The IRA (Investors Rights Agreement) is a standard venture financing document enumerating contractual rights of preferred stock investors beyond what the certificate of incorporation alone provides.

How it works

In a typical Series A or later priced round, the company, founders, and investors sign an IRA alongside the stock purchase agreement and amended charter. Common provisions include information rights — financial reporting schedules scaled by investment size; pro rata rights allowing investors to maintain ownership percentage in future rounds; registration rights for demand and piggyback inclusion in an IPO; and sometimes board observer rights or ROFR on founder stock sales. Major investors above threshold ownership receive broader packages. IRAs survive as long as preferred shares exist and bind successor holders. Negotiation focuses on reporting burden, pro rata thresholds, and registration demand frequency. IRAs do not typically include liquidation preferences — those live in the charter.

Why it matters

• Founders: Understand ongoing compliance costs. Side letter promises can conflict with IRA standards — keep counsel aligned.
• Investors: IRA rights are enforceable contract rights distinct from economic terms in the charter. Missing IRA provisions weaken investor protection.

Common mistake

Confusing IRA with the voting agreement or ROFR/co-sale agreement. Each document covers different governance and transfer restrictions.

Related ideas

Information rights, pro rata, registration rights, voting agreement, and right of first refusal form the standard NVCA document set.