Frequently Asked Questions

Who is CrowdVest?

CrowdVest is a platform that facilitates investments in startup companies. These companies are highly vetted by management, and presented to investors for consideration once approved. This process allows private companies the ability to raise funds needed for expansion.

Under the JOBS Act, the companies can raise up to $50 Million from the crowd through a Tier 2 Regulation A offering. You now have the opportunity to invest in these private companies, and own a piece of the startup that you believe in.

How is CrowdVest different from reward based crowdfunding sites?

When an investment is made into a company on CrowdVest the investor will receive a security in return (equity or debt). The rewards based firms such as Kickstarter will give investors a reward or special gift. With CrowdVest you will own a piece of the company and the potential upside in the company.

Types of Offerings

Regulation A+

In April 2012 the JOBS Act was passed as a way to help spur on the struggling economy. The JOBS Act also created a new opportunity for entrepreneurs to access capital to grow their companies and ideas. Companies are now able to publicly advertise their capital raises. More importantly, on June 19, 2015 Title IV (Regulation A+) of the JOBS Act was put in effect and private companies are now able to raise money from all Americans. Prior to Regulation A+ only accredited investors were allowed to invest in private offerings. Today all American have the opportunity that only the wealthy had in the past.

Is investing in a company on Crowdvest right for me?

Equity investments are the buying and holding of shares in the company. Do you have a strong belief that the company will succeed after doing your own diligence? Can you financially afford to lose the entire investment? If the company is successful, can you afford to wait 7+ years for a return on your investment? If any of those answers are no, then investing would not be right for you.

Is investing in companies listed on Crowdvest risky?

The majority of the companies listed on CrowdVest will be considered high-risk startups. The companies will face numerous hurdles to reach their goals. There is a chance that all of your investment into a company on CrowdVest could be lost if the company goes out of business. Crowdvest will not make investment recommendations and no communication through this website or in any other medium should be construed as a recommendation for any security offered on or off this investment platform. As far as selling your investment, startups can be illiquid and often will not have a marketplace to sell your stake. That being said, the goal of the majority of the companies on the platform is to uplist to an exchange where shares are freely traded, offering investors the ability to sell their shares. Even though that is the goal, the vast majority of companies that raise capital through private offerings do not become listed on an exchange or trade in the secondary market.

How much can I invest?

Due to the riskiness involved with investing in startups, there are limits to how much an investor can invest during this 12-month period, which depends on your net worth and annual income.

  • If either of the investor’s annual income or net worth is less than $107,000, then the investor’s investment limit is the greater of $2,200 or 5% of the lessor of the investor’s annual income or net work.
  • If both annual income and net worth are equal to or more than $107,000, then the investor’s limit is 10% of the lesser of their annual income or net worth.
  • Regardless of the investor’s annual income or networth, an investor is prohibited from investing an aggregate amount of $107,000 or more in a 12-month period for all crowdfunding offerings.

How do I calculate my networth?

Calculating your net worth involves adding up all your assets and subtracting all your liabilities. The resulting sum is your net worth.

For examples and more information about how to calculate your net worth, click the link below

SEC.gov

What is an accredited investor?

According to Rule 506a of the Securities Act of 1933, an “accredited investor” is someone that meets one of the following requirements: net worth in excess of $1 million, annual income of at least $200,000 in the prior two years and expect to make at least that amount this year, total annual income with a spouse of $300,000 with the same criteria. There are other ways to pass the accredited investor threshold outside of being an individual and if you think you may qualify feel free to reach out to our team.

Can I make multiple investments?

Yes, thats the key to diversifaction. By making multiple investments you are helping several companies and it decreases your risk of losing the entire investment. Always keep in mind that you should never invest more than you can afford to lose. Diversification does not assure a profit and may not protect against investment loss.

The most common forms of securities an issuer can offer are equity or debt. With either security, the risk of losing your entire investment is a possibility. Equity securities include the following:

  • Common Stock: After buying common stock, the investor becomes a stockholder in the company, meaning they own a small piece of said company. Stockholders are usually entitled to receive dividends when and if declared, have voting rights, and receive information about the company, including financial statements.
  • Preferred Stock: Has many of the same characteristics as common stock, but with a few bonuses. PS has priority over common stock as to dividend payments and/or the distribution of the assets of the company, but with no voting rights.
  • Convertible Note: Is a bond that can be converted into common stock, so it allows an investor to lend money to a startup and later receive shares. If the company goes bankrupt, investors holding this note will be repaid before CS and PS.

What is dilution in regards to investments?

Dilution is a reduction in the ownership percentage of a share of stock caused by the issuance of new shares. When the number of shares outstanding increases, each existing stockholder owns a smaller, or diluted, percentage of the company, making each share less valuable.

Does Crowdvest accept international investments?

We generally accept all investments.

Is there a minimum amount I can invest in each company?

The minimum and maximum investment for each offering will vary and is determined by the company. However, they are typically $1,000 or less.

Can I re-sell my shares?

Companies that raise money through Regulation A+ are typically privately held companies, meaning their shares are not traded on the public stock exchange making it more difficult to re-sell your shares.

What kind of updates/reports should I expect after investing?

If the company changes anything during an active offering, you will receive a notification of the change, and be asked to reconfirm your investment after reviewing the changes. If the purchase is not reconfirmed within 10 business days the investment will be cancelled.

Companies must provide an update on its progress toward meeting the target offering amount within 5 business days after reaching 50% and 100% of its target offering amount.

Companies who have filed for an IPO, are acquired by a purchaser, repurchase your investment, have fewer then 300 shareholders after 1 year, if they go bankrupt, or after 3 years if they have less then $10 million in assets are no longer required to publish their annual reports.

How do I contact the company for more information?

On each company page there will be contact information as well as a link to the company website. Additionally for all Reg CF offerings the communication with the issuer must take place on the Crowdvest platform.

Cancellations

You will have up to 48 hours prior to the end of the offering period cancel your investment commitment for any reason and will receive a full refund. You'll receive a 5 day notice when a fundraise is about to close.

Does CrowdVest charge investors a fee to invest in the companies?

CrowdVest does not charge investors a fee to invest in one of the companies listed on our platform. For example, if you invest $5,000 in to an offering, you will receive $5,000 worth of securities. All $5,000 will be invested in the company. CrowdVest will charge the companies to list on the platform.

What happens if the fundraising fails?

You will receive an e-mail notification and receive a full refund of your investment.

How long will it take to receive my refund?

It depends on the method by which you've paid. We'll initiate a refund as fast as possible but it can take up to 14 days.

Will the startup and Crowdvest have an ongoing relationship?

After fundraising, Crowdvest will no longer have an ongoing relationship with the company.

Can CrowdVest help with tax implications of startup investing?

No. We suggest you contact your tax advisor.

How can I get started investing today?

  1. Sign up to build your profile.
  2. Identify an investment opportunity...
    • Diversify
    • Past performance does not predict future success.
    • Do your own research.
    • Ask questions.
    • Review disclosures.
    • Understand that startups change plans constantly.
    • Review the offering terms.
    • Watch out for dilution.
    • Invest in companies you believe in.
  3. Click the “Invest Now” button located on the company page and follow the steps to complete your investment

Regulation Crowdfunding (CF)

Regulation CF, also known as Title III of the JOBS Act, was passed into law in May 2016 that allows small companies and entrepreneurs the opportunity to raise money from the crowd (average American). The new law allows companies the ability to raise up to $1,070,000 from the crowd in lieu of the traditional route of banks and venture capitalists.

Is Regulation CF appropriate for me?

Regulation CF is similar to an equity investment, which is the buying and holding of shares in the company. When considering Regulation CF, three questions should come to mind. Do you have a strong belief that the company will succeed after doing your own diligence? Can you financially afford to lose the entire investment? If the company is successful, can you afford to wait 7+ years for a return on your investment? If any of those answers are no, then investing would not be right for you.

How much can invest?

Due to the riskiness involved with investing in startups, there are limits to how much an investor can invest during this 12-month period, which depend on your net worth and annual income.

  • If either of the investor’s annual income or net worth is less than $107,000, then the investor’s investment limit is the greater of $2,200 or 5% of the lessor of the investor’s annual income or net work.
  • If both annual income and net worth are equal to or more than $107,000, then the investor’s limit is 10% of the lesser of their annual income or net worth.
  • Regardless of the investor’s annual income or networth, an investor is prohibited from investing an aggregate amount of $107,000 or more in a 12-month period for all crowdfunding offerings.
  • How do I calculate my networth?

    Calculating your net worth involves adding up all your assets and subtracting all your liabilities. The resulting sum is your net worth.

    For examples and more information about how to calculate your net worth, click the link below

    SEC.gov

    How do I sell my shares in a Regulation CF offering?

    Regulation CF restricts resale of securities for one year, except to the issuer, an accredited investor, a family member or their trust. Companies that raise money through Regulation CF are typically privately held companies, meaning their shares are not traded like on the public stock exchange making it more difficult to re-sell your shares.

    How do I cancel my Regulation CF offering?

    You will have up to 48 hours prior to the end of the offering period cancel your investment commitment for any reason and will receive a full refund. You'll receive a 5 day notice when a fundraise is about to close.

    What are the costs associated with investing in a Regulation CF offering?

    Zero costs to the investor. The company will pay a fee between 5.5% and 7.5% of the money raised to Crowdvest. There may also be shares included in the compensation terms. All terms can be found on the company’s specific page.

    What should I expect after investing?

    You will receive a confirmation email once you’ve completed your investment. All funds will be transferred to an escrow account for holding until the fundraising is closed. Upon completion of the fundraising round, you will receive an email of acceptance of your subscription. If the round is unsuccessful, an escrow agent will contact you to return your investment.

    What kind of updates/reports should I expect after investing?

    If the company changes anything during an active offering, you will receive a notification of the change, and be asked to reconfirm your investment after reviewing the changes. If the purchase is not reconfirmed within 10 business days the investment will be cancelled.

    Companies must provide an update on its progress toward meeting the target offering amount within 5 business days after reaching 50% and 100% of its target offering amount.

    Company fundraising under Regulation CF will issue an annual report no later than 120 days after the end of their fiscal year. This information will include but isnt limited to:

    • The price to the public of the securities or the method for determining the price,
    • The target offering amount,
    • The deadline to reach the target offering amount,
    • Whether the company will accept investments in excess of the target offering amount,
    • A discussion of the company’s financial condition,
    • Financial statements of the company:Accompanied by information from the company’s tax returns,reviewed by an independent public accountant, Audited by an independent auditor.
    • A description of the business and the use of proceeds from the offering,
    • Information about key persons at the company, and
    • Certain related-party transactions.

    Companies who have filed for an IPO, are acquired by a purchaser, repurchase your investment, have fewer then 300 shareholders after 1 year, if they go bankrupt, or after 3 years if they have less then $10 million in assets are no longer required to publish their annual reports.

    How do I contact the company for more information?

    On each company page there will be contact information as well as a link to the company website. Additionally for all Reg CF offerings the communication with the issuer must take place on the Crowdvest platform.

    What are risks associated with Regulation CF?

    Before investing in a company listed on Crowdvest, you should do you own research about the company and all the of listed risk factors. Here are some common risks associated with companies listed on Crowdvest.

    • Speculative: Speculative investments are investments made in companies that don’t have a proven track record of sales and revenue. Startups rely on that on development of a new product or service that does not have a track record and often fail. When investing in company’s of Crowdvest, you should be prepared to lose your investment.
    • Illiquidity: Regulation CF restricts resale of securities for one year, except to the issuer, an accredited investor, a family member or their trust. You should be prepared to hold your shares for an undefined period of time without the expectation of a return during that time period.
    • Possibility of fraud. There is a possibility of fraud in very industry, company, and even department and startup companies are not invulnerable to it either.
    • Valuation: Determining a valuation for a startup company can be very difficult and sometimes misleading. Startups are not valued like public companies listed on a stock exchange, so as an investor you risk overpaying or underpaying for your stock.
    • Limited disclosure: Being a startup a company has not fully developed its operations, and may only be about to disclose limited information regarding its business plan. Company fundraising under Regulation CF will issue an annual report no later than 120 days after the end of their fiscal year. Companies who have filed for an IPO, are acquired by a purchaser, repurchase your investment, have fewer then 300 shareholders after 1 year, if they go bankrupt, or after 3 years if they have less then $10 million in assets will no longer be required to publish annual reports.
    • No voting rights: After investing in a company listed on Crowdvest, you will not receive voting rights.

    Lack of professional guidance. Many successful startups had the guidance of professional investors that play an important role through their experience and resources. Companies that are raising capital through Regulation CF may not have the benefit of professional investors.