Document background
The Startup Equity Agreement is a crucial document in the Indian startup ecosystem, typically used when a startup company is raising capital through equity investment. It becomes necessary when new investors are bringing capital into the company in exchange for shares, whether during seed funding, Series A, or subsequent funding rounds. The agreement must comply with Indian corporate law, particularly the Companies Act 2013, SEBI regulations, and FEMA guidelines for foreign investments. It addresses key aspects such as share valuation, investor rights, governance structure, exit mechanisms, and protection of both investor and founder interests. The document is essential for establishing clear terms of investment, preventing future disputes, and ensuring regulatory compliance while providing a framework for the company's growth and subsequent funding rounds.
