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In this video, Todd Ault explains the concept of a Subscription Agreement, which is necessary when purchasing stock in a private placement. This agreement confirms that the investor has read and understands the private placement memorandum (PPM) and is committed to the investment. Ault emphasizes that every investor he has worked with over the last 30 years has signed such an agreement, which ensures proper reference to related documents, like warrants. He notes that subscription agreements are also used in hedge fund investments and other private entities. The video highlights the importance of this agreement for those raising money for private companies, particularly startups.