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At Baltic Ventures we consider everything when helping our companies scale and grow.
Our accelerator programme not only offers 5 months of structured coaching and mentoring, but successful companies also receive an initial investment, through our Angel Syndicate, via an Advanced Subscription Agreement (ASA). This gives founders an immediate cash injection of funds with fair terms and also some space to breathe whilst they complete our programme.
An Advanced Subscription Agreement (ASA) is an investment agreement that allows an investor to essentially pre-pay for shares in a company. In simpler words you, the company, receive an initial investment up front and the investor receives shares at a later date.
In traditional equity rounds shares are issued immediately, an ASA however defers the issue of shares to a later date- typically until the next funding round at a discounted rate to investors.
ASAs provide several benefits to both our start ups and syndicate:
ASAs are less complex and require fewer legal formalities compared to traditional funding rounds.
Startups do not need to set a valuation at the time of investment, allowing for more flexibility in determining valuation during a future round. A large focus of our programme is investor relations and networking, by deferring valuation this puts you in a better position for investment conversations throughout the programme.
Shares are not issued upfront, meaning you maintain control of company equity for longer and again, can have stronger investor conversations, as less dilution is more attractive to certain investors and VCs.
ASAs often include a discount on the next funding round’s valuation e.g. 20% – giving investors an incentive to invest early/follow on.
The Baltic Ventures Angel Syndicate is the vehicle that invests into the companies on our accelerator programme. Our network is made up of a variety of angel investors from varying backgrounds across Europe.
We use Seedlegals to draft all our ASA legals and Odin to manage our syndicate and the deployment of capital.
When a company agrees to take part in our programme we kick off the due diligence process and start preparing for your investment. This typically takes a total of 8 weeks, with companies receiving funds 2-3 weeks before our programme starts at the end of August via bank transfer.
Our ASA has a 6-month long stop date, this means that from the day of investment (day you receive funds) you have 6 months to raise equity finance. If your company raises at least £200k within the 6 months then the ASA will convert to shares at 20% of the pre-money valuation used in this round with your new investors. If you do not raise the ASA will convert at your pre-agreed backstop valuation. The investors in our angel syndicate also receive a discount of 20% on any subsequent round share price if they decide to follow on.
We work out your backstop valuation with you prior to completing the ASA legals. If you have raised equity finance (£100k+), or received a bona fide term sheet from a reputable equity investor, in the past 12 months, this pre-money valuation will be taken as your backstop valuation. If you have not raised equity finance then a backstop valuation of £970k pre-money will be used.
The 6-month long stop date is set by HMRC and allows our investors to claim SEIS or EIS on their investment.
We use ASAs as they are a fair, founder-friendly investment structure which complement our accelerator programme offering- we help founders to develop their investment thesis and networks so by using an ASA we give our start-ups more time and control over their initial investment conversations.