Investment agreement template must-haves for partnerships.

A man sitting at a desk uses an investment agreement template on his laptop.
Let’s explore what an investment partnership is and what a solid investment agreement template should include.

Investment partnership agreements can be mind-bogglingly complex — especially if you’re about to enter into one for the first time. You must carefully consider how to write the agreement before you sign it. Let’s explore what an investment partnership is and what the agreement should include.

What is an investment partnership?

An investment partnership, or investor partnership, is a form of business ownership. In it, the majority of the business’s investments are in financial instruments, and most of its profits stem from these instruments. An investment partnership agreement sets up this relationship.

Determine your investment partnership agreement structure.

While the content will vary, your investment partnership agreement template should always include the following:

Purpose of the contract. The purpose is to safeguard the investor’s investment in the company and the company’s return on the investor’s investment.
Investment. This establishes how much the investor will invest, over a set amount of time, in exchange for a certain number of a company’s stock shares.
Management and control. This establishes who approves decisions and how decisions are made for the investment.
Distribution. The net income earned by the company in a certain dollar amount will go to the investor on a certain schedule.
Dissolution. If a dissolution happens before the agreement has ended between the investor and the company, the company will give the investor payment equal to their original investment.
Voting. This establishes who gets to vote and how many votes each party gets.
Non-disclosure. This ensures that confidential information and trade secrets will not be discussed outside of the parties involved.
Non-competition. The investor agrees to not work with a company that is in direct competition with the company they are investing in throughout the time of investment.
Termination. This contract ends the investor and company relationship when either party is no longer interested.
Severability. This is an agreement where a contract’s full terms remain intact, even if one portion of the agreement is discovered to be unenforceable or illegal.

What to include in an investment agreement template.

Because these partnerships can come in many different forms, there isn’t a single, universally applicable investment partnership agreement template. That said, any such agreement should clearly define:

Parties and their roles. Establish which parties will enter into the agreement and what their exact roles will be.
Partner duties. Define the duties of each partner in the most specific language possible. Avoid generalized statements and go into detail.
Investment and profit sharing. Lay out how much each party will invest in the business and how you’ll distribute profits and losses. Again, you can’t go into too much detail.
Liabilities. Determine which partners will be personally liable for your partnership’s business obligations. This is crucial for protecting personal assets in case your business goes into debt or fails.
Dispute resolution. Specify how you’ll solve any disputes, including legal ones. Make sure to include a severability clause as well.

When creating your investment contract agreement template, be sure to check local and state guidelines that may impact your investor agreement.

What types of investor partnership agreements exist?

There are multiple investment partnership agreement options you can choose from. Some popular examples are as follows:

Private equity. This type of investment encompasses capital that is invested in unlisted companies. This type of fund is typically directly invested in public buyout companies or private companies, which prompts them to withdraw from the stock exchange. This type of investment agreement tends to be a high-return, high-risk one.
Venture capital. This class of funding is mainly used with small businesses or startup companies that show potential for long-term growth. Generally, persons with a high net worth, investment banks, and other financial organizations invest their money in this type of fund to gain high returns over a short period of time.
Hedge fund. Organizational investors, persons with high net worths, and other qualified investors finance this fund. This fund minimizes risk by both buying and shorting holdings in a long and short equity plan.
Mutual fund. With this type of fund, the fund manager extracts money from a large number of investors, then puts money into the increased capital in different types of financial security investments, including bonds, equity stocks, short-term debt funds, and more.

Reduce errors with an investment contract template.

When dealing with finances, one seemingly small error can have a huge impact on yourself or someone else. Making financial organization as simple as possible reduces the chance of mistakes.

By taking the time to create an investment partnership agreement template, you and future investors can spend less time correcting potential errors later on.

By creating this template, you make expectations clear from the start. An investment contract template clearly outlines what is expected so that all parties are on the same page.

Why an investment agreement contract is a must-have.

An investment agreement contract sets expectations from the start and ensures everyone involved is on the same page.

Here are a few reasons why an investment agreement contract is a must-have:

Protects both parties. Expectations and potential outcomes are clearly outlined. This makes all parties conscious of potential risks involved with the investment and how each party can benefit from the agreement.
Explains rights and obligations. This agreement ensures that both the company and the investors know their obligations and rights. This can prevent future issues down the line.
Builds trust. By managing expectations from the start and holding both parties accountable for their actions, each party can better understand the responsibilities of both sides.

Resources to edit and protect your investor agreement.

Once you’ve written an investment partnership agreement, it’s best to finalize it as a PDF. This way, you’ll ensure no one can edit PDF agreement text and also make it easy to share. Adobe Acrobat lets you convert practically any file into a PDF. You can also protect PDFs with passwords and even sign the document electronically. You can complete these tasks online as well.

Looking for more resources for when you’re working on your investment partnership agreement?