The Investors' Rights Agreement in a typical venture capital financing sets out certain rights the investors have, including the following:
- Registration Rights: This section provides investors with the right to register their shares for public sale under certain conditions.
- Information Rights: This section obligates the startup to provide certain financial and operational information to the investors. This might include annual financial statements, quarterly unaudited financials, and annual budgets.
- Right of First Offer (ROFO): Before the startups sells new securities to other parties, it must first offer them to the existing investors under the same terms. This provision ensures that current investors have the opportunity to maintain their ownership percentage.
A model Investors' Rights Agreement may be found on NVCA's website.