What is Agile Fundraising?

The way UK startups raise capital is undergoing a profound shift, from rigid, high-stakes funding rounds every 12–18 months to agile fundraising, where capital is raised incrementally, flexibly, and opportunistically. Pioneered by platforms like SeedLegals, this modern approach comprises two main tools:

1. Advance Subscription Agreements – Raising Ahead of a Round

An Advanced Subscription Agreement enables founders to raise funds before a formal priced funding round, without having to agree a valuation upfront. This instrument is structurally similar to the U.S. SAFE (Simple Agreement for Future Equity), and is often designed to be SEIS/EIS compatible, making it ideal for early-stage UK companies seeking capital while navigating valuation uncertainty.

Common Use Cases:

• You’re about to launch a product or secure a strategic partnership that will likely increase your valuation—but you need capital now to get there.
• You’re bridging between funding rounds.
• You want to raise smaller tranches from individual angel investors without kicking off a full equity round.

2. Instant Investment – Topping Up a Round

Instant Investment allows a company to extend or “top up” a completed funding round, using the same deal terms, and, critically, without going back to existing investors for consent. This can be done within a pre-agreed timeframe (typically up to 12 months) and optionally at a higher valuation, reducing dilution.

Example Scenarios:

• You close £300K of a £500K round and want to keep fundraising while securing the cash you have.
• You later meet new investors and want to accept additional capital without renegotiating terms.
• You’ve hit key milestones and can justify a valuation uplift for new funds post-round.

This approach avoids the stop-start nature of traditional fundraising and gives founders the agility to keep building without long interruptions.

Agile Fundraising in Practice

Agile funding is not just a theory, it’s the new normal for many UK startups. According to SeedLegals data:

• 70% of funding rounds now include a rolling close, allowing ongoing investments.
• Startups using SeedFASTs (the SeedLegals name for Advance Subscription Agreements) typically raise an average of £25,000 per agreement, often issuing six SeedFASTs in a year.
• Instant Investment rounds average £30,000 per tranche, and many companies complete multiple top-ups within a 12-month window.

Agile funding reflects how founders actually work, raising funds when opportunities arise, while continuing to grow their business without the friction, cost, and time drain of a full funding round each time.

Why Use These Mechanisms?

Startups might choose incremental fundraising over large rounds for several strategic reasons:

1. Speed and Flexibility

Raising capital in a single large round takes time—often 3–6 months. Agile fundraising allows startups to accept capital quickly, often on pre-agreed terms, so they can respond to market opportunities without delay.

2. Extended Runway Without Over-Dilution

By raising smaller amounts as needed, founders avoid issuing more equity than necessary too early. This allows the company’s valuation to grow with traction, enabling more favourable terms for future raises.

3. Investor Optionality

Rolling and agile mechanisms give investors flexibility to participate when ready, or to increase their stake once they have more confidence in the company’s progress.

4. Avoiding “Boom and Bust” Fundraising Cycles

These mechanisms reduce the pressure to always be in a feast-or-famine mode, either fully funded or desperately trying to close a new round.

Common Mistakes and How to Avoid Them

While Rolling Investments and Agile Top-Ups offer great flexibility, they must be executed carefully. Below are frequent missteps—and how to steer clear of them:

1. Neglecting Shareholder Agreements and Articles

Mistake: Issuing shares or convertible notes / advance subscription agreements without checking your company’s constitutional documents.
Solution: Always review your shareholder agreement and articles of association. Ensure that any rolling or top-up investment respects pre-emption rights, drag/tag clauses, and share class rights.

2. Overcomplicating Terms for Each Investor

Mistake: Agreeing to bespoke terms for every small investor.
Solution: Standardise! Use templated Advanced Subscription Agreements or share subscription terms.

3. Breaching SEIS/EIS Rules

Mistake: Accepting rolling investments or top-ups in ways that jeopardise your investors’ tax relief eligibility.
Solution: Get advance assurance from HMRC and legal guidance on SEIS/EIS compliance.

4. Cap Table Confusion

Mistake: Losing track of dilution or share rights across multiple mini-raises.
Solution: Keep your cap table up to date and use specialist software where possible.

5. Lack of Strategic Planning

Mistake: Using rolling or top-up funding indefinitely without aiming for a larger round.
Solution: Use agile funding as a bridge toward a planned, more substantial raise when metrics are stronger.

How Solicitors Can Help Startups and Founders

Legal support is not just about drafting documents. A proactive solicitor can add strategic value across every stage of a rolling or agile fundraising process.

Key Areas Where Solicitors Add Value:

• Structuring the Deal: Advising on the suitability of ASAs, CLNs, or equity issuance for your specific funding scenario.
• SEIS/EIS Compliance: Ensuring documents and timing align with tax relief rules. Getting advance assurance.
• Template and Term Standardisation: Creating investor-ready documents that reduce negotiation friction.
• Cap Table and Rights Management: Updating or amending shareholder agreements and articles to accommodate rolling closings and new investment tranches.
• Managing Investor Relationships: Drafting clear side letters, managing expectations on conversion, and preparing updates.
• Strategic Planning: Helping you design a funding roadmap that aligns with your long-term goals.

Solicitors who understand startup dynamics can help founders avoid expensive missteps while unlocking opportunities with speed and confidence.

When Rolling Investments or ASAs May Not Be Appropriate

While useful in many situations, these tools are not always the right choice. Consider the limitations before committing to an agile model of funding.

1. Institutional or VC-Led Rounds

Larger venture capital funds often insist on priced equity rounds with negotiated terms, rights, and due diligence. Rolling ASAs won’t meet their governance or control expectations.

2. Complex Cap Tables

If your cap table is already messy, with too many instruments, share classes, or unresolved notes, adding more rolling instruments can make future rounds harder.

3. Late-Stage or Pre-Exit Scenarios

Convertible instruments add uncertainty around valuation and shareholding. Clarity is essential as you near an acquisition, IPO, or major round.

4. Investor Mismatch

Some investors (especially retail or conservative angels) prefer direct equity for simplicity and visibility. Others may be cautious of rolling structures without a clear timetable for conversion.

5. Over-Reliance on Short-Term Funds

If your runway is extremely limited, and you lack visibility on future capital, piecemeal fundraising may distract from operations or create negotiation fatigue.

In these cases, a traditional priced round, or even a strategic bootstrapping plan, may be the better course.

Conclusion

For founders looking to stay nimble and keep building while raising, agile fundraising methods offer a flexible and founder-friendly alternative to traditional fundraising. With careful planning and sound legal guidance, UK startups can harness these mechanisms to maintain momentum, optimise valuations, and grow sustainably – on their terms.

Need help structuring your next raise?

Our startup team at JLN specialises in innovative funding strategies for early-stage UK companies. Get in touch for a free consultation on rolling investment frameworks, SEIS/EIS planning, and investor agreements.

 

This article is intended for general information only, applies to the law at the time of publication, is not specific to the facts of your case and is not intended to be a replacement for legal advice. It is recommended that specific professional advice is sought before relying on any of the information given. © Jonathan Lea Limited.