Regulation Crowdfunding offerings can only be conducted electronically via certain registered broker dealers or via a funding portal that is registered with the Securities Exchange Commission and a member of the Financial Industry Regulatory Authority (known as “FINRA”), like FanVestor CF, LLC.
View and gain access to Regulation Crowdfunding investment opportunities, often startups or talent/entertainment they are interested in.
Review companies’ offering materials online.
Make an investment online.
To Issuers (Companies):
Simplify and speed up their fundraising process for smaller offerings.
Access a broad network of investors.
Streamline investor pitches, execution of legal documents, and processing of investments.
Important note: Investments are speculative, illiquid and carry a high degree of risk – including the loss of the entire amount invested. Only invest an amount you can afford to lose without changing your lifestyle.
You can support startups and early-stage growth companies, especially talent early in their careers that you are passionate about. You are helping them grow. In time, you may make a profit on your investment if they grow and generate revenue.
Invest in a startup because you love their mission, product or service, but not just for potential profit or return. Also remember, this investing is high-risk and you could lose your entire investment.
Generally, you transfer funds to a Qualified Third Party (“QTP”) (e.g., a bank or trust company designated by the issuer and accepted by FanVestor CF) who holds your funds in a separate account for you until you invest. The QTP will typically accept wire and ACH transfers of funds and using credit and debit cards, but will not accept cash or checks.
The majority of Regulation Crowdfunding offerings are common stock, but some companies raise capital through debt, convertible debt, and revenue sharing. Please thoroughly review each individual offering to ensure that you understand the investment instrument prior to purchase.
Investments in these issuers are illiquid and highly speculative. Only invest funds you can afford to lose entirely without changing your lifestyle. Be aware you may not be treated equally to other investors (see below). Click Here for a detailed discussion of Risk Factors.
Invest for the long term
Set realistic expectations: there is no way to know how long an investment could take to become valuable or salable.
Spread your investments across multiple companies and asset classes to diversify financial risk.
Do your own research
All companies that raise capital on FanVestor CF must provide investment documents to the SEC. You can always find more information about each company, including voluntary amendments to their Form C if you follow the Form C link on their campaign page.
Review risk disclosures in the Risks section of each company’s campaign page.
Review comments and questions, and participate in the discussion forum for each campaign you are interested in.
Pay close attention to any disclosed dealings between the company and its investors, officers, directors, employees or founders.
Do your own independent analysis of the marketplace where the company will be operating, and any intrinsic risks and/ or competitors in their space.
Investment limits for Crowdfunding offerings (“CF”) are set by the U.S. Securities and Exchange Commission (“SEC”) under Regulation Crowdfunding (“Reg CF”). First you should know there are two types of investors as defined by the SEC. Accredited and Non-Accredited investors.
Most people will fall into the non-accredited investor category so please see below. Accredited investors have no investment limit imposed on them. If you believe you may be an accredited investor see the definition which follows further below.
I. NON-ACCREDITED INVESTORS
The following limits are imposed by the SEC and cover a 12 month period and applies to all CF offerings you invest in within a 12 month period.
(a) If your annual income or net-worth is less than $107,000 you can invest the greater of:
$2,200 or 5 percent of the greater of your annual income or net worth.
(b) If your annual income and net worth are equal to or more than $107,000 you can invest:
10 percent of the greater of your annual income or net worth, not to exceed $107,000.
II. ACCREDITED INVESTORS
For accredited investors there is no limit as to how much you can invest in CF offerings. The following is a brief description of an accredited investor as defined by the SEC. For a more complete description please see the link which follows.
An accredited investor includes anyone who:
Earned income that exceeded $200,000 (or $300,000 together with a spouse) in each of the prior two years, and reasonably expects the same for the current year, OR has a net worth over $1 million, either alone or together with a spouse (excluding the value of your primary residence).
IMPORTANT NOTICE: YOU are responsible for knowing your annual investment limit, if any, and complying with such limits, if any. FanVestor CF, LLC does not make such determinations for you. If you are uncertain about calculating your net worth or investment limit, please seek the assistance of an accountant or other financial professional to assist you. FV may provide online guidance, but YOU are responsible for determining your investment limit, if any.
The minimum amount you can invest in a company will depend on the specifics of a given company’s campaign.
In general, after adding up all your assets and subtracting all your liabilities the result is your “net worth.” For calculating “net worth” for Regulation Crowdfunding investing limits under Regulation Crowdfunding, certain other items are then added in or subtracted. The SEC provides more information and illustrations in its Updated Investor Bulletin: Crowdfunding for Investors (May, 2017) (“Updated SEC Bulletin”).
Any U.S. Person over 18 years of age can invest. To learn more about how much you can invest, please review the Updated SEC Bulletin.
To contact the company directly during an offering, please leave a comment on the campaign page for the offering in the comments section and a member of their team will respond to you. Please note that you cannot use or leave your personal email address because under Regulation Crowdfunding the company can only communicate with investors through the FanVestor CF platform.
During an offering all available financial information can be found on the campaign page for each Regulation Crowdfunding offering which includes a link to the Form C filed with the Securities Exchange Commission.
The investment process generally is as follows:
Review the potential investment opportunities posted on FanVestor CF.
If you are interest in an offering, review the information posted to the offering campaign page, including the terms of the offering, the offering materials, the Form C filed with the Securities and Exchange Commission and any other presentation. Check out the community comments section. You will have an opportunity to review the investment documents again during the funding process.
You must first create an account and complete the necessary forms and verifications to ask a question in the comment section or to make an investment.
Once you decide to make an investment in a particular offering, you can invest by clicking on the Invest button.
Follow the steps shown to complete your investment.
Before you will be permitted to complete your investment, you will be required to confirm that you have reviewed FanVestor’s educational materials, understand that the entire investment may be lost, and that you are in a financial condition to bear the loss. You will also need to acknowledge that you understand the restrictions on investment cancellations, potential challenges for resales, and the inherent investment risks.
After you confirm your investment, your funds will be transferred to an escrow account until the fundraising is closed.
Once the fundraising round closes, you will receive confirmation of success and acceptance of your investment.
In the case of an unsuccessful campaign or if you cancel an investment, the escrow agent will return the funds from the escrow back into your bank account.
Under Regulation Crowdfunding, you have up to 48 hours prior to the end of the offer period to change your mind and cancel your investment commitment for any reason. Once the offering period is within 48 hours of ending, you will not be able to cancel for any reason even if you make your commitment during this period. However, if the company makes a material change to the offering terms or other information disclosed to you, you will be given five business days to reconfirm your investment commitment.
If a company does not reach its minimum funding goal or terminates its campaign for other reasons, the third party escrow holder will return all funds to you within 10 business days after the termination of the offering.
You will be notified of material changes to the offering terms or of a change to the offering period, and under Regulation Crowdfunding an investor must reconfirm his or her investment commitment within five days after a material change is made to an offering; otherwise, the investor’s investment commitment will be cancelled and the committed funds will be returned.
If an offering reaches the target goal for investments prior to the deadline, the investors will be notified that the offering will close earlier than anticipated on [new date]. Investors will be informed they have the right to cancel their investment commitment for any reason until a stated date and time that is 48 hours prior to the new offering deadline. The issuer will be able to continue to accept investment commitments during the 48-hour period prior to the new offering deadline.
At the close of an offering, all investors whose funds have “cleared” by that time will be included in the distribution. At that time, each investor will receive an email from FanVestor CF with their Countersigned Subscription Agreement, serving as proof of the purchase.
Once the offering has closed, you may choose how to handle your shares. You will be introduced to the company’s selected transfer agent. The transfer agent will be responsible for keeping a record of your shares and any transfer of your shares after the close of the offering.
There is no established market to re-sell your shares. Investors are generally restricted from reselling or transferring their Regulation Crowdfunding exempt shares, even privately, for a one-year period after they were issued, unless the shares are transferred:
to the company that issued the securities;
to an accredited investor
to a family member (defined as a child, stepchild, grandchild, parent, stepparent, grandparent, spouse or spousal equivalent, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law, including adoptive relationships.);
in connection with your death or divorce or other similar circumstance;
to a trust controlled by you or a trust created for the benefit of a family member; as part of an offering registered with the Securities Exchange Commission.
Under Regulation Crowdfunding, you can raise a maximum of $1,070,000 from all investors during any rolling 12 month period.How much does it cost?
The cost of launching a Regulation Crowdfunding campaign varies on a case-by-case basis, but generally speaking it costs between $5,000-$12,000 for the financial review and legal documentation required to launch a Regulation Crowdfunding campaign.
In terms of fees, FanVestor CF only makes money when you raise money. Depending on the offering complexity and amount raised, we charge between 5-7% of total capital raised for Regulation Crowdfunding offerings, as well as an additional 1-3% of securities issued. Finally, the issuer pays $10K in deferred revenue that we collect when the offering is complete and has met the issuer’s minimum fundraising target.How long does it take to launch a campaign?
Generally, companies should finish onboarding in 4-6 weeks. Onboarding can be done more quickly if you’re on top of things and responsive to our team.What do I need to launch a campaign?
Tell your story in your own words. Build and design your campaign page to attract investors. Our team can help you!
Set your terms
What’s your valuation? What kind of security do you want to sell and how much of it? It’s up to you.
You will be required to submit corporate documents like articles of incorporation and board resolutions and financial statements to approve your fundraise. You will also need to complete and file a Form C with the Securities Exchange Commission that will be posted to or linked on the FanVestor website.
You have three options:
Save on upfront cost and have your CEO self-certify your financial statements, but only if you want to raise up to $107,000, or less.
Review by a CPA of your financial statements is required to raise between $107,000 and $535,000.
Audited financial statements reviewed by a CPA are required to raise between $535,000 and $1,070,000. However, if this is your first Regulation Crowdfunding offering your financial statements only need to be reviewed by a CPA.
The campaign must be open to the public for a minimum of 21 days – commencing on the day the offering page goes live on the FanVestor CF website and the Form C is posted to the Securities Exchange Commission. After the 21 day period is over, you can sell securities.Do I need to engage a transfer agent to keep records of my share transfers and shareholders?
FanVestor CF requires that you use a transfer agent. It will refer you to its preferred transfer agent. You may also engage your own transfer agent, but you must inform FanVestor CF in writing and obtain its written consent to your choice no less than five days before the date your campaign is scheduled to begin.
The risk that the issuing company may issue additional equity securities in the future, which will result in the percentage of ownership that the investor previously had will be lower after the additional issuance of equity. Accordingly, there is a risk of having limited voting power as a result of dilution after subsequent equity with voting rights has been raised.
We create business relationships with companies that wish to raise capital (i.e., “issuers”) who pay us for access to our funding portal. Our relationships with an issuer may be related to a one-time securities offering or for multiple securities offerings over longer period of time. Following completion of an offering, there may or may not be any ongoing relationship between the issuer and the funding portal.
The issuer is permitted to discontinue filing annual reports at the date that one of the following occurs:
The issuer must file Form C-TR with the SEC if it terminates annual reporting. As you can see, if the issuer discontinues annual reporting you will no longer have annually updated financial information or disclosure information about the issuer or your Title III securities that you own.