Regular old crowdfunding is cool but donating for rewards is not the same as investing for shares. With equity crowdfunding, for each dollar you invest you get a certain amount of company ownership. The startup can use these funds to grow its business and if the startup goes on to do great things, you as a shares owner are entitled a piece of that success.
What is Regulation Crowdfunding?
Regulation Crowdfunding provides a framework for [registered] funding portals such as SeedingU to operate an online platform for businesses to offer and sell securities in reliance on Section 4(a)(6) of the JOBS Act. Before this, it was difficult for private businesses to sell securities to the public. The JOBS Act allows private businesses to sell securities to non-accredited investors (not just investors with a certain level of income and net worth).
Do my funds go in an escrow account?
Yes, all investments on SeedingU are placed in an escrow account hosted at Prime Trust LLC. Funds are transferred to the Issuer only after the minimum fundraising target has been met and the offering is closed.
How can I fund my investment?
You can pay with an e-check online, by mailing a check, or by wire transfer. Instructions will be provided during the investment process.
How much can I invest?
Anyone can invest in Regulation CF offerings. Because of the risks involved with this type of investing, however, you are limited in how much you can invest during any 12-month period. The limitation on how much you can invest depends on your net worth and annual income.
If either your annual income or your net worth is less than $107,000, then during any 12-month period, you can invest up to the greater of either $2,200 or 5% of the lesser of your annual income or net worth.
If both your annual income and your net worth are equal to or more than $107,000, then during any 12-month period, you can invest up to 10% of annual income or net worth, whichever is lesser, but not to exceed $107,000 of securities in aggregate across all issuers conducting a Regulation CF offering.
I changed my mind, can I cancel my investment?
Yes, you have up until 48 hours prior to the deadline posted on the offering page and included in the offering documents (Form C) (which may be changed from time to time) to cancel your investment commitment for any reason. No cancellations may be made within the 48 hours prior to the end of the offering term. If an investor does not cancel an investment commitment before the 48-hour period prior to the offering deadline, the funds will be released to the issuer upon closing of the offering.
If there is a material change to the terms of an offering or to the information provided by the issuer, we will give or send to any investor who has made an investment commitment notice of the material change and notice that the investor's investment commitment will be cancelled unless the investor reconfirms his or her investment commitment within five (5) business days of receipt of the notice. If the investor fails to reconfirm his or her investment within those five business days, we will (within five business days): notify the investor that the commitment was cancelled, the reason for the cancellation and the refund amount that the investor is expected to receive; and direct the refund of investor funds.
If material changes to the offering or to the information provided by the issuer regarding the offering occur within five business days of the maximum number of days that an offering is to remain open, the offering will be extended to allow for a period of five business days for the investor to reconfirm his or her investment.
Can non-U.S. Citizens invest?
Yes, unless the law of your country or the US government restricts your country from investing in US private companies.
How do I pay?
During the investment process, you will receive specific instructions for that offerings method of payment. The method of payment is specific to each project, so carefully review each step of the investment process. Typically payments are made ACH or wire transfer.
Will I pay a fee for investing?
Yes, a non-refundable 2.5% processing fee. The fees are associated with running the project, AML/KYC checks, placing the funds received into escrow, paying banking transaction fees.
I invested. Now what?
No money will leave your bank account until your application has been accepted and both parties have signed the contract. Once accepted the money will go from your account to escrow. If the campaign is successful your money goes from escrow to the startup company. If not, the money is returned back to you.
Can I modify my investment?
No, you cannot modify an investment after you've completed your commitment to invest. If you wish to invest a different amount or make other such modifications, you may cancel your previous investment and make a new investment.
Can the issuer or the portal cancel my investment?
Yes, as long as your funds are still in escrow, or haven't yet been received, your investment may be canceled. Once the funding round has closed, your investment cannot be canceled.
How are contracts signed?
During the investment process, you will receive specific instructions about how you are to sign any documents. We only offer electronic signatures so review instructions carefully during the investment process.
What happens if an offering doesn't reach its funding goal?
If an offering doesn't reach its minimum funding amount by the target funding date, you will be refunded your investment.
When will the offering close?
An offering must be open for a minimum of 21 days prior to a closing. If the closing date changes, the investors must be notified at least 5 days prior to the new closing. An offering closes when either the maximum amount of funding has been reached, or the end date of the funding round has been closed.
Will I receive project updates after I invest?
You may receive updates from the project issuer on the status and progress of the project. You will be notified directly of these updates or they may be viewed on the project itself under the update section. However, you should not expect a lot of communication as they have a business to run. Startups are under no legal obligation to communicate with investors outside of issuing an annual report.
Is an equity investment risky?
Yes it is risky. Do not you invest money you cannot afford to lose. Do not expect a short term return on your investment. And there is no secondary market to easily re-sell your investment stake to someone else.
Can I easily re-sell my shares?
No. There is no secondary market like the stock exchange for shares of a private company. Also, since we only offer securities pursuant to Regulation CF raises, the SEC specifically prohibits resale of securities for 12 months, except to the issuer, an accredited investor, a family member or their trust.