The short answer
Information rights are contractual rights that require a company to send certain investors regular financial information, such as annual and quarterly financial statements and an annual budget. They usually go to larger investors in a priced round and are set out in an investors' rights agreement.
- Information rights are a contract term, not an automatic entitlement.
- They're often limited to investors above a set ownership or check size.
- Typical items: annual and quarterly financials, an annual budget.
- Good investor updates often go beyond what the contract requires.
How it works
In a priced round, the investors' rights agreement often gives "major investors" (those above a threshold you negotiate) the right to receive financial statements on a schedule, plus a budget and sometimes inspection rights. Smaller investors may have no contractual right to information at all, even though many founders share updates with everyone.
Worked example (hypothetical)
A seed round has a lead investing $1M and 15 angels at $10K to $50K each. The term sheet defines a major investor as anyone investing $250K or more, so only the lead gets formal information rights: annual financials within 120 days of year-end and quarterly financials within 45 days of quarter-end. The founders still send all 16 investors a short monthly update.
Why it matters to a pre-seed or seed founder
Set the threshold so you aren't legally bound to deliver formal reports to dozens of small holders, while still keeping everyone informed. Regular updates build trust and make your next raise easier, because existing investors can vouch for you. Use our investor update template, and see board seat for governance rights that go further.
Frequently asked questions
Do SAFE investors get information rights?
Standard SAFEs don't include them, though side letters sometimes add them.
Are monthly updates legally required?
Not usually. They're good practice; the contract sets what's required.
Can information rights be limited?
Yes. Companies commonly exclude trade secrets and limit rights to major investors.