What is Information Rights?
An investor's contractual right to regular financials and updates - typically annual and quarterly statements plus a budget.
Information rights obligate the company to share defined reporting with significant investors: audited or unaudited annual statements, quarterly financials, an annual operating budget, and often a cap table on request. They're standard in priced rounds and usually limited to 'major investors' above an ownership threshold. The point is transparency - investors can't govern or protect their stake without visibility into performance and runway. Why it matters to you: information rights are reasonable and expected, but loose drafting can turn them into an open-ended reporting burden or hand sensitive data to investors who also back competitors. Scope the deliverables, set a clear cadence, tie the rights to a meaningful ownership floor, and add confidentiality language.
Example
- A term sheet grants major investors (1%+ ownership) quarterly financials within 45 days of quarter-end and an annual budget before the fiscal year starts.