Document background
The Future Equity Agreement (FEA) is a crucial instrument in the Philippine startup ecosystem, designed to facilitate early-stage investments while deferring complex valuation discussions. This document type emerged as a solution to the challenges faced by startups in raising initial capital when company valuation is difficult to determine. Under Philippine law, particularly considering the Revised Corporation Code and Securities Regulation Code, the FEA provides a structured way to invest in companies while complying with local regulatory requirements. It is commonly used when companies are seeking seed funding or bridge financing, offering investors the right to convert their investment into equity at a later date, typically during a qualified financing round. The agreement includes essential provisions for conversion mechanics, valuation caps, and investor rights, while ensuring compliance with Philippine corporate, securities, and foreign investment laws.
