A forward subscription agreement (FSA) is a legal contract between an investor and a company that allows the investor to purchase shares of the company at a predetermined price at a future date. Essentially, it is an agreement made between the investor and the issuer of the shares that lays out the terms of the investment.

Forward subscription agreements are often used by startups and early-stage companies to raise capital. They offer a number of benefits to both the company and the investor. For the company, FSAs can be a more flexible way to raise funds than traditional methods such as issuing shares or taking on debt.

The FSA typically includes information such as the number of shares being purchased, the price per share, and the date on which the shares will be issued. The agreement also includes any conditions or restrictions that may be placed on the investor, such as limitations on their ability to sell the shares.

One of the key benefits of an FSA is that it allows the company to secure funding from investors without having to sell shares immediately. This can be important for early-stage companies that may not be ready or able to go public or attract larger investments.

For the investor, an FSA can provide an opportunity to invest in a company at a discounted price before it goes public or experiences rapid growth. Because the investor is committing to buying shares at a future date, they are often able to secure a lower price than they would if they were to buy shares on the open market.

However, it is important to note that investing in an FSA carries risks as well. The investor is essentially making a bet on the future success of the company and there is no guarantee that the company will perform as expected. Additionally, it can be challenging to assess the value of the shares being offered through an FSA as there is often limited information available about the company`s financials or market potential.

It is also worth noting that FSAs are generally not available to the general public as they are considered private placements. Only accredited investors who meet certain wealth or income requirements are eligible to participate in these types of investments.

In summary, a forward subscription agreement is a legal contract between an investor and a company that allows the investor to purchase shares at a future date at a predetermined price. Although these agreements offer benefits to both the company and the investor, they come with risks and are generally only available to accredited investors.