What is an ‘Advanced Subscription Agreement (ASA)’?
Don't invest unless you're prepared to lose all the money you invest. This is a high-risk investment and you're unlikely to be protected if something goes wrong. Take 2 mins to see our risk warning.
John Li
June 21, 2023
An Advanced Subscription Agreement is a standard equity agreement used by startups, and is normally used when a startup does not want to set a valuation for the company at present. It may, for example, be waiting for a “lead” investor to set the terms of the round.
The intention behind an ASA is to pay for shares that will be issued in a subsequent funding round. Typically that round will close within the next 6 months.
The idea is that the valuation of the company is not set at the current moment, but rather when the round closes. Investors in the ASA are normally given a discount to whatever valuation is set in the subsequent round.
It’s helpful for startups because they can get investors to sign on a dotted line while momentum is there. It’s also helpful for investors because they get the certainty of their investment and can also make introductions to help the startup close the rest of their round.
An ASA is sharia-compliant and where there are any novel cases we always run by a Sharia expert and get certification.