Pre-seed Angel investment agreement Template for Malaysia

A Pre-seed Angel investment agreement is a legal contract where early-stage investors (angels) provide initial funding to Malaysian startups before their first formal funding round. It outlines how much money the angel will invest, what percentage of company ownership they'll receive, and key terms like voting rights and board seats.

In Malaysia's startup ecosystem, these agreements typically range from RM50,000 to RM500,000 and must comply with the Securities Commission's guidelines on equity crowdfunding. They protect both the investor and startup by clearly defining valuation, exit strategies, and anti-dilution provisions while setting the foundation for future funding rounds.

Use a Pre-seed Angel investment agreement when your Malaysian startup needs early funding but isn't ready for venture capital or formal Series A rounds. It's particularly valuable for tech startups, innovative SMEs, or digital businesses seeking capital between RM50,000 and RM500,000 while wanting to maintain significant control over their company.

This agreement becomes essential when negotiating with individual investors or small investment groups, especially before establishing formal company valuation. It helps prevent future disputes by clearly documenting investment terms, ownership stakes, and investor rights while complying with Malaysian Securities Commission requirements for private investments in early-stage companies.

• Simple Equity Agreement: Basic version offering straight equity in exchange for capital, common for first-time founders seeking under RM100,000
• Convertible Note Agreement: Debt that converts to equity at a future funding round, popular with tech startups in Malaysia's digital economy
• SAFE Agreement (Simple Agreement for Future Equity): Provides investment rights without immediate equity, adapted to comply with Malaysian securities laws
• Milestone-Based Agreement: Links investment tranches to specific company achievements, protecting both investor and startup interests
• Strategic Angel Agreement: Includes mentorship and business development provisions alongside capital investment

• Angel Investors: High-net-worth individuals or investment groups providing capital, typically between RM50,000 to RM500,000
• Startup Founders: Entrepreneurs seeking early-stage funding while maintaining operational control of their company
• Corporate Lawyers: Draft and review agreements to ensure compliance with Malaysian securities laws and protect both parties' interests
• Company Directors: Authorize and execute the agreement on behalf of the startup
• Investment Advisors: Guide both parties through valuation, terms negotiation, and regulatory requirements
• Securities Commission: Oversees compliance with Malaysian investment regulations and investor protection guidelines

• Company Details: Gather complete business registration info, shareholder structure, and current valuation documents
• Investment Terms: Define investment amount, equity percentage, and any specific conditions or milestones
• Investor Profile: Collect investor's credentials, proof of funds, and investment history in compliance with SC guidelines
• Exit Strategy: Outline preferred exit mechanisms, including tag-along rights and future funding provisions
• Governance Rights: Specify voting rights, board representation, and veto powers for major decisions
• Due Diligence: Prepare financial statements, business plan, and market analysis for investor review
• Legal Review: Ensure agreement aligns with Malaysian securities laws and startup funding regulations

• Parties & Capacity: Full legal names, registration numbers, and authorized signatories of investor and startup
• Investment Terms: Precise amount, valuation basis, and equity percentage being offered
• Share Rights: Class of shares, voting rights, dividend rights, and anti-dilution provisions
• Representations: Company's warranties about its financial status and legal compliance
• Information Rights: Investor's access to financial reports and company updates
• Exit Provisions: Tag-along rights, drag-along rights, and future round participation
• Governing Law: Malaysian law application and dispute resolution mechanisms
• Confidentiality: Protection of sensitive business information and trade secrets

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

• Investment Size: Pre-seed typically involves smaller amounts (RM50,000-500,000) from individual angels, while seed rounds often exceed RM1 million from institutional investors
• Investor Rights: Pre-seed agreements usually offer simpler terms with limited investor control, while seed agreements include more comprehensive rights and protections
• Documentation Requirements: Pre-seed agreements need less extensive due diligence and simpler terms, whereas seed agreements require detailed financial projections and corporate governance structures
• Valuation Approach: Pre-seed often uses convertible notes or SAFEs to delay formal valuation, while seed rounds typically require concrete company valuations