What is Equifund?

Equifund is a crowdfunding portal registered with the Securities and Exchange Commission and Financial Industry Regulatory Authority (Portal No______). Equifund provides a platform where entrepreneurs and investors can connect and transact in a frictionless environment. Equifund 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.

What is Crowdfunding?

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 $1,070,000 (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.

Where can I start my due diligence on an Equifund offering?

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.

Equifund’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 community.

Does Equifund provide investment advice and solicit investors?

Crowdfunding Portals such as Equifund 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 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.

Do I have to pay a fee to join Equifund?

Equifund does not charge its users a fee to join. It’s free! Equifund charges the following fees for services it provides in connection with the crowdfund offerings posted on the funding portal: 10% of the gross proceeds (total amount raised) of each offering payable in cash. All fees are payable at closing by the issuer from proceeds of the offering.

What fees does Equifund charge?

Equifund charges the following fees for the services it provides in connection with crowdfund offerings posted on the funding portal: 10% of the gross proceeds (total amount raised) of each offering payable in cash. All fees are payable at closing by the company from proceeds of the offering.

Who & How much can I invest?

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.

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.

The following table provides a few examples:

Annual Income Net Worth Calculation 12-month-Limit
$30,000 $105,000 greater of $2,200 or 5% of $30,000($1,500) $2,200
$150,000 $80,000 greater of $2,200 of 5% of 80,000($4,000) $4,000
$150,000 $100,000 10% of 107,000($10,700) $10,700
$200,000 $900,000 10% of $200,000($20,000) $20,000
$1.2 million $2 million 10% of $1.2 million ($120,000), subject to $107,000 cap $107,000

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.

Can I cancel my investment commitment?

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 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.

What are the risks of investing in crowdfund offerings?

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 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:

SEC –  Investor Bulletin: Crowdfunding (February 16, 2016)

FINRA – For Investors: Education Is Key to Protection

Crowdfunding and the JOBS Act: What Investors Should Know

Should I speak to an investment advisor before investing?

We strongly recommend that you consult with your investment advisor before investing in any offerings on the portal.

How do I make an investment?

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 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.

Will the company inform me of any material changes in the offering prior to closing?

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 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 because it may contain important information.

Who holds my investment until closing?

Regulation Crowdfunding requires all investor commitment amounts to be held by a third-party escrow agent until closing. Neither Equifund 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.

What happens to my commitment amount if a company does not meet its funding target?

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.

Are there any transfer restrictions once I receive my shares in the company?

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.

If I have any questions about Equifund or an offering, who should I contact?

Users that have questions about Equifund’s services or technology, should contact accounts@equifund.com . If you have any questions regarding a specific offering or would like to request additional information you should contact the company directly (not Equifund) by visiting the company’s offering page on Equifund and using our communication forum. Equifund does not discuss any particular offering. All offering documents are made available on Equifund.

What do I get for my investment?

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.

What happens when an issuer meets its funding goals?

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.

What does "break escrow" mean?

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) to transfer funds from the escrow account to the business.