EU-FAST: Standardized Investment Documentation for European Startups

Raising capital in Europe has traditionally been complicated by fragmented legal frameworks. Each country has different corporate laws, requiring customized documentation for cross-border investments.

EU-FAST (Founders' Agreement Standard Terms) changes this. As part of the EU Inc. initiative, it provides standardized investment documentation that works seamlessly across all EU member states.

The Investment Documentation Problem#

Current Challenges#

When a European startup raises money, especially from investors in multiple countries, they face:

Document Customization:

• Term sheets adapted for each jurisdiction
• Share purchase agreements localized
• Shareholder agreements modified per country
• Different warranties and representations

Legal Costs:

• Multiple law firms often needed
• Review in each relevant jurisdiction
• Negotiations on jurisdiction-specific points
• €20,000 - €100,000+ in legal fees for a seed round

Time Delays:

• Weeks of document preparation
• Back-and-forth on legal nuances
• Closing delays due to complexity
• Missed market opportunities

Why US Startups Have an Advantage#

American startups benefit from:

Standardized Documents:

• SAFE (Simple Agreement for Future Equity) by Y Combinator
• NVCA model documents for priced rounds
• Consistent across all 50 states

Lower Costs:

• Well-understood templates
• Minimal customization needed
• Faster legal review
• Often €5,000 - €20,000 for early rounds

Faster Closes:

• Days or weeks, not months
• Investors familiar with standard terms
• Less negotiation on boilerplate

What is EU-FAST?#

EU-FAST (Founders' Agreement Standard Terms) is a standardized set of investment documentation designed specifically for EU Inc. companies. It includes:

Standard Term Sheet Template#

A unified term sheet format that:

• Works across all EU jurisdictions
• Uses consistent definitions
• Covers standard investment terms
• Reduces negotiation points

Investment Agreement Templates#

Pre-approved agreements for:

• Convertible instruments (EU equivalent of SAFE)
• Equity financing rounds
• Shareholder agreements
• Ancillary documents

Standardized Definitions#

Consistent terminology across all documents:

• Valuation definitions
• Liquidation preferences
• Anti-dilution mechanisms
• Protective provisions

EU-FAST Document Suite#

The EU Convertible (EU-C)#

Similar to the American SAFE, the EU Convertible provides:

Structure:

• Investment converts to equity at next priced round
• Valuation cap and/or discount
• No maturity date or interest
• Minimal documentation

Key Terms: | Term | Description | |------|-------------| | Valuation Cap | Maximum valuation for conversion | | Discount | Percentage discount to next round price | | Pro-rata Rights | Right to participate in future rounds | | MFN | Most Favored Nation provisions |

Benefits:

• Fast to execute (days, not weeks)
• Low legal costs
• Founder-friendly default terms
• Understood by European investors

Priced Round Documents#

For Series A and beyond, EU-FAST provides:

Share Purchase Agreement:

• Standard representations and warranties
• Conditions precedent templates
• Closing mechanics
• EU-wide applicability

Shareholders' Agreement:

• Governance provisions
• Transfer restrictions
• Drag-along and tag-along
• Information rights

Articles Amendment:

• Share class creation
• Preference terms
• Protective provisions

Optional Annexes#

Side Letters:

• Board observer rights
• Pro-rata rights
• Information rights
• Other investor-specific terms

Management Agreements:

• Founder vesting
• Employment terms
• Non-compete provisions

How EU-FAST Simplifies Fundraising#

Before EU-FAST (Current State)#

Seed Round with 3 Investors from 3 Countries:

1. Initial term sheet negotiation (1-2 weeks)
2. Engage law firms in multiple jurisdictions
3. Draft documents for primary jurisdiction
4. Localize for each investor's requirements
5. Multiple rounds of review
6. Negotiate jurisdiction-specific issues
7. Final documentation (100+ pages)
8. Signing and closing

Timeline: 6-12 weeks Legal Costs: €30,000 - €80,000

With EU-FAST#

Same Seed Round:

1. Use EU-FAST term sheet template (days)
2. Select appropriate EU-C or equity template
3. Fill in commercial terms
4. Limited customization if any
5. Single legal review
6. Signing and closing

Timeline: 1-3 weeks Legal Costs: €5,000 - €15,000

Key EU-FAST Terms Explained#

Valuation and Economics#

Pre-Money Valuation: Company value before investment, standardly defined.

Post-Money Valuation: Pre-money plus investment amount.

Option Pool: Shares reserved for employee equity, typically included in pre-money.

Investor Protections#

Liquidation Preference:

• 1x non-participating is EU-FAST default
• Ensures investors get money back before common
• Participating preferences require opt-in

Anti-Dilution:

• Broad-based weighted average is default
• Full ratchet available but not standard
• Protects against down rounds

Protective Provisions: Investor consent required for:

• New share classes
• Major acquisitions
• Significant debt
• Change of control

Governance#

Board Composition:

• Templates for different stages
• Investor board seats linked to investment size
• Independent director provisions

Information Rights:

• Quarterly financials
• Annual audits (if applicable)
• Board meeting access

Exit Provisions#

Drag-Along:

• Majority can force sale
• Standard threshold defined
• Protection for minorities

Tag-Along:

• Right to sell alongside founders
• Pro-rata participation
• Standard terms included

Comparison: EU-FAST vs. US Alternatives#

| Feature | EU-FAST | SAFE | NVCA Docs | |---------|---------|------|-----------| | Geographic scope | 27 EU countries | US (50 states) | US (50 states) | | Early-stage focus | Convertible + equity | Convertible only | Equity | | Standardization | High | Very high | High | | Customization needed | Minimal | Minimal | Moderate | | Legal costs | Low | Very low | Moderate | | Investor familiarity | Growing | Established | Established | | Cross-border ready | Yes | N/A | N/A |

Practical Implementation#

For Founders#

Before Fundraising:

1. Familiarize yourself with EU-FAST templates
2. Understand standard terms and optionality
3. Decide on your preferred structure (convertible vs. equity)
4. Prepare your data room

During Fundraising:

1. Start with EU-FAST term sheet template
2. Negotiate commercial terms only
3. Resist unnecessary customization
4. Use standard documents

At Closing:

1. Minimal legal review needed
2. Fast turnaround on execution
3. Clean cap table management
4. Clear investor rights

For Investors#

Benefits:

• Familiar, standardized terms
• Lower due diligence costs
• Faster deal execution
• Consistent rights across portfolio

Considerations:

• Standard terms may need adjustment for larger deals
• Customization available when truly needed
• Balance standardization with deal-specific requirements

Timeline and Availability#

Q1 2027: Launch#

EU-FAST documentation will be available when EU Inc. launches:

• Core templates published
• Commentary and guidance available
• Initial investor/founder adoption

2027-2028: Refinement#

As usage grows:

• Feedback incorporated
• Templates updated
• Best practices emerge
• Market standards solidify

Long-term#

EU-FAST becomes the standard:

• Universal recognition
• Streamlined pan-European investing
• Competitive with US documentation

Conclusion#

EU-FAST represents a fundamental improvement in how European startups raise capital. By standardizing investment documentation across all EU member states, it:

• Reduces legal costs by 50-80%
• Accelerates deal timelines by 50-75%
• Creates pan-European investor familiarity
• Enables European startups to compete globally

For founders planning to raise capital through EU Inc., EU-FAST removes one of the major friction points in European fundraising—finally giving European startups investment documentation worthy of a unified market.

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This article is for informational purposes only and does not constitute legal or financial advice. Consult with qualified professionals for specific guidance on your fundraising.