1.3 EU-FAST | Notion

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<aside> Corporate Principle - Pillar 1.3 EU-FAST

EU-FAST (European Union Fast Advanced Subscription Template)

Will be a streamlined, open-source template designed for early-stage companies to attract early-stage investment, similar to BSA AIR, convertible loan notes, and SAFEs. It is not a debt instrument.
Will be a standard form, which shall be available on the official EU-Inc’s website and shall remain unchanged.
Stands for European Union Fast Advanced Subscription Template. It will be a convertible investment instrument that allows investors to subscribe for shares in advance of their actual issuance, thereby providing the company with capital before a formal share sale and the closing of an investment round.
Is the first instrument that combines speed, simplicity, and low costs, while offering the benefits of convertible loan notes, BSA AIR, and SAFEs.
Facilitates the "Europeanisation" of investments for modern companies. By standardizing company structures across Europe, it simplifies cross-border investments, making it easier for individual and institutional investors, both European and international, to invest in startups. As a result, it should foster a more competitive and transparent investment landscape for founders and investors across the EU with an ultimate result to streamline equity-based investment for pan-European modern companies, similar to the well-established models used in the UK (BVCA) and the US (NVCA).

Key Characteristics

Convertible Investment Instrument: EU FAST will be a convertible security, not a debt instrument.
Advance Funds for Future Equity Subscription: It will enable companies to receive funds upfront, which will later convert into equity upon a qualifying event.
Flexible Conversion: The instrument only converts into equity upon a qualifying triggering event, such as the next round of financing.
Commercial Terms: Investment terms can be based on a valuation cap or at a discount on the equity price determined during the next qualifying financing round. By default, EU FAST will use a post-money valuation.
No Maturity or Long Stop Date: There will be no set maturity or long stop date for the EU FAST instrument.
Additional Investor Rights: Any additional investor rights, such as pre-emption or information rights, can be outlined and agreed upon in a side letter.
Jurisdiction: The jurisdiction for disputes related to the EU FAST will primarily be determined by the location of its registered address. While the EU regulations governing the EU-Inc's corporate structure require compliance across all Member States, any disputes that cannot be resolved through the applicable regulations in a specific Member State should be addressed in that state. Please see Dispute Resolution: The corporate framework governing the EU-Inc shall be subject to the national courts of the jurisdiction chosen as corporate seat (registered address) by the EU-Inc, which will enforce the 28th Regime EU regulations with complex matters referred to specialised EU corporate court. Disputes should first be resolved through alternative dispute resolution methods to ensure a cost-effective solution for all parties. If a resolution cannot be reached through these means, the matter will then proceed to the relevant national courts. Ideally, a dedicated EU-wide fast-track court system specialised in EU-Inc’s matters should be established for cases related to the 28th Regime to ensure fair, swift, proportional, and efficient outcome. for more information on governing law and dispute resolution.
An outline of the proposed EU-FAST + Side Letter will be shared in future iterations.

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⁉️ Why is the EU-FAST not a convertible loan note agreement?

The EU-FAST would be a new alternative investment instrument designed to combine the benefits of existing early-stage funding options subject to future EU regulations.

Convertible loan notes are commonly used in startup financing as they allow debt to convert into equity, offering speed and simplicity. However, in certain EU countries, convertible notes are heavily regulated, which can create barriers when converting debt to equity. Recognizing these challenges, the EU-FAST has been developed as a simplified subscription agreement—drawing inspiration from instruments like the BSA AIR, Advanced Subscription Agreement, or YC SAFE. Importantly, the EU-FAST differs in that it would accrue no interest and have no maturity date, making it a flexible, forward-looking tool while supporting a standardised, efficient approach to early-stage investment across Europe. That being said, there is nothing that should prevent EU-INC from accepting other investment instruments that are widely used across Europe provided they comply with the future EU regulations governing the affairs of such entities.

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💡 Best practices of similar instruments globally:

SAFE (US): is a legal future-equity agreement. Developed by Y Combinator in 2013, the SAFE was designed as a simpler, founder-friendly alternative to convertible notes for early-stage startup investment widely adopted globally as standard investment documents including in Europe. Templates of SAFEs can be found here.
Advanced Subscription Agreement (UK): Allows investors to pre-purchase shares in a future round, simplifying investment without debt.
BSA AIR (France): A form of hybrid financial instrument (warrant) allowing investors to convert investments into shares at a later stage inspired by US SAFE, based on a future funding round. It offers a discount or valuation cap. An example template can be found at **Seedcamp.**
Convertible Loan Note (Germany, UK): A debt instrument that converts into equity in a later round, with a discount or valuation cap. It’s commonly used for early-stage financing. For more information, visit Orrick’s Legal Ninja Snapshot. </aside>

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📌 Example

A German investor is interested in investing in your EU-Inc, which has a registered address in the Netherlands. You have agreed on a post-money valuation for the investment. Using the open-sourced EU-FAST available on the EU-Inc website, you would be able to download the template, update it with the relevant investor and company details, specify the post-money valuation, and sign the document electronically. The investor would then wire the funds directly to the company.

This arrangement constitutes a future or advanced subscription for shares, as the EU-FAST will only convert upon a Financing Round, Liquidity Event, or Dissolution Event (unless repayment under Dissolution Event is elected).

Note:

The EU-FAST aspires to be a practical, pan-European tool for early-stage investments. However, its implementation as a standardized tool will depend on its adoption and the ecosystem's willingness to collaborate.

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