A SeedFAST is an investment agreement where the investor invests money now, and that investment will convert into shares at a later date when one of 4 trigger events is reached:
1: On a new qualifying funding round
When you issue a SeedFAST you'll specify what amount of new investment constitutes a new funding round. When you raise that amount of investment (either in one go or cumulatively over any number of individual raises - you can choose which you'd like when you create the SeedFAST) that will cause the SeedFAST to convert "on a new round".
In this scenario you can give the SeedFAST investor a Discount (typically 10% to 20%) on the valuation that new investors in the round will pay, as an incentive for the SeedFAST investors to invest earlier.
You can also choose to apply a Cap, which means that if the valuation in your new round is above that cap, the SeedFAST will still convert at the Cap. This is a protection for the SeedFAST investor to avoid the company giving them very few shares by raising the next round at a very high valuation.
If you apply both a discount and a cap, then the SeedFAST will convert at the lower of the new round valuation minus the discount, or the cap (i.e. the discount is not applied to the cap).
2: On the Longstop Date
If a funding round doesn't happen before a certain date, known as the Longstop Date, then the SeedFAST will convert at the Low Valuation, which you can specify when you create the SeedFAST.
If the investor is looking for SEIS or EIS, then the Longstop Date is limited to 6 months maximum. If the investor isn't after SEIS or EIS then there's no limit on the Longstop Date. That said, SeedFASTs are generally designed to convert within 18-24 months maximum, any longer than that and the investor is likely to want interest and return of capital, for which you'd choose a convertible note (like our SeedNOTE) instead of a SeedFAST, as it offers those options, and more.
3: On an IPO or sale of the company
The SeedFAST will convert into equity immediately before the exit event occurs so that the SeedFAST investor can then sell those shares to the acquirer, alongside the existing shareholders.
4: If the company goes into liquidation
If things don't work out and the company shuts down then the SeedFAST will convert into shares automatically just prior to that event, so that the SeedFAST holder becomes a shareholder and can make a claim on the company assets, along with other shareholders. And, if they're an SEIS or EIS investor, that will also then allow them to claim SEIS/EIS loss relief on their investment.