Offer to Purchase Shares Agreement Venture Capital Template

In plain language: Identifies the offeror and the target company by full legal name and registered address, and states the date of the letter.

Common mistake: Using a trade name instead of the registered legal entity name. Mismatched names between this letter and subsequent binding documents create execution delays.

In plain language: States the number of shares, the share class, and the specific price per share the offeror is willing to pay.

Common mistake: Omitting the share class. Common and preferred shares carry different rights — failing to specify the class creates ambiguity that can delay or derail closing.

In plain language: Sets out the aggregate purchase price and how and when it will be paid — lump sum at closing, staged tranches, or subject to milestones.

Common mistake: Describing staged payments without tying each tranche to a specific milestone or date. Vague staging language is the single most common cause of post-offer payment disputes.

In plain language: States the implied pre-money and post-money valuation and the resulting ownership percentage the investor will hold after the transaction closes.

Common mistake: Omitting the 'fully diluted' qualifier. Ownership stated on an issued-shares basis can look materially different once options and warrants are counted in.

In plain language: Lists the specific conditions that must be satisfied before the Offeror is obligated to complete the purchase — such as board approval, due diligence sign-off, or regulatory consent.

Common mistake: Listing conditions without specifying who is responsible for satisfying each one and by what date. Open-ended conditions can be used to indefinitely delay or renegotiate terms.

In plain language: Sets the target date on which the transaction is expected to complete, with funds transferred and shares registered in the investor's name.

Common mistake: Setting an unrealistically short closing timeline before legal documentation is drafted. Rushed closings that miss the stated date can create uncertainty about whether the offer remains open.

In plain language: Requests that the company refrain from soliciting or accepting competing offers for a defined period while the parties work toward closing.

Common mistake: Making the exclusivity period too long without a corresponding obligation to progress deal documentation. Founders accept 60-day exclusivity and then face a slow-moving investor with no recourse.

In plain language: Requires both parties to keep the existence and terms of the offer confidential until a binding agreement is executed or a public announcement is authorized.

Common mistake: Omitting confidentiality entirely from a share purchase offer letter. Disclosure of offer terms to other investors or competitors can affect valuation negotiations or trigger unwanted third-party interest.

In plain language: States how the receiving party should formally accept the offer — typically countersignature — and the deadline by which acceptance must be received.

Common mistake: No expiry date. An open-ended offer can be 'accepted' weeks later at a time no longer convenient for the offeror, creating an unintended contractual obligation.

An offer to purchase shares (venture capital) is a formal written notice from an investor to a private company, proposing to acquire a specific number and class of shares at a defined price. It sets out the key commercial terms — valuation, consideration, conditions, and closing timeline — before a binding share purchase agreement is drafted. It signals serious intent and establishes a framework for final documentation.

In most jurisdictions, an offer letter of this type is not a binding share purchase agreement — it is a statement of intent subject to conditions precedent and the execution of definitive documents. However, specific clauses such as confidentiality and exclusivity are typically binding on acceptance. Consider consulting a lawyer if you need certainty about which provisions create enforceable obligations in your jurisdiction.

A term sheet is a broader pre-deal document covering governance, investor rights, anti-dilution, and liquidation preferences across several pages. An offer to purchase shares is narrower — it focuses specifically on the share acquisition mechanics: price, quantity, conditions, and closing date. For simple seed or early-stage rounds, the offer letter may substitute for a full term sheet; for Series A and beyond, both are typically used.

Acceptance triggers the exclusivity period and starts the clock on conditions precedent such as due diligence completion and board approval. The parties then negotiate and execute a definitive Share Purchase Agreement incorporating the terms agreed in this letter, along with any shareholder agreement or investor rights agreement required for the new share class.

The offer itself is issued by the investor and does not require their countersignature — it is a unilateral proposal. To create a record of acceptance, the template includes an acceptance mechanism where the company's authorized representative countersigns and returns the letter. This countersigned copy becomes the reference document until definitive agreements are executed.

Price per share is derived from the agreed pre-money valuation divided by the company's fully diluted share count. For example, a $5M pre-money valuation with 5,000,000 shares outstanding on a fully diluted basis yields a price of $1.00 per share. Investors and founders typically negotiate the pre-money valuation first, then calculate the implied price per share from the cap table.

The most common conditions are: satisfactory completion of investor due diligence, board of directors approval of the transaction, execution of a definitive share purchase agreement, and any required regulatory or third-party consents. For larger rounds, shareholder approval or a right-of-first-refusal waiver from existing investors may also be required.

Yes — for syndicated rounds where two or more investors are co-investing, all offerors can be named in a single letter with their respective share allocations and consideration amounts listed separately. Alternatively, each investor can issue a separate offer letter for their portion of the round, which simplifies individual negotiation but increases administrative overhead for the company.