What Is a BSA AIR? The Mechanism Simply Explained

Category: Financing · BSA AIR Reading time: 2 min

The BSA AIR has become the go-to instrument for early-stage fundraising in French startups. But many founders sign one without fully understanding what they're committing to. Let's demystify it.

The problem it solves

When a startup seeks its first financing — typically €50k to €500k — two tricky questions immediately arise: at what valuation does the investor come in? And how do you do this quickly and simply?

Negotiating a valuation at early stage is often artificial: the company hasn't proven much yet, and putting a number on it creates long and sometimes blocking negotiations. That's exactly why the BSA AIR exists.

How it works

The Bon de Souscription d'Actions à l'Investissement Rapide allows an investor to fund a startup today, without setting a valuation today. Conversion to shares happens at a future funding round, at a valuation defined at that point — typically with a discount or a cap favouring the investor.

In practice:

1. The investor provides funds (e.g. €100,000) and receives a BSA AIR in return.

2. No valuation today: the question is deferred to the next round.

3. At the Series A, the BSA converts automatically to shares, with a discount (e.g. 20%) and usually a valuation brackets (cap and floor).

4. If no round occurs within the agreed timeframe, alternative mechanisms kick in (repayment or forced conversion).

💡 Example: You raise €100k via BSA AIR with a €3M cap and a 20% discount. At your Series A valued at €5M, your BSA AIR investor converts at max €3M — a more favourable stake than new investors coming in at the full €5M valuation.

Why it's popular

• Speed: the documentation is far lighter than a standard capital increase. Often a matter of days. The funds are directly wired to the company's bank account.

• Simplicity: no valuation negotiation at this stage.

• Flexibility: discount, floor, cap, timeline — everything is freely negotiable.

• Tax benefits: under certain conditions, investors benefit from a favourable tax regime on long-term capital gains.

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Points of caution

• Levity in setting the financial terms of a BSA AIR may lead to catastrophy (conversion for a majority of the share capital, etc.)

• Most Favoured Nation (MFN) clauses can create unexpected obligations if you issue multiple BSA AIRs successively.

• A poorly drafted BSA AIR can block your next funding round if the conversion conditions are ambiguous.

🎯 My advice: The BSA AIR is an excellent tool — provided it's properly documented. A template found online may seem sufficient. It never is. Have it drafted or reviewed by a lawyer.