outlines how much money the investor will contribute, what percentage of company ownership they'll receive, and their rights as stakeholders.

Under Indian securities law, these agreements must specify valuation methods, voting rights, and exit options. They often include key protections like anti-dilution clauses and information rights, while complying with SEBI's angel investment guidelines. Smart startups use these agreements to secure initial capital without giving up too much control early on.

Use a Pre-seed Angel investment agreement when your startup needs initial funding but isn't ready for formal venture capital rounds. This document becomes essential right before accepting money from individual investors who want to support your business idea at its earliest stage - typically investments between ₹10 lakhs to ₹1 crore.

The agreement proves particularly valuable when negotiating with first-time investors or family offices in India. It helps protect both parties by clearly defining ownership stakes, board rights, and future funding terms upfront. Getting this agreement right early prevents costly disputes and simplifies future investment rounds with venture capital firms.

• Simple Equity Agreement: Most basic version offering straight equity for cash, popular among family and friends investing under ₹25 lakhs
• SAFE Agreement: Converts to equity at a future funding round, with preset terms and valuation caps
• Convertible Note Agreement: Includes debt-like features with interest rates and maturity dates, commonly used for investments above ₹50 lakhs
• Participating Rights Agreement: Gives angels special rights to join future rounds and maintain ownership percentage
• Strategic Angel Agreement: Includes mentorship commitments and specific industry expertise requirements alongside investment terms

• Angel Investors: High-net-worth individuals or family offices providing initial capital, typically between ₹10-50 lakhs, to early-stage startups
• Startup Founders: Entrepreneurs seeking seed funding who negotiate and sign these agreements on behalf of their companies
• Startup Lawyers: Legal professionals specializing in early-stage investments who draft and review these agreements
• Company Secretaries: Ensure compliance with SEBI guidelines and maintain proper documentation for future funding rounds
• Investment Advisors: Help structure deals and mediate between angels and startups during negotiations

• Company Details: Gather incorporation documents, shareholding pattern, and current valuation assessment
• Investment Terms: Define investment amount, equity percentage, and any special rights or restrictions
• Due Diligence: Compile financial statements, business plan, and growth projections
• Investor Information: Collect KYC documents, PAN details, and proof of funds from angel investors
• Legal Framework: Review SEBI's angel investor guidelines and startup recognition criteria
• Exit Strategy: Document clear terms for future exits, including buyback options and transfer rights

• Investment Terms: Clear specification of investment amount, equity percentage, and valuation details
• Rights & Obligations: Voting rights, board seats, and investor participation in future decisions
• Anti-dilution Protection: Safeguards against ownership dilution in future funding rounds
• Information Rights: Regular financial reports and business updates to investors
• Exit Mechanisms: Defined paths for investor exits through IPO, buyback, or third-party sale
• Dispute Resolution: Arbitration clauses and governing law specifications under Indian jurisdiction
• Compliance Statement: Reference to SEBI guidelines and startup recognition requirements

A Pre-seed Angel investment agreement differs significantly from a Seed investment agreement in several key aspects, though both handle early-stage startup funding. Understanding these differences helps choose the right agreement for your funding stage.

• Investment Size: Pre-seed deals typically involve smaller amounts (₹10-50 lakhs) from individual angels, while seed agreements handle larger investments (₹1-5 crore) from institutional investors
• Documentation Level: Pre-seed agreements are simpler, focusing on basic rights and valuations, while seed agreements require comprehensive terms, warranties, and governance structures
• Investor Rights: Pre-seed agreements offer limited control rights, whereas seed agreements include detailed protective provisions and board representation
• Due Diligence: Pre-seed requires basic company verification, while seed funding demands extensive financial and legal due diligence