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A Pre-seed Angel investment agreement outlines the terms when an early-stage investor (angel) puts money into a startup before its first major funding round. It's typically simpler than later-stage investment contracts, focusing on basic terms like equity stakes, valuation, and investor rights.

These agreements often use convertible notes or SAFE (Simple Agreement for Future Equity) structures, letting angels invest now while determining the exact share price later. This helps startups get quick funding without complex negotiations over company valuation, while giving investors potential upside if the company grows. The terms usually include basic protections for both sides, like information rights and dilution provisions.

Use a Pre-seed Angel investment agreement when your startup needs early funding but isn't ready for a full venture capital round. This agreement works best for raising smaller amounts (typically $25,000 to $250,000) from individual investors who understand the high risks of early-stage investing.

The agreement becomes essential when you need quick capital without the complexity of traditional equity rounds. It's particularly valuable for tech startups, software companies, and innovative businesses that need runway to build their first product or reach initial market validation. The flexible terms help preserve future fundraising options while giving angels the potential for significant returns.

• Basic SAFE (Simple Agreement for Future Equity): Most straightforward version offering equity rights at a future date, popular with Y Combinator startups
• Convertible Note Agreement: Includes debt that converts to equity, with interest rates and maturity dates
• Priced Equity Agreement: Directly sets company valuation and equity percentage, typically with detailed investor rights
• KISS (Keep It Simple Security): Alternative to SAFE with more investor protections, including provisions for interest payments
• MFN (Most Favored Nation) SAFE: Simpler version that automatically matches terms of future better deals

• Startup Founders: Lead negotiations and sign the agreement on behalf of their company, often working closely with their legal counsel to protect company interests
• Angel Investors: High-net-worth individuals who provide early funding, review and negotiate terms, and sign as investing parties
• Startup Attorneys: Draft and review agreements, ensure legal compliance, and advise founders on term implications
• Investment Lawyers: Represent angel investors, review terms, and ensure investor protections are adequate
• Corporate Secretary: Maintains official records, manages document execution, and tracks equity arrangements

• Company Details: Gather incorporation documents, cap table, and current valuation estimates
• Investment Terms: Define investment amount, type of security (SAFE, note, equity), and conversion triggers
• Investor Information: Collect accredited investor verification, tax forms, and contact details
• Rights Package: Determine information rights, pro-rata rights, and board observation privileges
• Key Protections: Outline anti-dilution provisions, transfer restrictions, and voting rights
• Future Planning: Consider impact on future funding rounds and potential exit scenarios

• Parties & Identifiers: Full legal names, addresses, and roles of investor and company
• Investment Terms: Amount, valuation cap, discount rate, and conversion mechanics
• Securities Details: Type of security issued, class of shares, and conversion rights
• Investor Rights: Information access, pro-rata rights, and participation in future rounds
• Representations: Company and investor warranties about legal status and authority
• Key Definitions: Clear explanations of technical terms and triggering events
• Governing Law: Jurisdiction and dispute resolution procedures
• Signature Block: Dated signatures with titles and witness 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. The main distinctions lie in timing, structure, and complexity.

• Investment Size: Pre-seed deals typically involve smaller amounts ($25K-250K) from individual angels, while seed rounds often exceed $500K and involve institutional investors
• Documentation Complexity: Pre-seed agreements are usually simpler, often using SAFE or convertible notes, while seed agreements require comprehensive shareholder rights and detailed terms
• Valuation Approach: Pre-seed often delays formal valuation through convertible instruments, while seed rounds usually set a specific company valuation
• Investor Rights: Pre-seed agreements have minimal investor protections, whereas seed agreements include detailed voting rights, board seats, and information rights