An ASA (Advance Subscription Agreement) is a forward contract for equity: the investor subscribes now, and the company issues shares when a defined trigger — usually a qualifying equity round — occurs.

How it works

The founder and investor sign an ASA specifying the subscription amount, long-stop date, and conversion mechanics. Common terms mirror US bridge docs: a discount to the next round price, a valuation cap, or both. When the qualifying round closes, the ASA converts into shares at the better economic outcome for the investor under the formula in the agreement.

Unlike a loan, a standard ASA is not debt — there is no coupon unless you use a variant that blurs the line. If no qualifying round happens before the long-stop, the ASA may convert at a pre-agreed fallback valuation, repay cash, or enter negotiation, depending on the template.

UK founders often choose ASAs over SAFEs because SAFEs are US-centric and may not align cleanly with Companies House filings, SEIS/EIS advance assurance, or investor expectations in London and Edinburgh ecosystems.

Why it matters

• Founders: ASAs extend runway without setting a formal pre-money today. Confirm SEIS/EIS compatibility and that your articles allow the share class you will issue on conversion.
• Investors: Diligence the cap table stack — multiple ASAs with different caps convert simultaneously at the priced round and can compress founder ownership more than expected.
• Operators: Legal counsel should coordinate ASA signatures with board approvals and updated shareholder registers at conversion.

Common mistake

Treating an ASA like free money with no dilution until “later.” The dilution is real at conversion; founders who raise several ASAs without modeling as-converted ownership get surprised at the Series A term sheet.

Related ideas

SAFEs, convertible notes, /glossary/as-converted ownership, and seed funding instruments in UK versus US markets.