EPOS and ASAP for Dutch Startups: A SAFE-like Instrument for Dutch BV Financing

Why foreign investors should not treat EPOS or ASAP as a standard US SAFE

An EPOS or ASAP is a SAFE-like financing instrument used in Dutch startup financing. The investor pays now, while the actual issuance of shares takes place later, usually at the next equity financing round, an exit or another agreed conversion event.

EPOS stands for Easy Prepayment on Shares. ASAP is often used as shorthand for Agreement for Subscription Against Advance Payment. The core idea is similar: an advance payment for future shares, without immediately structuring a full equity round.

For international founders and investors, this can be attractive. The instrument resembles the US SAFE, but it must be adapted to Dutch corporate law and the mechanics of a Dutch BV.

This article explains how EPOS and ASAP instruments work, why they are not simply “Dutch SAFEs”, and what foreign investors and founders should understand before using them in a Dutch startup financing.

For a broader comparison with SAFE, KISS and convertible loans, see SAFE, KISS, EPOS and Convertible Loans in Dutch Startup Financing. This article is also part of the broader ViottaLaw series on Dutch VC terms and Dutch BV structures and convertible loan agreements in Dutch startup financing.

Why a Dutch SAFE-like instrument?

The US SAFE was designed for US startup financing. It is short, recognisable and founder-friendly. But a US SAFE does not automatically work for a Dutch BV.

In a Dutch BV, a shareholder position is not created by contract alone. The issuance of shares requires corporate approvals, consideration of pre-emption rights, alignment with the articles of association and execution by Dutch notarial deed. If the next financing round involves preferred shares, liquidation preferences, investor consent rights or other VC terms, those terms must also be implemented within Dutch corporate law.

An EPOS or ASAP tries to preserve the commercial simplicity of a SAFE while making the instrument better suited to Dutch BV mechanics.

The practical point for foreign investors is important: do not assume that a US-style SAFE can simply be signed and later converted into Dutch shares without additional corporate steps. Dutch implementation matters.

How does an EPOS or ASAP work?

In broad terms, the investor provides funding to the Dutch startup. In return, the investor does not immediately receive shares. Instead, the investor receives a contractual right to receive shares upon a future conversion event. Common conversion events include:

• a qualified equity financing round;
• a sale of the company;
• an IPO;
• an agreed conversion date;
• another contractually defined trigger event.

The conversion often takes place at a discount to the price paid by new investors in the next round, or by reference to a valuation cap. Sometimes both a discount and a valuation cap are used.

The instrument is usually not structured as a traditional loan. There is typically no interest and no fixed maturity date. This makes it simpler and more founder-friendly than a convertible loan. At the same time, it gives the investor less downside protection.

What is different in the Netherlands?

The main difference is that Dutch corporate mechanics cannot be ignored.

A contractual right to future shares is useful only if the company can actually issue those shares when the conversion event occurs. In a Dutch BV, that usually requires:

• a shareholders’ resolution or another valid corporate authorisation;
• compliance with pre-emption rights, unless excluded or waived;
• articles of association that allow the relevant share class;
• a Dutch notarial deed of issuance;
• alignment with any existing shareholders’ agreement;
• proper treatment of future preferred shares or investor rights.

This is where many US-style templates create problems. A document may say that the instrument converts automatically, but under Dutch law the actual issuance of shares still requires formal implementation.

For international investors, this means that the document should not only describe the economic conversion formula. It should also include clear obligations on the company and existing shareholders to cooperate with the required Dutch corporate actions.

Founder-friendly, but not risk-free

For founders, the main advantage of an EPOS or ASAP is that it does not usually create immediate repayment pressure. There is no traditional loan that must be repaid at maturity, and there is typically no accruing interest.

That can be valuable in a pre-seed or seed financing, where cash should be used for product development, hiring and market validation rather than debt service.

But founders should be careful. Issuing multiple SAFE-like instruments with different valuation caps, discounts, side letters or special rights can create a messy cap table. That may become a problem in the next institutional financing round.

Future investors will want to understand exactly how the EPOS or ASAP instruments convert. If the existing documents are unclear, inconsistent or difficult to implement under Dutch law, the “simple” instrument can become a negotiation problem later.

What should investors focus on?

For investors, the key question is whether the instrument provides sufficient protection before conversion.

Under a convertible loan, the investor normally has a claim against the company until conversion. Under an EPOS or ASAP, that may not be the case. The investor may primarily have a contractual right to future shares, but not a standard repayment claim.

Investors should therefore pay attention to:

• the exact conversion events
  clearly define which events trigger conversion, such as a qualified financing round, an exit or another agreed corporate event;
• the valuation cap
  specify the maximum company valuation that will be used for the conversion calculation, ensuring the investor benefits from early-stage risk;
• the discount
  determine the percentage discount the investor receives compared to the price paid by new investors in a future financing round;
• information rights before conversion
  set out what financial and operational information the investor is entitled to receive while still holding the instrument;
• what happens if there is an exit before the next financing round
  explain whether the investor converts into shares, receives a cash payout or benefits from another agreed mechanism;
• what happens if no qualified financing occurs
  include a fallback arrangement for situations where the expected financing round never takes place;
• the position of the investor in an insolvency scenario
  clarify whether the investor ranks as a creditor and how claims will be treated if the company becomes insolvent;
• the share class issued upon conversion
  identify the type of shares the investor will receive once conversion takes place;
• whether the investor receives ordinary shares or the same class as the new investors
  avoid uncertainty by expressly stating the rights attached to the shares issued upon conversion;
• how the instrument interacts with future investment documentation
  ensure consistency with future shareholders’ agreements, investment agreements and other financing documents.

An EPOS or ASAP can be practical, but it should not be treated as a document that can be signed without legal and commercial review.

EPOS/ASAP or convertible loan?

The choice between an EPOS/ASAP and a convertible loan is mainly a choice between simplicity and protection.

An EPOS or ASAP may be suitable for a fast early-stage round where the parties want to postpone valuation and avoid debt pressure for the startup. A convertible loan may be more appropriate where the investor wants more downside protection, the investment amount is larger, or the parties want to include interest, maturity, default and repayment provisions.

In the Dutch market, the convertible loan remains more familiar. SAFE-like instruments are increasingly discussed, especially where foreign investors or internationally oriented founders are involved. But they need to be translated carefully into Dutch BV structures.

The right question is not whether an EPOS is “better” than a convertible loan. The right question is which instrument fits the company, the stage, the amount, the investor expectations and the next financing round.

When is an EPOS or ASAP useful?

An EPOS or ASAP can be useful where:

• the company is raising a pre-seed or seed round;
• the investment amount is relatively limited;
• the parties want a short transaction timeline;
• a future equity round is expected;
• founders want to avoid immediate debt pressure;
• investors are willing to take more equity risk;
• international investors are familiar with SAFE-like instruments;
• the company’s Dutch BV structure is still relatively simple.

The instrument is less suitable where the company is uncertain about future financing, where the investor requires strong downside protection, or where the existing cap table is already complex.

Practical drafting points

A well-drafted EPOS or ASAP should at least address:

• the investment amount;
• the conversion trigger;
• the valuation cap;
• the discount;
• what happens on an exit before conversion;
• what happens if there is no qualified financing;
• information rights;
• cooperation with shareholder resolutions and notarial issuance;
• treatment of pre-emption rights;
• alignment with the articles of association and shareholders’ agreement;
• treatment of future preferred shares;
• any MFN or pro rata rights.

The document should remain short and practical, but not so short that the key Dutch implementation points are missing.

Conclusion

EPOS and ASAP instruments can be useful SAFE-like tools for Dutch startup financing. They offer speed and simplicity, without the traditional features of a loan such as interest and maturity.

But their value depends on implementation. In a Dutch BV, conversion requires corporate approvals, treatment of pre-emption rights, alignment with the articles of association and a Dutch notarial issuance of shares.

An EPOS or ASAP is therefore not a US SAFE with a Dutch name. It is a financing instrument that must be tailored to Dutch BV mechanics, future financing rounds and the interests of both founders and investors.

For foreign investors and international founders, the practical lesson is clear: use the commercial simplicity of a SAFE-like structure, but do not skip the Dutch legal implementation.

FAQ

What is an EPOS?

EPOS stands for Easy Prepayment on Shares. It is a SAFE-like instrument under which an investor pays now for a contractual right to receive shares in the future.

What is an ASAP?

ASAP is often used as shorthand for Agreement for Subscription Against Advance Payment. It refers to an advance payment for future shares.

Is an EPOS the same as a SAFE?

Not exactly. The commercial idea is similar, but a Dutch BV requires specific corporate approvals, alignment with the articles of association, treatment of pre-emption rights and notarial issuance of shares.

Is an EPOS a loan?

Usually, the instrument is intended as an alternative to a loan. It typically has no interest and no fixed repayment date. The exact legal and accounting treatment should be assessed carefully.

When is a convertible loan more appropriate?

A convertible loan is usually more appropriate where the investor wants more downside protection, the amount is larger, or the parties want to agree interest, maturity and default provisions.

What is the main Dutch legal issue for foreign investors?

The main issue is that conversion into Dutch BV shares is not purely automatic. The issuance of shares requires Dutch corporate steps, including approvals and notarial implementation.

About Dirk de Waard

Dirk de Waard is a Dutch corporate and M&A lawyer and partner at Venture Lawyers in Amsterdam. He advises founders, startups, scale-ups and investors on venture capital, SAFE-like instruments, EPOS, ASAP, convertible loans, shareholder arrangements, governance and Dutch BV deal implementation.

Using an EPOS, ASAP or SAFE-like instrument in a Dutch startup?

A SAFE-like instrument can be useful in Dutch startup financing, but it must be adapted to Dutch BV mechanics. Conversion, shareholder approvals, pre-emption rights, articles of association and notarial issuance should be considered before signing.

Dirk de Waard advises founders and investors on EPOS, ASAP, SAFE-like instruments, convertible loans and early-stage financing rounds involving Dutch BVs. Contact Dirk at dirk.dewaard@viottalaw.com to discuss the Dutch legal implementation of a startup financing or conversion mechanism.