With a startup come a new product idea and the hope of it doing better in the market. When this happens one will need commitment of either clients or investors. This is for the clients or investors to help launch the product to a full scale. The investors will always need a kind of agreement to be sure that the business idea will be a viable one.
The investor will need ample information of projected sales before they start investing in the business. so if you need investor funding for your business then you would need to write and send to them an agreement letter. This is where the letter of intent to startup business comes in
So a letter of intent to startup business is a written agreement of a startup to an investor or investors to build the investor’s confidence. It also be describe as a non legal binding letter that is written to bind two or more people in a business deal. An investor that wants to fund a startup would want to know the details of the business, the profit, price of the product and even the contact details formally stated. This will enable the investor to know if the business idea is worth investing in. with the intent letter one can gain proper investor funding. The Agreement will help startups to have funds that will aid propagate their products and services.
How to Write a Letter of Intent to Start a Business
The Letter of intent to startup business should be written in a persuasive manner. You are trying to convince an investor to invest in your startup. So you need to be positive and professional with it. The below guideline should be followed, if you want to draft your letter to perfection.
- You can start your letter with an introduction by introducing the start-up projects to those concerned
- You should write your letter accurately. This will help to invalidate your startup and bring a better effects value
- You would have to include the date of delivery and pricing of the product. This will strengthen your letter of intent
- Let your letter be detailed and explanatory o that the reader will be aware of all the commitment needed
- State in your letter the benefits of your products, the quality and other features
- Have the signatures of all the decision makers on your start-ups
Below are the samples of the letters of intent to startup business
Sample 1
12th June, 2015
David Cosmos
Okpara tailoring sales company
4567 mountain street, Atlanta
Dear Paul,
The intent of this letter is to offer a an agreement of the mutual interest between the:
Buyer: Mr. Cosmos
And
Seller: Mr. Edwin
The buyer will purchase the business products forth with from the seller, Mr. Edwin. This letter of intent would states the conditions that will incorporate the future agreement. It will also have on it data and information that would happen in future.
For the prospective transaction: this will involve a 70% share of Edwina products to Mr. Cosmos. The prospective transaction will be to make a payment of $400,000 only to the seller
For contingencies: before getting to the final decision, all the parties must be satisfied with the laid out plans. Even the employment negotiations should be concluded amicably
Due diligence will be carried out by the buyer. There will be examining of the business records, legal documents and financial books
When it comes to public announcement and confidentiality agreement, it has been agreed that all the parties involved must not disclose any information to the public. So information shall be a secret to both parties
For expenses of the business, both the seller and the buyer will bear their expenses. From the legal fees to other expenses related to the agreement.
The closing date for the transaction should happen on the 4th July 2021. But if the transition is not concluded on date, the public announcement and confidentiality agreements remain
Yours sincerely,
Agreed to by buyer: Mr. COSMOS
And
Accepted by the seller: Mr. Edwin
Sample 2
Mrs. Augusta Smith CEO
IT Solutions
5678 able street
Los Angeles, California
Dear Mrs. Patrick,
The intent of this letter is to give a formal note of the interest of the below parties
Seller: Mrs. Augusta Smith CEO, IT Solutions
And
Buyer: Mrs. Patrick
This is to indicate that the buyer, Augusta Smith will buy the business service stated in this letter. This letter will list the terms and conditions of the purchases of this service as the future agreement. This also includes the documents and information that will take place now or in the future.
When it comes to prospective transaction that the both parties are interested in. which is the sale of 60% of IT solutions shares. This shares amount about $500,000 will be paid by Mrs. Patrick.
For contingencies before the agreement, the seller Augusta Smith CEO IT Solutions must be satisfied with all the processes concerned.
Due diligence must always be followed and the buyer asks my permission to look at the accounting and business records. The seller has agreed to comply with all the confidentiality agreement. This means that the buyer will never have any contact with the clients of the seller Augusta Smith CEO, IT Solutions
There is a public announcements and confidentiality agreement in place. This simply means that all parties will not disclose any information concerning the agreement to any public.
The both parties have agreed to carry all the expenses 50:50. All professional fees and legal expenses would be shared 50:50
The closing date of this transaction would be on the 19th of September, 2020. But if it doesn’t happened that day, then confidential clause still applies
Yours sincerely,
Agreed by the buyer: Mrs. Smith
And
Agreed by the seller: Augusta Smith CEO, IT Solutions
Conclusion
It is always good to negotiate a business deal via drafting a letter of intent. If the deal will materialize then there should be agreement between the parties. With the letter of intent, the agreement will be non-legally binding. To get the letter written to perfection, you would need to include all the information like the terms and conditions of the intended business.
The outlined guidelines above can help you draft your letter of intent how you should. You can use the samples as your templates to excellently write your letter.
