What is Representations and Warranties?
Nexa Consultancy | Startup & Finance Glossary
These are statements of fact and promises made by the founders to the investors in a funding agreement. They cover aspects like the company being duly incorporated, owning its IP, and having paid all its taxes. A breach of these can lead to serious legal and financial consequences.
Startup Example: In an SHA, founders warrant that the company has no pending lawsuits. If a major lawsuit was undisclosed, this is a breach of warranty, and the investors can sue the founders for damages.
Our due diligence readiness service ensures all representations are accurate.