The Equitize USA Crowdfunding Process
Most businesses around the world go to a bank when they need capital. In many countries that can be difficult and expensive. Banks determine the terms and conditions for any loan. The banks set the rate for the interest that they charge.
Investment crowdfunding allows companies to acquire the capital they need from investors in the US. Unlike any type of institutional financing or venture capital, the companies seeking the funds set the terms of the financing.
A company can sell debt or equity securities to investors. It can fund specific projects, events, and inventory. The funding transaction can be structured to be on the company’s books or off.
The Regulatory Landscape for Crowdfunding in the US
Funding your business or start-up using investment crowdfunding is a process that is regulated by the US Securities and Exchange Commission (SEC). Companies that list on Equitize USA will utilize Regulation D if they are seeking investors in the US.
Our advisors will work with listing companies to assist in making their offering compliant with SEC Regulations
The Regulation D “private placement” market adds $2 trillion per year for these private securities offerings. Most of these offerings are purchased by large and smaller institutions.
Regulation D provides that company selling its securities under Regulation D make that offer in the US only to a class of investors that are deemed to be “accredited”. Offerings on the Equitize USA platform will be targeted at individuals and households that qualify as accredited investors. There are approximately 15 million accredited investors.
Any investor who wishes to invest in any offering listed on the Equitize USA platform will be required to undergo an accredited investor verification process before their investment is accepted.
Minimal SEC filings are required under Regulation D
Regulation D requires that the issuing company file a Form D with the US SEC when the offering commences. The filing does not constitute a formal registration statement. The SEC does not get a copy of the disclosure documents, marketing materials, and contracts that the company presents to investors as part of the offering.
Balancing risk and reward
Investors will assess the relative risks and rewards of investing in your company. Risks can always be mitigated. We encourage all listing companies to take steps to protect investors.
All investments made under Regulation D are considered to be speculative because they are illiquid. Once invested, investors do not expect to have any method of re-selling their investment. Investors can lose their entire investment. Investors who take the risk of investing in your company are entitled to a reward commensurate with that risk.
Our advisors will work with each company to help structure each offering to make it attractive to investors.
The Application Process
Let’s begin with the most frequently asked questions of all….
How much does it cost and what is involved during the application process?
Your application submission is chargeable at a rate of $499.
Upon receipt, our team will review your application and may request more detailed information from you. This is why it’s important to provide as much accurate and detailed information as possible at this early stage.
There can only be two outcomes from your application
- Your equity campaign listing is rejected.
- Your equity campaign is accepted.
If your listing is rejected
You will receive a comprehensive report which will detail the problems we’ve discovered with your offer and supporting documentation, allowing you to come back to us at a later date and re-apply. After having corrected any identified issues, you are then welcome to re-apply. Upon receipt and acceptance, this $499 fee will be credited back to your “hosting fees” account or credited for any other service you purchase from us.
If your listing is accepted
Congratulations! We look forward to working with you. Our team will be in touch to book and begin the onboarding process with you. The $499 application fee will be credited to either your “hosting fees” account or for any other service you choose to buy from us.
Hosting Fees = $2,999/60 days or $3,499/90 days
You will need to host your offer (campaign) on our platform for a minimum of 60 days. Some may need to list for 90 days. It really depends how good your offer is structured and how well prepared you are with your campaign marketing.
Deep Dive – Strategy and Deal Structure = $7,499
Want to structure your offer as an irresistible one for investors?
Well this one’s for you!
Not only will you get access to our highly experienced Advisory Board and the very best of industry brains behind you, but they’ll strategize with you to help you structure your deal for maximum impact.
It’s not what you know, it’s who you know!
Call us today to discuss this great opportunity in more detail or just click here to send us a message.
- You Are in a Large, Lucrative Market:
We look for companies with substantial potential upside for our investors. Ideal startups and early-stage companies serve large, multi-billion dollar total addressable markets.
- You Address a Gap in the Marketplace:
We seek companies that provide a solution to a major pain point in a large, addressable market.
- You Differentiate from the Competition:
We seek issuers who acknowledge their competition, are able to describe their competitors, and understand how to sell into a new or established marketplace. Additionally, companies need to stand apart from the competition and provide a unique value proposition to customers.
- You are Technology Enabled:
We look for companies that are substantially leveraging technology to provide their business with rapid scalability, significant efficiencies, and great profitability.
- You Have an Experienced & Passionate Team:
We seek out strong founders and formidable teams that have a big vision, the substance to get there, and the tenacity to break through brick walls. Entrepreneurs with a track record of success are especially desirable.
- You have Significant Traction:
Companies must have an MVP (minimum viable product) with enough significant traction in the marketplace to show product-market fit. We prefer companies that are post-revenue but will consider pre-revenue companies with compelling traction partnerships.
The Marketing Process
Virtually any company can run a successful crowdfunding campaign to raise capital. The determining factor is often whether they are willing to spend what it takes to reach out to a sufficient number of potential investors until they raise the funds that they seek.
Marketing for crowdfunding, like all cold e-mailing, is very much a numbers game. If a company sends out one million e-mails and raises only one half the capital it seeks, then logically it will continue to send out e-mails until the offering is completed. Of course, today there are far more effective marketing tools available which can make emailing look quite dated.
Crowdfunding campaigns leverage SEC Regulation D because they target wealthier investors; frequently requiring a minimum investment of $10,000 to $25,000 per investor. If the minimum is $10,000 they will need up to 100 investors per million dollars raised. If the minimum investment is $25,000 as few as 40 investors per million dollars raised will be needed.
In either case, the process begins by acquiring or developing a list of pre-disposed potential investors. Some marketing companies utilize data mining techniques to curate lists of investors specific to each offering.
We want your offering to succeed. Companies listing on Equitize USA will be asked to demonstrate that they have an adequate plan and budget to market their offering.
What to say and how to say it is important
Everything that the company says to prospective investors is regulated. That includes what the company says elsewhere on its website, in press releases, advertisements and interviews. Projections of sales and profits need to be realistic. All claims need to be supported by real facts.
Our advisors will assist listing companies to comply with US laws and regulations.