The law firm Cheongchul's Attorney Kim Kwang-sik conducted an interview with 'Global Epic' regarding the 'Startup Investment Agreement.'

The most immediate and practical challenge when starting a startup is securing funding. In the early stages, obtaining funds is a priority, which often leads to the quick signing of investment agreements during the investment attraction process. However, if the investment agreement is viewed merely as a tool for receiving investment funds, the founder may make a grave mistake that threatens the future of the business.

The investment agreement is a document that organizes the promises between founders and investors; however, it includes various clauses that affect equity dilution, management rights, and decision-making authority. Signing without a clear understanding of how these clauses operate significantly increases the risk of facing unfavorable circumstances in business operations later on.

Attorney Kim Kwang-sik from Cheongchul law firm advised, “The clauses included in the investment agreement are not just part of the contract; they directly affect the founder's equity and management rights. In particular, clauses such as anti-dilution provisions, preemptive rights, drag-along, and tag-along rights are important mechanisms through which investors can intervene in future business operations or influence decision-making. Therefore, it is crucial to fully understand and negotiate the meaning and operation of these clauses during the initial contract stage.”

Details can be found in the posted full interview.

Investment Agreements: A Crucial Strategy Determining the Future of Startups