Equity Crowdfunding - a Revolution in Startup Fundraising
Equity crowdfunding allows startups to raise funds up to $1.07 million
(soon to be $5.0 million) from both accredited and unaccredited investors.
Raising equity capital from the general public was never this easy!
Based on the JOBS Act, signed into law in 2012 and launched in 2016, US-based companies with less than $1.0 billion in revenue can now secure investments without needing to meet normal SEC registration requirements.
The maximum amount that can be raised is currently $1,070,000 each year, but is expected to be increased to $5,000,000 in late 2020.
Our Reg CF Crowdfunding Services
We run your crowdfunding campaign from start to finish at no upfront cost. We earn a fee only when your campaign is a success!
We help you decide on the best campaign strategy for your startup and select a crowdfunding platform that offers the maximum probability for a successful raise.
We prepare your financial statements, create all campaign materials, write the marketing messages, and prepare social media posts for the campaign launch.
We launch in two stages; a private launch to create initial buzz for your startup from early investors, followed by a mass-rollout to the general public.
Throughout the campaign duration we will monitor, adjust, and optimize your campaign for maximum fundraising success.
Many startups raise the largest amount of funds during the final days - even hours - of a campaign. This is the time to apply our SuperBOOST methodology.
Your campaign was successful, and collecting the funds can begin. We will handle all required tasks associated with post-raise investor follow up.
We're in this together. We charge zero upfront fees to help you create and
manage your Reg CF campaign.
Our compensation is strictly based on the success of the campaign we create for you; no success - no fee!
Marketing Budget: $10k to be spent on paid ads.
Equity Crowdstars Success Fee: 20% of funds raised.
Equity Crowdstars Share: 10% of securities issued.
Marketing Budget: $25k to be spent on paid ads.
Equity Crowdstars Success Fee: 15% of funds raised.
Equity Crowdstars Share: 7.5% of securities issued.
Marketing Budget: $50k to be spent on paid ads.
Equity Crowdstars Success Fee: 10% of funds raised.
Equity Crowdstars Share: 5% of securities issued.
Crowdfunding Success Stats
Since 2016 Reg CF equity crowdfunding has exceeded expectations!
There are many equity crowdfunding platforms in existence today - but which one is best for you? Which one offers the highest chances of reaching your funding goal? Which one is the easiest to get onto? We will answer all of these questions so that your campaign reaches its maximum potential.
Go to Wefunder
Go to StartEngine
Go to SeedInvest
Go to Republic
Go to MicroVentures
Go to Fundable
Go to Nextseed
Go to NetCapital
Go to TruCrowd
We are a team of seasoned professionals. Your are a driven startup founder. Together we are unstoppable.
Mike SmithHead of Legal
Mike SmithHead of Marketing
Mike SmithHead of Client Success
Mike SmithHead of Operations
Frequently Asked Questions
What is equity crowdfunding?
Equity crowdfunding is the online offering of private company securities to the general public. Equity crowdfunding allows a broad group of investors to fund a startup company or small business. Investors give money to the startup and receive a small ownership stake of the startup in return. If the startup succeeds, then the value of the investor's ownership stake goes up as well. In the US, startups and small businesses must use an online crowdfunding platform registered with the SEC and FINRA when offering their securities to the public. Equity crowdfunding is especially valuable for startups that don't have access to traditional angel investors or venture capital.
What is the legal basis for equity crowdfunding?
Historically, equity crowdfunding was limited to certain wealthy individuals ("accredited investors") who needed to meet certain net worth and income levels. All of this changed with the JOBS Act (Jumpstart Our Business Startups Act) signed into law under the Obama administration in 2012. The JOBS Act is a law intended to encourage funding of small businesses in the United States by easing many of the country's securities regulations. In May 2016 the JOBS Act's Title III equity crowdfunding rules, also known as the Regulation Crowdfunding (Reg CF) rules, went into everyday people to invest in private startups and small businesses.
Who can raise funds using Reg CF equity crowdfunding?
Regulation CF crowdfunding is available to US-based startups and small businesses who generate under $1 billion in revenue per year. Some companies are not eligible to use the Reg CF exemption, including certain investment companies, companies that have failed to comply with annual reporting requirements, issuers having being convicted of securities fraud, and companies that have no specific business plan or have indicated their business plan is to engage in a merger or acquisition with an unidentified company or companies.
How much money can I raise using equity crowdfunding?
Under Reg CF a startup can raise up to $ 1.07 million during a 12-month period. This amount is expected to be increased to $5 million in late 2020. For companies that need to raise higher amounts, Reg A+ Tier 1 and Reg A+ Tier 2 regulations offer the ability to raise up to a maximum of $20 million and $50 million per 12-month period, respectively.
Who can invest in equity crowdfunding campaigns?
Individuals who can invest in Reg CF campaigns include accredited and non-accredited investors. If an investorâ€™s annual income or net worth is less than $107,000 then the investorâ€™s investment limit is the greater of $2,200 or 5 percent of the investorâ€™s annual income or net worth (whichever is the smaller amount). If both annual income and net worth are equal to or more than $107,000 then the investorâ€™s limit is 10 percent of the lesser of the two amounts. Regardless of an investor's annual income or net worth - the maximum amount any investor can invest under Reg CF during a 12-month period is $107,000. Spouses are allowed to calculate their net worth and annual income jointly.
Do I need to submit financial statements?
Yes - for a funding target up to $107,000 the startup must submit its financial statements and certain information from its federal income tax returns, both certified by the chief executive officer of the startup. If the startup has reviewed or audited statements then those are to be submitted instead. For raises between $107,000 and $535,000 the company needs to submit statements reviewed by an independent public accountant. If audited statements exist, they are to be submitted instead. For raises over $535,000 the company - if raising funds under Reg CF for the first time - needs to submit reviewed statements unless audited financial statements are available. If the company has raised funds under Reg CF before, then audited statements are required.
Is equity crowdfunding like Kickstarter or Indiegogo?
No - equity crowdfunding is not like rewards-based crowdfunding. When you give money to a campaign on Kickstarter, Indiegogo, or similar platform, you will not receive an ownership stake in the company. Instead, in return for your donation you expect to receive a non-financial reward, such as a gift, discount, or limited edition product.
Is equity crowdfunding like Lending Club or Prosper?
No - equity crowdfunding is not like peer-to-peer lending. When you loan cash to a borrower on a lending platform, you will not receive an ownership stake in the company. Instead, you expect to get your money back plus interest after a certain amount of time has passed.
Is there a minimum amount of money my campaign must reach before I can receive the funds?
Equity crowdfunding platforms will hold the funds committed by investors in an escrow account. Only if the campaign reaches a certain minimum amount can these funds be withdrawn by the startup. Individual equity crowdfunding platforms set their own minimums that must be met before a campaign is deemed "successful". If this minimum amount is not reached, then the platform will return the deposited funds to the investors.
How long does it take for my campaign to raise my targeted amount of funding?
This depends on many factors; extremely successful campaigns might reach their funding goal after only a few weeks. Many campaigns run for several months before being closed. The startup decides how long it wants to keep the campaign open; once the company has reached its minimum raise it can stop, or it can continue and try to reach its maximum stated funding goal.
What is the best crowdfunding platform for me?
Since launching in 2016, over 50 crowdfunding platforms have received approval from the SEC, but there is not one that is â€œthe bestâ€ for all startups. Instead, which platform/s will return the best results for your campaign depends on various factors, such as the stage of your company, the nature of your product/service, and the focus of the platform. Some platforms specialize in certain industries or regions, while others accept startups from all walks of life. We will help you select the best platform for your company stage and fundraising goals.
Can I run several crowdfunding campaigns on multiple platforms at the same time?
No - crowdfunding platforms will not allow a startup to run the same campaign on multiple platforms in parallel. However, once a startup closes its campaign on the selected crowdfunding platform it may launch a new campaign on another platform. Keep in mind that a startup cannot raise more than the maximum (currently $1.07 million) during any 12-month period.
How much does it cost to run a fundraising campaign on an equity crowdfunding platform?
Crowdfunding platforms charge a fee to allow a campaign to run on their platform. Some platforms charge an upfront fee, while others only charge a fee if the startup's campaign is successful and reaches the minimum fundraising goal. Fees that might be covered by a platform include escrow services, legal, CPA, and marketing.
How much do you charge for your services?
Equity Crowdstars charges no upfront service fee. Instead, our fee is calculated based on the amount of money raised with the campaign we create for you. This means that we only get paid if our campaign is successful in raising funds for your startup. However, there is an out-of-pocket cost required to pay for advertisements on social media. We offer three services packages to choose from depending on the amount of budget you would like to commit to paid advertisements.
Do you have a startup and want to run a crowdfunding campaign? Great
- we can help!
Fill out the form as much as possible and we'll get back to you right away.