Hi fellow entrepreneurs,
A friend wants to invest in our startup - $1500 per month for 1 year at a valuation of 20% discount of next round.
Can someone please share a draft format of an agreement similar to the above arrangement?
A google search for a template you need might solve your worries. Why don't you give that a trial. After getting any format, you may just give it some little tweak to suite your needs.
There is no template necessary. I'm not a lawyer, but the basic premise of a contract is that so long as the intent is clear, any language is acceptable. Consider as many possible circumstances as you can when drafting your agreement, so even if things happen that you do not expect, there is already a clear resolution to the situation. For example, what happens if your investor gets hit by a truck and the payments stop? Does his family inherit his stake? What if your next investment round wants your current partner out of the deal? There are lots of scenarios to consider. You may wish to consult with an attorney or some other specialist who can help you think about possible scenarios you have not considered that should be addressed up front.
As friendly as you are with your pal now, it will not be so friendly if things go wrong. Better to have these conversations today while you're still friends.