Side Letters for Your Fundraise and Employee Participation

You have the option to agree on individual supplementary terms with specific investors or employees — so-called side letters.

These supplement the standard contracts (General Investment Terms and Terms of the Investment Agreement) and can be uploaded directly on the platform.

Once uploaded, the side letter is automatically shown in the respective investor's subscription flow and must be signed by both parties.

What is a side letter used for?

A side letter allows you to grant individual investors additional rights or terms beyond the standard conditions. Typical use cases include:

Top-up right (comparable to a convertible loan)
If a qualified financing round takes place after the investment, the investor receives additional virtual shares. The price is calculated with a discount on the new valuation and/or capped. The top-up right can only be exercised once.

Pro-rata right
In follow-on financing rounds, the investor can participate proportionally to maintain their ownership stake. The pro-rata share is calculated based on the ratio of their shares to the total diluted capital. The company is obligated to inform the investor about follow-on financings and grant them a deadline to exercise the right.

Liquidation preference
In the event of an exit, liquidation, or dissolution of the company, the investor receives their investment amount back on a priority basis before any other distributions are made to shareholders or token holders.

Extended information rights
Beyond the standard information right (annual financial statements), additional rights can be agreed, for example:

Audited or unaudited quarterly financial statements
Operational reports with key metrics and milestones
Immediate notification of material events
Access to the management team for updates and questions
Right to attend shareholder meetings

All information provided under extended information rights must be treated as confidential.

Governance rights
Individual voting or protective rights beyond the standard profit participation rights. These can be adjusted depending on the investment amount and agreement.

Template

For the Fundraising packages (Fundraise, Fundraise Plus, Scale-Up), Tokenize.it provides a side letter template that includes all the building blocks listed above as optional modules. You can select the relevant sections and adapt them to your needs.

Important: The template does not constitute legal advice. We recommend having the side letter reviewed by a lawyer before use.

Employee Participation (TOP)

For employee participation (Token Option Plans) as well, you have the option to agree on individual supplementary terms with your employees, advisors, or third parties. Tokenize.it provides a template for individual allocation terms ("Employee Allocation Custom Conditions") for this purpose.

The template covers, among other things:

Individual vesting periods and cliff periods
Provisions for part-time work, parental leave, or suspension of the employment relationship (pro-rata calculation)
Accelerated vesting upon exit or first transaction
Forfeiture of unvested options upon termination of the relationship
Provisions on taxes and social security contributions
Right to exercise vested options at any time without the company's permission

Important: This template also does not constitute legal advice. We recommend having the allocation agreement reviewed by a lawyer before use.

Note: Public Fundraise

Side letters cannot be used with the Public Fundraise add-on. Side letters are only available with the Fundraising packages and for employee participation.

How do I upload a side letter?

The upload takes place directly on the platform as part of creating an offer. The side letter is shown to the respective investor or employee together with the standard contracts in the subscription flow.