Knowledge Base: Using ASA's on FounderCatalyst

Key Terms Used in This Guide:

• ASA (Advanced Subscription Agreement) → A way to invest in startups, similar to a SAFE, where investors provide capital in exchange for future shares.

• Qualifying Financing Event → A funding round where ASAs or CLNs automatically convert into shares, typically at a predetermined valuation or discount.

• Longstop Date → The latest possible date when an ASA must convert, usually after 6-12 months.

What about CLNs and SAFEs?

FounderCatalyst also supports CLNs (Convertible Loan Notes) and SAFEs (Simple Agreements for Future Equity), although they are less commonly used than ASAs in the UK.

• CLNs can be useful when you want to include interest or loan repayment terms.

• SAFEs are simpler and don’t involve debt, but are less familiar to UK-based investors and legal professionals.

Important note: CLNs and SAFEs are not eligible for SEIS or EIS tax relief. If SEIS/EIS is important to your investors, ASAs are the appropriate instrument to use.

The process for CLNs and SAFEs on FounderCatalyst is very similar to ASAs. If you're considering these instruments or unsure which one best suits your needs, we recommend booking a call with the FounderCatalyst team to discuss your options.

Accuracy Requirements for ASAs

Before adding any ASAs to your cap table — or asking the FounderCatalyst team to do this for you — please ensure the figures and details are accurate. Once a funding round is closed, it becomes very difficult to make changes.

If you are requesting support to enter ASAs on your behalf, you must provide the following complete and accurate information for each ASA investor:

• Full name

• Email address

• Number of shares

• Price per share

• Discount %

• SEIS/EIS scheme classification (e.g. None, SEIS, or EIS)

Important: Incorrect, incomplete, or estimated figures can cause cap table errors and jeopardise SEIS/EIS eligibility. Please double-check all figures before finalising your round.

Find the Right Process for Your ASA

Below are situations you might encounter when managing ASAs on FounderCatalyst. Click on the relevant scenario for step-by-step guidance.

• Scenario 1: You already have a live ASA and are now onboarding to the platform.

• Scenario 2: You are onboarded to the platform but haven’t started a funding round—now issuing an ASA.

• Scenario 3: You are starting an initial funding round but want to issue an ASA before closing it.

• Scenario 4: You have closed a funding round on FounderCatalyst and now need to issue an ASA.

• Converting ASAs: Qualifying Financing Event or Longstop Date

• Other Key Considerations When Using ASAs

Step-by-Step Guides

Scenario 1: Adding an Existing ASA to Your Cap Table

1. Go to Cap Table

2. Add a Shareholder → Click “A person that owns shares in your company.”

3. Select ASA → Choose “Advance Subscription Agreement” as the share type.

4. Input Expected Shares → Enter either:

• The expected number of shares, based on the qualifying funding round price per share.
• The number of shares based on the longstop valuation.

5. Click ‘Allocate Pending Shares’ → Once all details are entered, click the green 'Allocate Pending Shares' button under the cap table to finalise the addition.

Scenario 2: Issuing an ASA Before a Funding Round

1. Go to Cap Table

2. Add a Shareholder → Click “A person that owns shares in your company.”

3. Select ASA → Choose “Advance Subscription Agreement” as the share type.

4. Input Expected Shares → Enter either:

• The expected number of shares, based on the qualifying funding round price per share.
• The number of shares based on the longstop valuation.

5. Click ‘Allocate Pending Shares’ → Once all details are entered, click the green 'Allocate Pending Shares' button under the cap table to finalise the addition.

Scenario 3: Issuing an ASA During a Funding Round

Important: If you're planning a priced round followed by an agile round, this may be a better strategy. Book a call with FounderCatalyst to discuss your options.

1. Go to Cap Table

2. Add ASA as ‘Ordinary Shares’ → You must initially enter ASA shares as ordinary shares (they will be adjusted later).

3. Enter Share Details → Add:

• The number of shares
• The price per share
• This ensures ASA allocations are pre-allocated in your cap table

4. Raise a Support Ticket → Contact FounderCatalyst to convert ordinary shares into ASAs manually.

Scenario 4: Issuing an ASA After Closing a Funding Round

Important Notes:

• Once a funding round is closed, the cap table becomes locked. You cannot make direct edits to the pre-funding round cap table.

• The only action you can take at this stage is to issue share certificates.

• If you expect to issue ASAs post-round, consider an agile round instead. Book a call with FounderCatalyst to discuss options.

1. Wait Until Share Certificates Are Signed:

• After a funding round closes, the People & Company sections are locked until share certificates are signed.
• If you haven’t done this yet, complete the signing process first.

2. Access the People & Company Sections

• Once share certificates are signed, the relevant sections will unlock, allowing you to issue an ASA manually.

3. Add the ASA Holder to the Cap Table

• Go to Cap Table → Click “A person that owns shares in your company.”
• Select “Advance Subscription Agreement” as the share type.
• Enter the details:
  • Expected number of shares (based on the qualifying funding round price or longstop valuation).
  • Any other relevant investment terms.
• Click ‘Allocate Pending Shares’ to confirm.

4. (If Required) Raise a Support Ticket for Adjustments

• If you encounter any issues with the locked cap table, raise a support ticket with FounderCatalyst.
• The support team can assist with any required manual adjustments.

5. Consider an Agile Round (Alternative Approach)

• If you're issuing ASAs after closing a round, an agile round may be a better option.
• Agile rounds allow for continuous fundraising without the rigid closing process of traditional funding rounds.
• Book a call with FounderCatalyst to explore this option.

Converting ASAs: Qualifying Financing Event or Longstop Date

1. Raise a Support Ticket → Notify FounderCatalyst that an ASA needs conversion.

2. Follow Post-Round Formalities → Complete all closed round steps:

• See Formalities Guide

3. Update Companies House → Submit SH01 to record newly issued shares.

4. Complete (S)EIS1 Forms → If relevant, file with HMRC.

Other Key Considerations When Using ASAs

1. Adding ASAs to the Data Room

• Ensure transparency for investors by uploading your ASA agreements to the Disclosed Items folder in the Data Room.
• This allows potential investors to review existing ASAs before committing to the round.

2. Warranty & Disclosure Process

• You must disclose ASAs against Warranty 1.3 in Schedule 4 when completing your legal documentation.
• This ensures that all investors are aware of the ASAs and their potential impact on the company’s cap table.

3. SEIS/EIS Implications

ASAs can have a significant impact on SEIS/EIS eligibility, so careful planning is required.

Key Risk: If an EIS ASA converts before all SEIS funds have been used, then none of your SEIS investors will be able to claim SEIS—they’ll have to switch to EIS.

Best Practice:

• Use up all SEIS allocation before issuing any EIS ASAs.
• If your ASA has a longstop date within 6 months, be mindful that it might convert before the funding round closes, potentially impacting tax relief.

See our article for more details: For (S)EIS investors, are ASAs the Devil’s work?

4. Converting an ASA in an Agile Round

• If an ASA is converting during an Agile round, follow the same steps as Scenario 3: Issuing an ASA Before Closing a Funding Round.
• This ensures that all ASAs are accounted for before the final close.