Can I buy regulation crowdfunding securities directly from a company?
No. Companies are not allowed to offer crowdfunding investments to you directly. They must use a crowdfunding intermediary, such as a funding portal like TycoonInvest, or a broker-dealer. Each must be registered with the Securities Exchange Commission and a member of the Financial Industry Regulatory Authority (FINRA).
Can anyone invest in a Regulation Crowdfunding (Reg CF) offering?
Yes. If you are a U.S. citizen over the age of 18, you may invest in a securities-based crowdfunding offering.
What if I am not a U.S. citizen?
Potential investors who are not U.S. citizens are strongly advised to consult their legal, tax, and financial advisors before investing. The securities offered on this site are not offered in jurisdictions where public solicitation for offerings is not permitted; it is solely your responsibility to comply with the laws and regulations of your country of residence.
Due to some specific regulations in Canada and the UK, we are unable to accept investments, market, or solicit in those territories.
How much can I invest?
Due to the inherent risks involved with this type of investing, you are limited to how much you can invest during a 12-month period. The investment maximum will depend on your annual income and net worth.
If 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 greater of your annual income or net worth.
If your annual income is equal to or greater than $107,000, and your net worth is also equal to or greater than $107,000 then you can invest up to 10% of the greater of your annual income or net worth, so long as it does not exceed $107,000 during any 12-month period. For more information, see the SEC Investor Bulletin.
What’s the difference between unaccredited and accredited investors?
An unaccredited investor is any individual person who makes less than $200,000 annually (or less than $300,000 including a spouse), and also has a total net worth of less than $1 million (excluding the value of their primary residence).
An accredited investor is any individual person who has an annual income exceeding $200,000 (or $300,000 for joint income), for the last two years with the expectation of earning the same or higher income in the current year.
A person may also be considered an accredited investor if their net worth exceeds $1 million (excluding the value of their primary residence), either individually or jointly with their spouse.
An entity is an accredited investor if it is a private business development company or an organization (think banks, insurance companies, brokers, and trusts) with assets exceeding $5 million.
The good news is that with equity crowdfunding, both accredited and unaccredited investors can invest in your company, as long as they are at least 18 years of age.
How do I calculate my net worth?
To calculate your net worth, you must total all of your assets and then subtract the total of all your liabilities. The resulting sum is your net worth. For purposes of crowdfunding, the value of your primary residence and any mortgages or loans owed against that primary residence should be excluded from your net worth calculations. For additional information including calculations and examples, see the SEC Investor Bulletin.
What is “Testing the Waters”?
Companies have the ability to “Test the Waters” before they launch an official offering. This allows them to gauge interest from the investor community. As an Investor, you will be able to indicate interest in an offering, as well as how much you would like to invest before the company can actually accept your investment in an official offering. You are essentially reserving shares before the offering goes live.
With “Testing the Waters”, are the investors investing now? What information are they providing?
No. Investors are simply reserving shares for when the offering goes live. Once they click the “Reserve Now” button, they will provide their contact information, as well as indicate how much they want to invest. Before the offering goes live, they will need to reconfirm their investment and go through the transaction process to officially invest.
Disclosure: Reserving shares is simply an indication of interest. There is no binding commitment for investors that reserve shares in this manner, to ultimately invest and purchase the company shares that were reserved, or to purchase any shares of the company whatsoever.
What types of securities investments are offered on TycoonInvest?
Equity: Equity represents an ownership interest in the business. There are different types of equity securities that can be issued, including voting rights, first right of refusal, or clawback rights. By offering equity, businesses can gain loyal customers, as well as investors who are interested in the long-term success of the company. It also allows the company to raise money without having to take on debt. With this type of investment, business owners should be comfortable relinquishing some control and ownership of their business.
Debt security: A debt security is similar to a conventional loan. This type of security can be bought and sold between two parties and the basic terms such as the amount borrowed, interest rate, and loan repayment date are determined upfront. Companies that choose this type of security to issue, typically like to retain control of their company and are comfortable making the debt payments for the duration of the security.
Convertible Note: A convertible note starts off as debt, where the loan accrues interest that can be paid at the end of the term or it can be converted into equity at a predetermined discount rate. In the event that the note is “converted,” the amount of equity you receive will depend on the specific terms of the note. With the availability of a conversion option, convertible notes offer greater flexibility for the company.
Revenue Share: Revenue shares are similar to debt securities, with a few caveats. Businesses pay back a percent of net revenue each quarter until the loan is paid in full. When the business is doing well, investors may receive larger payments, and when the business has slowed down, payments can be lower. Revenue share securities allow businesses to retain full control of their company and are typically preferred by cyclical companies, such as those that generate most of their revenue during a certain period of time in the year.
Where can I contact the company or receive financial information about the offering?
To contact the company directly, leave a comment or question for them on their campaign page via the “Q&A” section. Someone from the company’s team will respond to you in that same Q&A section of the campaign page.
Important Note: Do not leave your personal contact information in the “Q&A” section, as the company may only communicate with investors through the TycoonInvest platform for as long as they have an active funding campaign.
You may find all sources of financial information under the “Offering Terms” section of the company’s campaign page.
Once an issuer offering has been completed, issuers are required to publish annual reports. Under certain circumstances, an issuer may cease to publish annual reports and, therefore, an investor may not continually have current financial information about the issuer.
Is there any cost to investing?
It is possible that TycoonInvest or the company may wish to offset some costs by having investors pay a processing fee that will be charged to investors on top of the price of shares. Any fees over the price of the shares will be included in the total cost of the investment. This fee can be anywhere from $10-$25 per transaction.
What if a company does not reach its minimum funding goal?
If a company does not raise the amount of money needed to reach its minimum funding goal, your investment will be canceled, and your money will be returned to you within 10 business days after the closing of the crowdfunding offering.
What if the issuing company reaches its target funding goal early?
TycoonInvest will notify investors by email when the target offering amount has been met. If the issuing company hits its goal early, it can create a new target deadline at least 5 business days out. Investors will be notified of the new target deadline via email and will then have the opportunity to cancel up to 48 hours before the new deadline. Campaigns must be live for a minimum of 21 days regardless of their progress in meeting their funding target.
Can I still invest in a company if they have already reached their maximum funding goal?
You can submit an “indication of interest.” This reserves your spot on the waitlist for offerings that have raised their maximum funding goal. It is not an investment that guarantees a place in the offering. It is instead, a non-binding commitment that reserves your place on the waitlist.
If you have been notified that your indication of interest has been accepted, you will need to sign a binding agreement within 24 hours of being notified. Otherwise, you will lose your place on the waitlist.
Can I cancel my indication of interest?
You may cancel your indication of interest up to the time that 48 hours remain before the target deadline.
When will I become an investor once I am on the waitlist?
You will not become an investor in an offering unless your indication of interest is accepted, and you have signed your binding subscription agreement within 48 hours of notification. There is not a defined timeframe, as to when/if your indication of interest will be accepted. Once space is available in the offering, you may move to the next stage of the process.
What types of entities can invest in an offering?
There are several ways to invest, but these are the most common:
- Individually or Jointly;
- In a self-directed IRA or 401K (learn more about this here);
- As a Trust;
- As a legal entity, such as a Corporation, Limited Liability Company, or Partnership.
What types of payment do you accept on investments?
We currently accept three forms of payment:
- Credit Cards (in limited cases, some issuers may not wish to accept them);
- Automated Clearing House (ACH);
- Bank Wire Transfer.
Important note: International investors can only pay through Credit Cards or Bank Wire transfers.
How does TycoonInvest make money?
TycoonInvest makes money by charging a commission on the amount of capital raised by the issuer. The commission is 5% of the capital raised. This is subject to change at any time and is disclosed in the offering document of the company.
When will I receive confirmation of my investment and when will I get my shares?
At the close of an offering, all investors whose funds have “cleared” will be included in the disbursement. At this time, each investor will receive an email confirmation from the company, with a copy of their Subscription Agreement, which will serve as their proof of purchase moving forward.
Please keep in mind that a company can conduct a series of “closes” or withdrawals of funds throughout the duration of the campaign. If you are included in the withdrawal period, your countersigned subscription agreement will be emailed to you, along with a proof of purchase immediately following that withdrawal.
Following the completion of an offering conducted on TycoonInvest, there may not be an ongoing relationship between the issuer and TycoonInvest.
What if I change my mind?
For Regulation Crowdfunding, investors are able to cancel their investment at any point throughout the campaign up until 48 hours before the closing of the offering. TycoonInvest will arrange for the escrow agent to return your money.
Once your investment is officially canceled, there is a 10-day clearing period (from the date your investment was submitted). After your funds have cleared the bank, you will receive your refund within 10 business days.
Can I sell my shares?
Shares sold via Regulation Crowdfunding offerings have a one-year lock-up period before those shares become unrestricted and can be sold freely.
Investors are generally restricted from reselling shares for a one-year period after they were issued unless the shares are transferred:
- to the company that issued the securities;
- to an accredited investor
- to a family member (defined as a child, stepchild, grandchild, parent, stepparent, grandparent, spouse or spousal equivalent, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law, including adoptive relationships.);
- 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.
How do I contact TycoonInvest?
If you still have questions that have not been answered by the FAQs, you may contact us here. We will respond to your questions within 24 hours (excluding weekends and holidays).