Securing investment is a pivotal moment for any tech startup. It validates your vision and represents a crucial step towards scaling your business.

However, while a new funding round brings excitement, it can also distract founders from the complexity of the investor agreements involved.

For tech founders, understanding these documents is essential to protect your interests and ensure the journey ahead remains stable and predictable.

When founders are preparing for or negotiating a funding round, investor documentation should be approached as a commercial deal, not just a formality.

Having experienced support during investment negotiations can help founders protect control, manage risk, and avoid long-term constraints. This is part of the transactional support we provide for growth-stage businesses.

With that in mind, here is what should be understood when navigating investor agreements.

At the start of the investment process, the term sheet is usually the first formal document you will encounter.

Although it is often non-binding, aside from clauses such as confidentiality and exclusivity, it sets out the core commercial terms of the investment.

As a result, valuation, investment amount, equity allocation, and key investor rights are established at an early stage.

What to look for:

Tip: Don’t rush the term sheet. It dictates the tone and content of the more detailed legal documents that follow. Negotiate hard on key terms here, as it’s much harder to change them later.

Once the term sheet is agreed, the Share Subscription Agreement follows.

This agreement governs the relationship between the company, the investors, and, in some cases, the founders.

It sets out how investors subscribe for new shares and confirms the mechanics of the investment, including share numbers, pricing, and payment terms.

What to look for:

Alongside the SSA, the Shareholders’ Agreement governs how shareholders and the company interact after investment.

This document plays a central role in setting decision-making processes, defining control, and managing shareholder rights.

As such, it has a long-term impact on how the business operates.

What to look for:

Unlike the Shareholders’ Agreement, the Articles of Association are publicly filed.

They govern the company’s internal management and define the rights and responsibilities of shareholders and directors.

Following investment, companies often amend the Articles to reflect the rights agreed with investors.

What to look for:

The disclosure letter provides essential protection for founders.

Through this document, founders disclose any exceptions to the warranties given in the Share Subscription Agreement.

For example, if a warranty states that no disputes exist, any known issues should be clearly disclosed.

When prepared properly, this document reduces the risk of future claims.

Tip: Be meticulously honest and thorough in your disclosures. Anything not disclosed could lead to a claim against you or the company post-investment.