What are the criteria, rules and requirements for raising equity crowdfunding?
The SEC permits U.S.-based companies with a business plan to conduct a crowdfunding campaign through a registered intermediary that is either a funding portal (that’s us) or a broker-dealer. Each crowdfunding campaign must be held on a single intermediary , and all Regulation Crowdfunding activities within a 12-month period are capped at $1,070,000. (Stay tuned on that front, though, as legislators are considering increasing that cap to $5 million.)
Issuers (the Startups) must file Form C (more info , PDF template ) with the SEC and make that information available publicly at least 21 days before your campaign begins. The Issuer must share updates on funding progress during the campaign, though the Fundify platform takes care of this for Startups. Within five days of the campaign’s end, the Issuer must publish Form C-U to disclose the amount of securities sold.
The SEC rules set the max amount that individuals can invest across all crowdfunding offerings in a 12-month period. Fundify calculates this total for Investors in real time, making it easier for them to invest.
Funds raised through a Reg CF round must be held in escrow with a third-party company until the round closes. We can put you in touch with our escrow vendor – Prime Trust – that’s ready to handle this seamlessly.
The Startup sets the target offering amount , the offering deadline and any minimum investment levels. If the target offering amount is not raised by the offering deadline, investments are canceled and returned to the Investors, per SEC rules.
In addition, Fundify Experts conduct further due diligence and financial review to vet Startups that are interested in being part of our Marketplace. We find Startups that are well positioned to benefit from crowdfunding and help our Investors by offering a Marketplace of high-quality Startups with strong potential.