Document background
The Advanced Subscription Agreement is primarily used in Hong Kong's dynamic startup ecosystem when companies seek to raise capital efficiently while deferring complex valuation discussions. This document type emerged as an alternative to convertible notes, particularly suitable for jurisdictions like Hong Kong where debt instruments may face regulatory constraints. The ASA provides a framework for investors to commit funds immediately while receiving rights to future equity, typically at a discount to the next funding round or based on a valuation cap. The agreement includes essential provisions for subscription mechanics, conversion rights, investor protections, and information rights, all structured to comply with Hong Kong's legal and regulatory requirements. It's particularly valuable in situations where determining an immediate company valuation is challenging or when parties wish to expedite the investment process while maintaining flexibility for future funding rounds.
