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A Seed investment agreement spells out the terms when early-stage investors put money into a startup in exchange for equity. This legal contract, governed by Indian Company Law and SEBI regulations, details how much funding the startup gets, what percentage of ownership goes to investors, and key rights like board seats or veto powers.

These agreements typically protect both founders and angel investors through essential clauses about valuation, share transfer restrictions, and future funding rounds. For Indian startups, they often include specific provisions about foreign investment compliance under FEMA rules and establish important governance frameworks that help avoid disputes later.

Use a Seed investment agreement when your startup is ready to accept its first major funding from angel investors or early-stage venture capitalists in India. This agreement becomes essential once you've moved beyond friends-and-family funding and need formal terms for external investors putting in anywhere from ₹25 lakhs to ₹2 crores.

The timing is perfect when you've agreed on a basic valuation with investors and need to formalize key terms like equity stakes, voting rights, and anti-dilution protection. Having this agreement in place before money changes hands protects both parties and ensures compliance with Indian securities laws, especially if you're dealing with foreign investors.

• Simple SAFE Agreement: Most basic version focused on equity-only terms, commonly used by early-stage Indian startups raising under ₹50 lakhs
• Convertible Note Agreement: Includes debt conversion terms and interest rates, preferred for bridge rounds between ₹50 lakhs to ₹2 crores
• Full Subscription Agreement: Comprehensive version with detailed investor rights, governance provisions, and compliance requirements under Companies Act
• Foreign Investment Structure: Specially adapted for overseas investors, incorporating FEMA compliance and RBI reporting requirements

• Startup Founders: Sign as company representatives, negotiate terms, and make key promises about business operations and future growth
• Angel Investors: Provide the seed capital, review and negotiate investment terms, often bringing expertise alongside money
• Corporate Lawyers: Draft and review agreements, ensure compliance with Indian securities laws and SEBI regulations
• Company Directors: Approve the agreement terms, often required to sign specific commitments or warranties
• Company Secretary: Handles regulatory filings, maintains statutory records, and ensures proper documentation under Companies Act

• Company Details: Gather incorporation documents, shareholding pattern, and latest valuation report
• Investment Terms: Document agreed-upon investment amount, equity percentage, and share price calculations
• Investor Information: Collect KYC documents, PAN details, and source of funds declaration
• Rights Package: Define board seats, voting rights, and any special veto powers
• Compliance Check: Verify FEMA rules for foreign investors, SEBI regulations for domestic funding
• Future Planning: Include provisions for next funding rounds, exit options, and anti-dilution protection

• Investment Details: Clear statement of funding amount, equity percentage, and share class being issued
• Representations & Warranties: Company's legal status, ownership structure, and financial condition
• Rights & Obligations: Investor voting rights, board representation, and information access privileges
• Pre-emptive Rights: First refusal rights on future share issues and anti-dilution protection
• Exit Mechanisms: Tag-along, drag-along rights and conditions for share transfer
• Governing Law: Explicit mention of Indian jurisdiction and applicable regulations under Companies Act
• Dispute Resolution: Arbitration procedure following Indian Arbitration Act provisions

A Seed investment agreement differs significantly from a Pre-seed Angel investment agreement in several key aspects, though both deal with early-stage funding. The main distinctions reflect their different stages in the startup funding lifecycle and legal requirements under Indian securities laws.

• Investment Size: Seed rounds typically involve ₹50 lakhs to ₹2 crores, while pre-seed deals are usually under ₹25 lakhs
• Legal Structure: Seed agreements require full compliance with SEBI's startup funding regulations, whereas pre-seed deals often use simpler documentation
• Investor Rights: Seed agreements include comprehensive investor protection clauses and board rights; pre-seed typically has basic rights only
• Valuation Approach: Seed rounds use formal valuation methods and detailed cap tables, while pre-seed often relies on convertible instruments or simple equity splits
• Compliance Requirements: Seed deals need RBI reporting for foreign investment, while pre-seed usually involves domestic capital only