Knowledge Base: Agile funding rounds

What is Agile?

An Agile round lets you use funds as they come in, rather than waiting to close all investors at once as in a full funding round. This ‘rolling close’ approach allows you to keep raising investment even after the initial round has closed, enabling more flexible, ongoing fundraising. New investors simply sign an Adherence Agreement, binding them to the existing documents from the initial round.

The share price can increase over the course of the Agile round as your valuation grows, but it cannot fall below the authorised minimum.

To start an Agile round, you need your initial documents in place (e.g. Shareholders’ Agreement and Articles). If you’ve already completed a funding round with FounderCatalyst, these will be available; otherwise, you can use your existing documents.

You must also authorise the creation of additional shares. This enables you to add investors and close investments over time without further approvals, as existing investors will have already waived pre-emption rights and provided the necessary consents.

You can set this up during your initial funding round, or - if you’ve already completed it - by selecting ‘Authorise an Agile Funding Round’.

Two methods to set up an Agile round

1a. Authorising agile shares when defining your initial funding round. Jump to 1a

1b. Using your existing documentation and authorising an agile round Jump to 1b

The two methods are shown below including video walkthroughs.

Section 2 shows you the steps once you've started your agile round (including closing investors). Jump to Section 2

1a. Authorising agile shares when defining your initial funding round

When defining your initial funding round, enter the desired amount you wish to raise via agile, this will determine the number of shares that will be on offer; you also set the minimum price per agile share - it will default to the current share price investor are paying in the initial round, and you must add the agile round deadline (typically 6 months, but up to 12 months). This will authorise agile shares for your startup - but you don’t need to pay for the agile round yet, only when you actually open the agile round.

From here go to Section 2 to see how to complete and close your Agile Round.

1b. Using your existing documentation and authorising an agile round

Check out this video to learn more.

1. Select this option if you need to increase the number of shares/deadline for an Agile round raise.

2. Input your number of agile shares, minimum price per agile share and the agile share deadline (up to a year).

3. At the next stage, you must get your current shareholders to approve the creation of an agile round (don’t worry – we’ll do that for you!), unless you have indicated that you've already undertaken this step outside of the FounderCatalyst platform. In order to proceed you need:

• Holders of at least 75% of the shares in your company to approve the Special Resolution.
• Consent from holders of over 50% of the investor shares in your company in order to finalise this investment.

2. Starting an Agile round and closing investors

If you have completed the steps above, you are now ready to start an agile round.

1. Select "Start your Agile Round"

2. Next up, begin to invite your investors. You can choose from the options in blue.

3. Once you have invited investors to the platform, they will need to sign the required documents. You can nudge them to sign by sending another email requesting they sign, by clicking ‘Chase Outstanding Signatures’.

4. Once the documents have been signed, a green signature will appear below each of the documents. Once the money has been transferred, click ‘Mark as Received’. Enter your password as instructed.

5. Following the transfer of money, you can leave the round open for more investor (you don't need to close the round).

FAQs

Why is Agile so attractive for founders?

1. Most cost-effective fundraising option at £995+VAT for up to 12 months. This is uncapped, so you could raise millions for that fixed fee, and it includes S/EIS advance assurance.

2. Founders can close investors immediately and receive cash. You close investors on a per investor basis, meaning you don’t need to close the full round before accessing funds. This allows you to start deploying capital quickly and raise further Agile investment as needed.

3. Flexible valuation - there is a minimum share price the company cannot go below, but founders can increase the share price over time as valuation grows. A practical example - if an early investor negotiated your valuation down, but you now have strong interest at a higher valuation, it can be difficult to bring new investors into the same round. In this case, you can close the initial round and immediately open an Agile round, allowing you to increase the share price.

How are existing investors protected?

1. The share price during an agile round is set at a minimum value – usually no lower than the previous funding round. This ensures shares are not sold more cheaply than before.

2. The number of shares offered is capped, ensuring investors are not diluted beyond a specified percentage.

3. The timescale for the agile round is defined, preventing fundraising at the same price long after it should have increased.

What do I need to start an Agile round?

In order to start an agile round you need initial documents (Shareholders agreement and Articles etc) in place. If you have completed an initial funding round with FounderCatalyst, these will already be produced or you can use your previous documents not produced by FounderCatalyst.

Do I need a new Subscription and Shareholders Agreement (SSA)?

You don't have a new SSA in agile funding rounds. The very thing that makes them agile is the use of an adherence agreement, binding new investors to your existing paperwork.

Can I use the Agile function if I have existing non-FC paperwork?

Yes! You can authorise (taking care of any consents and the shareholder resolution process) and undertake an agile funding round using your existing paperwork. The adherence agreement simply attaches investors to that paperwork.

When are shares issued in an Agile round?

Shares are issued the moment you mark the money as received on a per investment basis. You don’t need to close the funding round to receive funds or issue shares.

Can I invite ‘Entry-Level’ investors to my Agile round?

Agile rounds can't have "Entry level" investors. Instead, assign any number of shares - even if not yet committed - and invite them to your Intelligent Data Room.

Does the second round have to raise the same amount of funds as the first and at the same value?

No, the share price can increase over time and you can raise different amounts – it really is agile.

How long can the agile funding round take place after the first round has closed?

Up to one year.

Extending your Agile Authorisation

The authority we seek at the start of the process only authorises shares to be issued up until the date set. To extend beyond that, you will need to authorise a new agile round (1B process).

What happens if I don't close a full Agile round? Remember, you're not issuing shares - you are authorising to allot new shares. If you don’t issue them, there is no impact.

What do we do if we need to change a right/protection?

You have to start a full priced round to do this, as you can’t change rights or protections during an agile round. This will be a New Terms round, not an agile round.

ASA vs Agile?

With ASAs, a founder has to issue new ASAs for each investor - they need to authorise each one, issue each one, and track the conversion trigger for each.

Whereas Agile is set up at the outset and investors sign an Adherence Agreement, making the process much simpler.

Agile also benefits the investor as they receive equity immediately and can reclaim SEIS sooner; with ASA, investors can only claim after the long stop date has passed or the ASA has converted in a qualifying funding round.

What admin do I need to do once I receive investment from an investor in an Agile round?

You are required to notify Companies House regarding the allotment of new shares via an SH01 - see our guidance on how to complete and file an SH01. If these shares are made using the SEIS or EIS schemes, then you also need to notify HMRC via a process known as Compliance and Certificates – we will do this for you – FounderCatalyst support for SEIS & EIS compliance

Who will generate shares (SH01) in Companies House?

You will once the shares are sold, by filing an SH01 according to this article.

Your obligation is to submit an SH01 within a month of allotting shares, so most people 'batch' the submission of SH01s to catchup on filings that occurred in the last month rather than doing one SH01 per allotment.

Which document usually indicates if we need investor consent for a new round?

The shareholders agreement, subscription agreement or whatever you previous took investment under almost always enshrines consent rights (or not).

Do I need to include all of our existing shareholders before starting an agile round?

Yes, those are the people you need to ask for consent (or to approve the shareholder resolution at least) so when you decide to go for this, we should ensure your existing captable is invited.

On the platform, how can I apply a discount for a specific investor in agile investment?

In an agile round, your 'floor' on a share price is the amount you authorise. You should ensure that your floor is low enough to accommodate any discount you wish to offer. You can vary the share price over time in an agile round, but never below the floor.

Will an agile funding round dilute existing investors?

Yes, an agile funding round dilutes everyone, including founders and existing investors, in the same way as adding an additional investment as part of the original funding round.

Can we include SPVs from previous rounds in our agile round?

Yes, you can include SPVs (Special Purpose Vehicles) from earlier rounds in your agile round. Each SPV can be added to the funding round like any other investor entity.

After closing our crowdfunding rounds and adding those SPVs to the cap table, can we keep adding new investors to the agile round under the same terms?

Yes, the agile round allows you to keep adding new investors under the same terms until it expires. You can choose to add them individually or through additional SPV entries. For example, you can either list the SPV multiple times as it gathers new investors or combine multiple entries into a single, larger SPV investment - it’s entirely up to your preference.

Are disclosures from our first funding round automatically included in the Agile round, or do we need to disclose everything again?

Yes - your disclosure letter is carried forward from the first round. Investors in the Agile round benefit from those disclosures automatically, so you don’t need to re-submit them or create a new disclosure folder. Nothing further or more up-to-date is required.

Can I update or amend the disclosures or warranties from our previous round before inviting new investors in an Agile round?

No - you don’t update disclosures during an Agile round. Investors in your Agile round automatically benefit from the warranties and disclosures made at the time your previous round closed. You don’t need (and aren’t expected) to refresh or resubmit these disclosures.