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A Seed investment agreement outlines the terms when early-stage investors put money into German startups in exchange for equity. It's the key document that startup founders and angel investors use to formalize their initial funding relationship, typically for investments between €25,000 and €250,000.

Under German corporate law, these agreements specify crucial details like company valuation, equity stake percentages, investor rights, and milestone-based payment schedules. They often include standard protective provisions (Gesellschafterschutzrechte) and align with German GmbH regulations, giving investors certain veto rights while protecting founders' ability to run their business.

Use a Seed investment agreement when your German startup needs its first significant external funding, typically between €25,000 and €250,000. This legal foundation becomes essential once you've moved beyond friends-and-family funding and are ready to bring in professional angel investors or early-stage venture capital firms.

The timing is critical - implement this agreement before any money changes hands and while you still have negotiating leverage. German startups often need this document when transitioning from proof-of-concept to market entry, usually after establishing a GmbH but before seeking Series A funding. It protects both founders and investors during this vulnerable growth phase.

• Simple SAFE Agreement: Most basic form used by early-stage German startups, converting investment to equity at a future funding round without setting a current valuation
• Priced Equity Agreement: Traditional approach setting a fixed company valuation, commonly used when investing in GmbHs with clear revenue streams
• Convertible Loan Agreement: Debt that converts to equity, popular among German angel investors for tax advantages and downside protection
• Participation Rights Agreement: Grants economic rights without voting power, often used by strategic corporate investors

• Startup Founders: Negotiate and sign the Seed investment agreement as representatives of their GmbH, often seeking legal counsel to protect their interests and future control
• Angel Investors: Individual investors who provide initial capital, typically €25,000 to €250,000, and help shape key agreement terms
• Startup Lawyers: Draft and review agreements, ensuring compliance with German corporate law and protecting both parties' interests
• Business Accelerators: Often facilitate these agreements and may be party to them when providing seed funding as part of their program
• Tax Advisors: Review agreement structures to optimize tax implications for both investors and founders under German tax law

• Company Details: Gather current GmbH registration documents, shareholder list, and articles of association
• Investment Terms: Define exact investment amount, valuation, equity percentage, and any milestone-based payment schedules
• Due Diligence: Prepare financial statements, business plan, and intellectual property documentation
• Investor Rights: Outline specific voting rights, board seats, and information access privileges
• Exit Provisions: Specify tag-along rights, drag-along rights, and anti-dilution protection
• Compliance Check: Verify alignment with German corporate law requirements and tax regulations

• Parties and Recitals: Full legal names of the GmbH, founders, and investors, plus company registration details
• Investment Terms: Precise investment amount, valuation, equity percentage, and payment schedule
• Shareholder Rights: Voting rights, information rights, and participation in future funding rounds
• Anti-dilution Protection: Mechanisms to protect investor shareholding in future capital increases
• Exit Provisions: Tag-along and drag-along rights, plus share transfer restrictions
• Warranties: Standard representations about company status, financials, and intellectual property
• Governing Law: Explicit statement of German law application and jurisdiction

A Seed investment agreement differs significantly from a Pre-seed Angel investment agreement in several key aspects, though both are crucial for German startup funding. Let's explore the main differences:

• Investment Size: Seed agreements typically handle €25,000 to €250,000, while pre-seed deals usually involve smaller amounts under €25,000
• Company Stage: Pre-seed agreements suit very early startups without formal valuation, while seed agreements require established GmbH structure and clear metrics
• Investor Rights: Seed agreements include more comprehensive protective provisions and governance rights, pre-seed agreements are usually simpler
• Documentation Requirements: Seed agreements demand full due diligence and detailed financial projections, while pre-seed focuses on basic team and concept validation
• Legal Complexity: Seed agreements contain more sophisticated clauses for future rounds and exit scenarios, pre-seed agreements are more straightforward