How to pick the right deal terms for your SeedFAST

SeedFASTs are the UK market standard way to raise investment before a funding round. They’re our version of the popular Advance Subscription Agreement (“ASA”), with extensions for SEIS/EIS compatibility and more.

In this guide, we’ll explain the four key deal terms you’ll agree in a SeedFAST, show you what thousands of founders actually choose and explain the trade-offs behind each option.

The insights in this article are based on more than 28,000 SeedFASTs completed on SeedLegals between 2018 and 2025.

What is a SeedFAST?

SeedFAST is the SeedLegals name for an Advance Subscription Agreement (ASA). They’re used to take investment before a funding round, and they’re quick and easy to create on SeedLegals.

Instead of rounding up all the investors to fill out a funding round, agreeing a valuation with them and doing all the legal paperwork, SeedFASTs allow you to raise when the opportunity arises. You can defer the valuation discussion and the complex legal documents (Term Sheet, Shareholders Agreement, Articles) until later.

Basically, a SeedFAST is an agreement that says “You give me money now, and I’ll give you shares when I do my next funding round. To incentivise you to give me the money now, I’ll give you a, for example, 10% discount compared to the valuation the investors will pay in my next round. And, if I don’t do that funding round within (typically, for SEIS/EIS compatibility) 6 months, then your investment will convert into shares at a valuation of, for example, £3,000,000”

The key terms in a SeedFAST

SeedFAST agreements have four key deal terms:

• Longstop date – deadline at which a SeedFAST converts into shares if no funding round happens first
• Longstop valuation – the valuation at which it converts at the longstop date
• Discount – a percentage reduction on the price per share paid by new investors if the SeedFAST converts in a funding round
• Cap – a maximum conversion valuation that protects investors if the company’s value rises quickly

These four terms determine how risk and reward are shared between founders and investors.

The big question then is… what’s market-standard for these deal terms?

Should you offer investors a 20% discount or is that way too much? When does a valuation cap make sense?

Based on a sample size of 28,000 SeedFASTs completed on SeedLegals between 2018 and 2025 (we did say they’re popular!), we put together some data to help you choose your terms wisely, and also help in any negotiations with your investors. Point them to this article, if it’s helpful.

How big are most SeedFAST investments?

For our data analysis, we grouped SeedFASTs into three buckets:

Most individual SeedFAST investments are for less than £20k, suggesting that many founders use them to raise from multiple angel investments over time rather than closing a single large funding round.

That said, larger SeedFASTs are becoming far more common. Deals over £100k accounted for just 4% of SeedFASTs between 2020–2022, compared to 8% by the end of 2025 – double the share.

In fact, we now see significantly more funding raised in total through agile methods (SeedFASTs and Instant Investments) than through traditional rounds. Find out why in our article, SeedFASTs are the new seed round.

This shift also changes how founders should think about SeedFAST terms. As fewer SeedFASTs convert as part of a traditional funding round, more reach their longstop date instead. That makes choices like the longstop valuation, discount and valuation cap increasingly important.

Longstop dates: why most founders choose six months

The longstop date is the deadline by which your SeedFAST converts into shares if you haven’t completed a funding round first.

In theory, many founders would prefer a longer longstop. It gives you more time to use the investment to grow the business before agreeing a valuation for your next round.

In practice, HMRC’s SEIS/EIS rules shape the market. HMRC requires that for an advance subscription of shares (ie a SeedFAST) to be SEIS/EIS compatible, the longstop date has to be no more than 6 months. That’s quite short, you’d normally want a longstop date of 12 months or more so you can use the funds to grow the business and then raise again when you’re ready. So if you’re using SeedFASTs with non-UK investors or investors who aren’t SEIS/EIS eligible for another reason, keep in mind that a longer longstop date gives you more breathing room.

What the data tell us

More than four in five SeedFASTs use a six-month longstop. That’s not because six months is the perfect timeframe, but because that’s what HMRC requires for SEIS/EIS.

The data is a reminder of how fundamental SEIS/EIS is UK startup investing. Without those rules, we’d expect many more founders to choose longer longstops and defer agreeing a valuation until their business has had more time to grow.

Longstop valuations: how to decide

Your longstop valuation should reflect a realistic expectation of what your company could be worth if the SeedFAST reaches its longstop date without converting in a funding round.

Set it too high and investors may be reluctant to agree. Set it too low and founders could give away more equity than expected if the SeedFAST converts at the longstop. The right figure depends on your traction, market, comparable fundraises and the level of interest from investors.

You don’t have to figure it out alone. Your SeedLegals fundraising expert can share benchmarking data from similar companies to help you set a realistic longstop valuation.

Discounts: how investors are rewarded for investing early

A SeedFAST investor takes more risk than investors who join your next funding round. They invest before your company has an agreed valuation and before some of the uncertainty has been removed through the full investment documents that are finalised in the round.

A discount rewards them for taking that risk by allowing their investment to convert into shares at a lower price than new investors if the SeedFAST converts in a funding round.

Overall, most SeedFASTs include either:

• no discount
• a 20% discount

with 10% and 15% also commonly used.

Why do so many SeedFASTs have no discount?

If a discount rewards investors for investing before a funding round, why do more than half of SeedFASTs have no discount at all?

The data suggests that many founders no longer expect their SeedFASTs to convert as part of a traditional funding round. Instead, they’re increasingly using SeedFASTs as a fundraising method in their own right, with the expectation that they’ll convert at the longstop date. Because discounts only apply when a SeedFAST converts in a qualifying funding round, they offer no benefit if the expected outcome is conversion at the longstop date at the longstop valuation.

Smaller SeedFASTs are more likely to include a discount

Smaller SeedFASTs (under £20,000) are more likely to include a 20% discount than larger investments. Smaller investments are often made earlier in a company’s journey, where investors may want additional upside if the investment later converts in a funding round.

Larger SeedFASTs, by contrast, are more commonly structured without a discount, reflecting the growing use of SeedFASTs as a standalone fundraising tool rather than simply a bridge to a funding round.

Longer longstop, larger discount

The same relationship appears when looking at longstop dates. SeedFASTs with longer longstops are more likely to include larger discounts.

The longer the longstop, the more likely the SeedFAST is to convert as part of a future funding round rather than at the longstop date. In that case, the discount exists to incentivise the investor for joining the round early.

The takeaway

Discounts only create value if a SeedFAST converts in a funding round.

As more founders use SeedFASTs as a fundraising method in their own right, many are focusing less on discounts and more on agreeing a fair longstop valuation. Where a funding round is more likely – such as with longer longstop dates or earlier-stage investments – discounts remain a common way to reward investors for taking on additional risk.

Valuation caps: less than 30% of SeedFASTs have a cap

Instead of (or in addition to) giving SeedFAST investors a discount on the next round valuation as an incentive to invest early, you can cap the valuation at which the SeedFAST will convert.

If the next round valuation is higher than the cap, the SeedFAST will convert at the cap, giving the investors a potentially significant advantage for coming in early.

Whether a cap makes sense depends, in part, on how you expect the SeedFAST to convert. If you expect to raise a funding round before the longstop date, a cap may be an important part of the negotiation. If you expect the SeedFAST to convert at the longstop instead, agreeing the right longstop valuation is often the more important discussion.

Caps are risky for founders, because they’re much harder to predict than a percentage discount.

Only 28% of SeedFASTs created in 2025 have a valuation cap.

Why do investors ask for valuation caps?

Imagine you’re an investor.

A founder tells you they’re raising a SeedFAST so they can build the product, grow the business and raise their next round at a much higher valuation.

A 10% discount rewards you for investing early – but if the company’s valuation triples before the next round, you might feel a 10% discount doesn’t fully reflect the risk you took by backing the business at such an early stage.

A valuation cap solves that problem. It guarantees you’ll convert at no more than an agreed valuation, no matter how highly the company is valued in its next funding round.

Why founders should be careful agreeing a cap

The trade-off is that a valuation cap is much harder to predict than a discount.

With a 10% discount, you know exactly how much additional equity you’re giving away.

With a valuation cap, you don’t.

If you agree a £1.5 million cap and your next round happens at a £3 million valuation, your investor has effectively received a 50% discount – not the 10% or 20% you might originally have been expecting.

If your company performs exceptionally well, a valuation cap can therefore dilute existing shareholders much more than a simple discount.

Why caps are more common in the US

Interestingly, I would say it’s mostly US investors asking for a cap, because the pattern is different there.

In the UK, because of the 6-month maximum longstop date for SeedFASTs to be SEIS/EIS compatible, founders are using SeedFASTs as a bridge to their next round. You already have a reasonable idea of the valuation you’re aiming for in your next round – you just need some investment now to help you get there.

In the US, it’s different. The high costs of legals ($50K or more) to do a funding round and no 6-month SEIS/EIS longstop date limit means that companies use SAFEs (the US equivalent of a SeedFAST) instead of a funding round. Companies might raise millions in SAFEs, then go for years before raising a $10M seed round. In that case, companies are using SAFEs to skip the legal cost, but agreeing a valuation cap so it’s almost the same as doing a funding round now, at today’s valuation, even if the SAFE converts 2 years later in a monster funding round.

The right SeedFAST terms depend on timing, risk and how you expect the investment to convert

The earlier the stage – and the longer until the next funding round – the more likely investors are to expect stronger incentives such as:

• larger discounts
• valuation caps
• lower longstop valuations

But our data also reflects a broader shift. Increasingly, founders are using SeedFASTs as a fundraising method in their own right rather than simply as a bridge to an official funding round. That means more SeedFASTs are expected to convert at the longstop date, making the longstop valuation a more important term than it used to be.

Ultimately, the right SeedFAST terms depend on:

• how you expect the SeedFAST to convert
• how close you are to your next funding round
• whether you’re raising under SEIS/EIS
• your investors’ expectations
• and how much uncertainty there is about your future valuation

Talk to an expert

We hope this helped clarify how to decide on the right SeedFAST terms for your deal. If you still have any questions, book a free call with one of our specialists.