Frequently Asked Questions
Equifund Crowd Funding Portal Inc. (Equifund CFP) is a crowdfunding portal registered with the Securities and Exchange Commission and Financial Industry Regulatory Authority (Portal No 288900). Equifund CFP provides a platform where entrepreneurs and investors can connect and transact in a frictionless environment. Equifund CFP does not (i) offer investment advice or make any recommendations; (ii) solicit purchases, sales or offers to buy the securities displayed on its platform; (iii) compensate employees, agents, or other persons for such solicitation or based on the sale of securities displayed or referenced on its platform; or (iv) hold, manage, possess, or handle investor funds or securities.
Crowdfunding is the action of raising funds from a large pool of individuals (crowd). Under Title III of the Jumpstart Our Business Startups Act of 2012, a company can raise up to $5 million (debt or equity securities) in a twelve-month period from all types of investors. Traditionally, start-up companies trying to raise capital were largely limited to institutions or high-net worth investors to help fund their businesses.
Each issuer conducting a crowdfund offering is required to file an offering statement (Form C) with the Securities and Exchange Commission which provides detailed and important information about the company and the terms of the subscription agreement. The Form C is publicly available on the SEC’s EDGAR database https://www.sec.gov/edgar/searchedgar/companysearch.html and also posted on Equifund CFP.
Equifund CFP’s technology provides registered users with the ability to communicate directly with each company’s management as well as with other registered users. If you have any questions or concerns about an offering, we encourage you to ask the company’s management directly and also get the opinion of other registered users in the Equifund CFP community.
Crowdfunding Portals such as Equifund CFP are not permitted to (i) offer investment advice or recommendations; (ii) solicit purchases, sales or offers to buy the securities displayed on the platform; or (iii) compensate employees, agents, or other persons for such solicitation or based on the sale of securities displayed or referenced on its portal. Equifund CFP conducts limited due diligence as required by Regulation Crowdfunding. The posting of a crowdfund offering on our portal is not a recommendation to invest, any type of endorsement or a solicitation. You should contact your financial and investment advisor before investing and conduct your own due diligence to make sure investing in an offering is the right decision for you.
Equifund CFP does not charge its users a fee to join. It’s free!
To cover these costs, crowdfunding portals charge investors a transaction fee. This is usually done via a percentage-based fee in the range of 3.5% (sometimes higher). However, a percentage-based fee quickly increases well beyond a reasonable amount to cover associated costs and can become more expensive for the investor.
For example, according to a recent SEC review the average investment in a regulation crowdfund offering is $830. At 3.5%, investors would have to pay a $29.05 transaction fee for their investment. For accredited investors, it’s even more expensive. The average investment is $2,030 which would result in a fee of $71.05.
Equifund CFP has chosen to implement a flat fee of $24 across the board for each transaction, regardless of investment size. It is our belief that every investor should be treated equal, and our intention is to only cover the costs associated with processing the investment — not turn the fee into a profit driver.
You must be over the age of 18 to invest in Crowdfunding. Because investing in private companies is very risky and you risk losing your entire investment, regulators have set restrictions on how much you can invest based on your annual income or net worth. Use our calculator to get a general idea of what that amount is.
In any 12-month period an individual investor is permitted to invest up to the following limits:
- 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.
- If both your annual income and net worth are equal to or more than $107,000, then the limit increases to 10 percent of the greater of your annual income or net worth; and
- If you are an accredited investor you are not subject to any investing limits in Reg-CF. An accredited investor is and individual who can show an annual income of $200,000, or $300,000 of joint income, for the last two years with expectation of earning the same or higher income and has a total net worth more than $1 million (excluding your primary residence), either individually or jointly with their spouse.
Please refer to our “Investment Limitations” section for detailed information.
Joint calculation. You can calculate your annual income or net worth by jointly including your spouse’s income or assets. It is not necessary that property be held jointly. However, if you do calculate your income or assets jointly with your spouse, each of your crowdfunding investments together cannot exceed the limit that would apply to an individual investor at that annual income or net worth level.
To learn more, please click here [https://www.sec.gov/info/smallbus/secg/rccomplianceguide-051316.htm]
Yes, you can cancel your investment commitment up to 48 hours before the closing of an offering. The closing date is disclosed on each offering page on Equifund CFP and also the Form C for each offering. 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.
Investing in private companies, particularly startups and new ventures, is highly speculative and you should not invest unless you can afford to lose your entire investment amount without any change to your lifestyle. Risks include, but are not limited; (i) an issuers limited operating history, (ii) lack of liquidity or any market for the resale of your investment, (iii) possibility of fraud or misrepresentation, (iv) arbitrary valuation of the company, (v) limited shareholder rights and the possibility of dilution, (vi) inability to generate revenue or raise additional capital to fund operations, and (vii) inability to continue its relationship with Equifund CFP or to publish annual reports where an investor obtains the most current financial information about an issuer. For a more detailed review of the risks associated with Equity crowdfunding please refer to our “Risk” section.
We also encourage you to read the following educational materials:
Crowdfunding and the JOBS Act: What Investors Should Know
We strongly recommend that you consult with your investment advisor before investing in any offerings on the portal.
When you feel you are ready to invest and have completed your own due diligence; including reading the Form C and reviewed all information on the offering page, the process of making an investment is simple. Click on the “Invest Now” button on the company’s Equifund CFP offering page and follow the prompts. Our technology will populate the subscription agreement allowing you to electronically sign documents and even transfer funds into the third-party escrow account for the offering.
Each company is required to inform investors of any material changes to the offering terms or to the information provided to you regarding the company. If there are any material changes after you subscribed to the offering but before the closing of the offering, you will receive an email from Equifund CFP advising you that you have five business days to reconfirm your investment commitment. This will provide you with the opportunity to review the changes and either reconfirm your commitment or cancel your commitment to get a full refund. If you fail to reconfirm your investment commitment within the five business day period, your investment commitment will automatically be refunded. Therefore, all users should carefully read all correspondence from Equifund CFP because it may contain important information.
Regulation Crowdfunding requires all investor commitment amounts to be held by a third-party escrow agent until closing. Neither Equifund CFP nor the company has access to subscriptions until the closing of the offering. The escrow agent is a financial institution (a bank) and is identified in the offering documents.
If an offering does not meet its goal or funding minimum by the deadline stated in the offering documents, your commitment will be refunded to your bank account without deductions or fees (full refund). You will also receive an email notifying you of the cancellation.
Yes. Regulation Crowdfunding imposes transfer restrictions on the shares issued in crowdfund offerings. Unlike companies that are traded on a public exchange (i.e. Nasdaq or NYSE), the securities offered under Regulation Crowdfunding are private (not registered with the SEC) and are non-transferable (restricted) for a period of one year. This means that you are restricted or prohibited from reselling your shares for the first year, except for transfers to the following:
- to the company that issued the securities;
- to an accredited investor;
- to a family member;
- 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 SEC.
You should also be aware that even after the restricted period passes, there is no guarantee that a market will exist or that anyone will want to acquire your shares.
Users that have questions about Equifund CFP’s services or technology, should contact [email protected]. If you have any questions regarding a specific offering or would like to request additional information you should contact the company directly (not Equifund CFP) by visiting the company’s offering page on Equifund CFP and using our communication forum. Equifund CFP does not discuss any particular offering. All offering documents are made available on Equifund CFP.
Equifund CFP charges the following fees to issuers for the services it provides in connection with crowdfund offerings posted on the funding portal: 7% of the gross proceeds (total amount raised) of each offering payable in cash and 7% equity of the offering sold under section 4(a)(6). All fees are payable at closing by the company from proceeds of the offering.
It depends on your investment. Once the crowdfund offering closes, your investment subscription will be accepted and the issuer will counter sign any subscription documents (like the Subscription Agreement) in electronic form and you will receive a copy via email. Depending of the type of security, you will also receive a copy of the countersigned security (SAFE, Note etc.) or a copy of the equity security (Common Stock, Preferred Stock etc.). However, some companies do not actually issue paper certificates for common stock or preferred stock but instead your interest is held as a “book-entry” which means its reflected in the books of the company. You may receive a ceremonial certificate (not an actual stock certificate) reflecting such book-entry interest.
In the offering documents, issuers are required to set funding goals, funding limits and a funding deadline. If an issuer meets its funding goal and assuming that the offering period has not expired, you are still able to invest. If the issuer reaches the maximum funding amount before the deadline, the issuer will close the offering and execute the subscription agreements.
Each offering has a target amount that must be raised before the company can have access to the funds. Once the target amount of the offering is met, the company can ‘break-escrow’ by instructing the escrow agent (with Equifund CFP) to transfer funds from the escrow account to the business.
Once you’ve become a registered user of Equifund CFP, and have reviewed the educational material, you can immediately invest in the companies listed on Equifund CFP.