WHAT WE DO
What We Do?
- Select which Issuers to list on our platform, by among other things:
- Conducting background checks on the issuer and its principals
- Conducting due diligence to have a reasonable basis for believing the issuer is complying with all its obligations
- Conducting due diligence to have a reasonable basis for believing the issuer has established a means to keep accurate records of the holders of its securities
- Advise Issuers about their offerings, and help prepare offering documents
- Screen investors to ensure that they satisfy applicable per-investor limits (discussed below)
- Provide communication channels between you and the Issuer, and between you and other potential investors, where you can ask questions and exchange information
- Provide search functions or other tools for investors
- Provide you with educational materials to help you assess the risks of investing (e.g., this document)
- Keep records of investor communications and materials
What We Don’t Do?
- Offer investment advice or recommendations
- Guarantee any particular investment outcome
- Speak to investors about the merits of any particular company or offering
Our Relationship with Issuers
Issuers will pay us to be on our Funding Portal. They might pay us flat fees, commissions based on the amount of money they raise, or in other ways. They might also pay us for specified services we provide to them and reimburse us for expenses we incur on their behalf. For each offering you invest in, we will disclose our compensation.
In some cases, an Issuer might pay us in whole or in part with its own Securities, e.g., with its own promissory note. This will always be the same class of Security that is being offered to investors on our Platform. For example, if the issuer is offering common stock to investors, only common stock could be used for our compensation.
We will never own any financial interest in Issuers listed on our Funding Portal other than Securities we receive from them as compensation.
After an offering is complete, we might or might not have an ongoing relationship with the Issuer. The Issuer may decide to use our Funding Portal to raise money in the future, or use services provided by (and pay compensation to) entities affiliated with us.
We will maintain online communications channels –chat rooms, basically – where you can communicate with other investors and with the Issuer. All discussions on the chat rooms will be open to the public, but only investors who have registered with us are allowed to post. Representatives of the Issuer, and anyone engaged in promoting the offering, must clearly identify themselves as such. The chat room is where you can ask questions about investment opportunities that interest you.
We, the Funding Portal, generally aren’t allowed to participate in the chat room, except to establish guidelines and remove potentially abusive or fraudulent content.
LIMITS ON HOW MUCH YOU MAY INVEST
If you are an “accredited investor,” you can invest as much as you want in offerings under Title III. The term “accredited investor” includes:
- A natural person who has individual net worth, or joint net worth with the person’s spouse or spousal equivalent, that exceeds $1 million at the time of the purchase, excluding the value of the primary residence of such person.
- A natural person with income exceeding $200,000 in each of the two most recent years or joint income with a spouse or spousal equivalent exceeding $300,000 for those years and a reasonable expectation of the same income level in the current year.
- A natural person who holds any of the following licenses from the Financial Industry Regulatory Authority (FINRA): a General Securities Representative license (Series 7), a Private Securities Offerings Representative license (Series 82), or a Licensed Investment Adviser Representative license (Series 65).
- A natural person who is a “knowledgeable employee” of the issuer, if the issuer would be an “investment company” within the meaning of the Investment Company Act of 1940 (the “ICA”) but for section 3(c)(1) or section 3(c)(7) of the ICA.
- An investment adviser registered under the Investment Advisers Act of 1940 (the “Advisers Act”) or the laws of any state.
- Investment advisers described in section 203(l) (venture capital fund advisers) or section 203(m) (exempt reporting advisers) of the Advisers Act
- A trust with assets in excess of $5 million, not formed for the specific purpose of acquiring the securities offered, whose purchase is directed by a sophisticated person.
- A business in which all the equity owners are accredited investors.
- An employee benefit plan, within the meaning of the Employee Retirement Income Security Act, if a bank, insurance company, or registered investment adviser makes the investment decisions, or if the plan has total assets in excess of $5 million.
- A bank, insurance company, registered investment company, business development company, small business ivestment company, or rural business development company
If you are not an accredited investor, Title III limits how much you can invest every year – not only in any one company, or through any one Funding Portal, but also in all companies through all Funding Portals. These limits apply only to your investments under Title III (Regulation Crowdfunding), however.
Specifically, if you are not an accredited investor the maximum amount you can invest in all Title III offerings during any period of 12 months is:
These limits are adjusted periodically by the SEC, based on inflation.
- If your annual income or net worth is less than $107,000, you may invest the greater of:
- $2,200; or
- 5% of the greater of your annual income or net worth.
- If your annual income and net worth are both at least $107,000, you can invest the lesser of:
- $107,000; or
- 10% of the greater of your annual income or net worth.
You and your spouse may combine your incomes and assets for purposes of determining how much you may invest, although if you do so, you will be treated as a single investor for purposes of determining how much either of you may invest.
EXAMPLE: Investor Smith earns $107,000 per year and has a net worth of $150,000. Investor Smith makes his first Title III investment on December 1, 2016, investing $7,500 in Company X. On November 27, 2017 Investor Smith would like to make his second Title III investment, investing $5,000 in Company Y. But he can’t; he can invest only $3,200 in Company Y. But he could invest $3,200 in Company Y on November 27, 2017 and another $1,800 (actually, another $10,700, if he wanted to) on December 1, 2017.