An Advance Subscription Agreement / SeedFast is an agreement for future equity in the company, where investors will pre-pay for shares that will then be allocated in the next funding round. The common terms used in SeedFASTs are:
This is the valuation or price per share that the SeedFAST will convert to equity at. This will be the lower of the valuation cap or the next funding raising round or exit valuation, or the low valuation if the investment automatically converts at the longstop date.
Next Qualifying Fundraising
This is the predetermined amount of investment you would have to raise in the next fundraising round before your SeedFAST automatically converts to equity.
This caps the price per share at which the SeedFAST converts to equity at a funding round or exit event. It allows for investors to capture more of the upside in the event of a higher than expected pre-money valuation.
The date after which, if there has been no qualifying fundraising or exit event, the SeedFAST will automatically convert to equity at the pre-set low valuation.
The discount is applied to the price per share at the next fundraising round, and normally it is around 10 - 20 %. This is the reward given to investors for taking on the added risk of investing in early as part of a SeedFAST and not as part of the upcoming funding round!