If you want to take investment in ahead of a round using a SeedFAST then this guide is for you!
A SeedFAST is a type of Advanced Subscription Agreement (ASA). It is a quick and inexpensive way to raise funds from investors in an S/EIS compliant way without having to do a full round, allowing the investors to convert their investment into shares in the next funding round.
For more information on what a SeedFAST is, please see Introducing SeedFAST, an SEIS/EIS-friendly way to raise ahead of a funding round.
The key documents as part of a SeedFAST are your SeedFAST Agreement, Investor Consent Notice, Board Resolution & Shareholders Resolution. This guide will take you through all the steps needed to create and close an investment using a SeedFAST.
1. Start your SeedFAST
To start your SeedFAST head the Funding tab and click start new SeedFAST/SeedNOTE (the pink box).
A new window will open on the right side of the page, select SeedFAST, enter how much you are raising and then click start for free.
You will then be prompted to select the investor, please note SeedFASTs are individual agreements and you’ll need to create one per investor. Please see this guide on how to add a company investor.
The next window allows you to select:
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The date - this is just the proposed date of the investment and it is used to date your SeedFAST in the Timeline, this doesn’t feed through to any of the SeedFAST documents.
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The share class - Please remember to select a share class that is already described in your Articles of Association.
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SEIS/EIS requirements.
2. Key Terms
Click the pencil icon next to the Key Terms.
Are you doing more than one SeedFAST at a time?
If the answer is yes, you will need to enter the total of all the investments. This amount entered will feed into the SeedFAST and also the Investor Consent Notice, Shareholders Resolution and Board Resolution. This means when completing SeedFAST’s you only need to complete and sign one Investor Consent Notice, Board Resolution and Shareholders Resolution for all SeedFASTs.
At what valuation should the SeedFAST convert?
Here you have a choice to select that it will always convert at a set valuation or it will convert at a variable valuation (and discount) based on your next round share price.
If you select that it will convert at a variable valuation then you will be asked to select a discount, the high valuation cap and the low valuation. It’s important to note, that when selecting this option the SeedFAST will convert in one of two scenarios: a) at the next qualifying funding round either at the valuation set by the new non-SeedFAST investor and the discount or, b) at the low valuation cap if you hit the long stop date (whichever is lower).
For more information about what to set as your discount, cap and low valuation see this article, how to choose the right deal terms for your SeedFAST / Advanced Subscription Agreement.
What defines a new funding round?
This question asks you to pick the automatic conversion trigger, the amount you need to raise (including or excluding other SeedFASTs) before the SeedFAST converts. It’s important to set a sensible amount here to avoid your SeedFAST converting at the low valuation.
What share class will the SeedFAST convert into?
The standard here is to keep it so that the SeedFAST converts into the best available share class in the next funding round, so that your SeedFAST investors get the same deal terms as the new incoming investors.
If you select that the SeedFAST will convert at the share class specified (when you set the SeedFAST up) again please remember to select a share class already described in your Articles of Association.
When would you like the SeedFAST to convert if there’s no new funding round?
Select here the time period by which you would like to convert the SeedFAST if there is no new funding round. The SeedFAST automatically will convert at the Low Valuation if a funding round has not occurred within this time period, known as the Longstop Date.
Please note if you would like your SeedFAST to be SEIS/EIS Compatible (as per the HMRC guidelines) then you must set the Longstop Date to 6 months from the date of the agreement.
Investor Rights Section
After entering your bank details you are taken through to the Investor Rights section. As a SeedFAST investor, until you convert, you haven’t been issued any equity. This means you don’t come up as a shareholder on the cap table, you don’t have any voting rights, rights to dividends, or rights of preemption.
Investors, however, can ask for specific rights as part of the SeedFAST Agreement, and if they do you can set this in this section here.
Additional Items and Cover Page
The last two sections allow you to add any Additional Items and an explanatory Cover Page and once complete you can now create and unlock your SeedFAST.
3. SeedFAST Agreement:
Now you can create, unlock, sign and share the SeedFAST with your investor. Once your investor has signed the agreement, ask them to send you their investment.
Please note, to unlock this agreement you will be prompted to pay the SeedLegals fee.
4. Investor Consent Notice:
If you have done a previous funding round and you need the consent of existing investors to issue new shares (check your old Shareholders Agreement) then follow the same steps above to create, sign and share your Investor Consent Notice to the relevant investors.
Please note, if you are doing multiple SeedFAST Agreements you will only need to send one Investor Consent Notice for the total amount you are raising through SeedFASTs.
If there were no investor consent provisions in your last round, or if this is your first round then you can ignore this document.
5. Board Resolution:
This document is important to show that the Board of Directors approve the SeedFAST investments, you will need to have a board meeting and get one Director to sign this Board Resolution.
Please note, again you will only need to create one Board Resolution if you are doing multiple SeedFASTs.
6. Shareholders Resolution:
The Shareholders Resolution must be signed by at least 75% of the voting shareholders before the date on the SeedFAST. You will only need one Shareholders Resolution if you are doing multiple SeedFASTs.
The Shareholders Resolution will give you authority to convert the SeedFAST(s) into shares in the Company so that the total number of new shares will not exceed the maximum amount of shares that will be created if all SeedFASTs convert at the low valuation. Don’t worry the platform will automatically do the maths to calculate this number of shares for you!
7. Archive your SeedFAST
Once all the above has been completed and the funds are transferred you can hit this button to close the SeedFAST.
For other articles and help with your SeedFAST please see:
For a SeedFAST when can my investors get their SEIS-EIS certificates?