What is Stonegate CrowdFunding?
Stonegate CrowdFunding is a website platform which allows companies to raise equity and/or debt capital by exchanging capital for securities (equity or debt) which are issued by the company. Stonegate CrowdFunding enables companies to raise capital by offering investment opportunities to the accredited and institutional investors through general solicitation on our open web platform.
What is a Small OPO
Under Reg CF, companies can raise a maximum of $1M annually from all 18 and over accredited and non-accredited investors. The investor limits are based on annual investments. The shares are restricted and cannot be sold for a minimum of one year from purchase. Even after this time, there may be no resale market available. Only invest an amount that you can afford to risk or lose and will not impact your lifestyle.
What is a Large OPO
Under Reg A+, companies can raise a maximum of $50M annually from all age 18 and over accredited and non-accredited investors. The investment limits are per deal, not an annual aggregate. Investors can sell their shares at any point after the offering has closed, although there may be a limited or no trading market which will impact your ability to sell shares. Only invest an amount that you can afford to risk or lose and will not impact your lifestyle.
FAQs – MANAGERS/SPONSORS
How do I know if my company is a good fit for Reg A+?
We don’t know which campaigns will be huge successes, but we do have some basic criteria for companies that are a good fit for our platform.
• Must be US or Canada incorporated
• Primary place of business must be in the US or Canada
• Seeking to retain control over their company and vision
• Seeking to eventually raise a minimum of $2,000,000
• Understands and appreciates the benefit of turning consumers into investors
• Has a need for an army of brand ambassadors who will champion your company’s mission
• Understands that the Regulation A+ process involves significant and ongoing disclosure requirements and associated legal and administrative costs.
What is Regulation A+ and how will it allow me to raise funds?
Regulation A+ (also known as Title IV of The JOBS Act or Reg A+) opened the door for a larger crowd by allowing companies to raise up to $50 million from both accredited investors and the general public. This regulation is similar to a traditional initial public offering (IPO) in that you’re soliciting investments from the general public, however, with Reg A +, your company remains private and allows companies to raise capital faster and less expensively.
What is the difference between a Tier 1 and Tier 2 offering?
The Regulation A+ exemption is divided into Tier 1 and Tier 2 offerings. Tier 1 offerings are limited to 20MM within a 12-month period and require compliance with state blue sky securities laws regarding securities offerings. Tier 2 offerings are capped at 50MM within a 12-month period. Furthermore, Tier 2 offerings preempt state blue sky securities laws. This provides a significant advantage as it eliminates the burden and expense associated with compliance to state blue sky securities laws. Stonegate FundEngine primarily works with issuers of Tier 2 offerings.
What does it mean to “Test the Waters”?
Some companies looking to raise money through Regulation A+ choose to Test the Waters for a period of time and gauge the interest of the crowd before filing with the SEC. When a company does this, you will have an opportunity to “reserve shares” on the Stonegate FundEngine website. If you choose to participate at this stage, you are simply expressing interest in investing with no obligation of investing when it goes into Live Offering mode. There is no commitment between the reservation holders and their investment during Test the Waters.
How much capital can I raise?
Under Regulation Crowdfunding, companies can raise up to $1M within a 12 month period.
Under Regulation A+, companies can raise up to $50M in a 12 month period for a Tier 2 offering. Tier 1 offerings are capped at $20MM in a 12 month period, however, Stonegate FundEngine will not be working with Tier 1 issuers at this time.
Do my company’s financials need to be audited?
For Regulation A+ (Title IV), your company can begin a “test the waters” campaign without audited financials. If your company decides to proceed with Regulation A+ offering on Stonegate FundEngine, your company’s financials will need to be audited, as Stonegate FundEngine intends to support only companies offering securities pursuant to Tier 2 of Regulation A+.
For Regulation Crowdfunding (Title III), the amount of money your company is looking to raise will determine the filing requirements:
• Companies looking to raise under $100,000 must submit certain financial documents certified by their principle executive officer, but do not have to be audited or reviewed by a CPA.
• Companies looking to raise from $100,000.01-$500,000 are required to provide financial statements that have been reviewed by an independent CPA.
• Companies looking to raise more than $500,000 up to $1,000,000 are required to provide financial statements audited by a CPA.
What are the fees for listing a company on Stonegate FundEngine?
Stonegate FundEngine offers companies the opportunity to “Test the Waters” under Regulation A+ (Title IV), and it does not charge any fees. When it goes into live offering mode we charge a flat fee to the company on a per investor basis and varies depending on the raise
As for Regulation Crowdfunding (Title III), we charge 5% of the successful raise amount.
How long does it take for Stonegate FundEngine to approve my campaign after I submit it?
Stonegate FundEngine will do its best to give company founders feedback and comments within 48 business hours of campaign submission.
Please keep in mind that companies looking to hold a campaign under Regulation A+(Raising $2-50 million) must be US or Canada incorporated. In addition, the primary place of business must be in the US or Canada.
Under Regulation Crowdfunding (Raising up to $1 Million) companies must be US incorporated with a primary place of business in the US.
Why do I need to engage an escrow agent?
We provide a couple of options for an escrow agent. However, you will need to sign a separate agreement with any outsourced escrow agent providers as well as pay their associated fees. But don’t worry, we will handle as much of the escrow work as we can and will stand by to assist you with any questions or issues you may encounter.
FAQs – INVESTORS
Who can invest?
Anyone can invest! Stonegate FundEngine allows both accredited and non-accredited investors to invest.
With Regulation A+, a non-accredited investor can only invest a maximum of 10% of their annual income or 10% of their net worth per year, whichever is greater. There are no restrictions for accredited investors.
With Regulation Crowdfunding, non-accredited investors with an annual income or net worth less than $100,000, are limited to invest a maximum of 5%. For those with an annual income or net worth greater than $100,000, he/she is limited to investing 10% of that amount.
What does it mean to reserve shares?
Some companies may choose to Test the Waters for a period of time and gauge the interest of the crowd before filing their offering with the SEC. When a company does this, you will see an opportunity to “reserve shares” on the Stonegate FundEngine website. If you choose to participate at this stage you are simply expressing interest in investing. Share reservations are made in dollar amounts, since companies have not yet set their share price. This expression of interest is non-binding and will not obligate you in any way to fulfill your indication of interest. If a company receives enough interest and chooses to move forward with their offering, they will file the appropriate paperwork with SEC, including audited financials. Once authorized by the SEC, those with reservations will be invited to invest in a live offering.
When can I invest?
Once a company’s offering has been qualified by the SEC and moves ahead with the offering, the company will move into the live offering phase. Persons who expressed interest in the company previously will be notified of the live offering.
Once the offering is live, investors may purchase shares. The investor’s money is deposited into an escrow account. At the conclusion of the offering the cash is transferred from escrow to the issuing company and the shares are transferred to the investors.
Is there any cost to investing?
No, there are absolutely no up-front costs to the investor. An investor may create an account and reserve shares without paying anything.
Stonegate FundEngine makes it money by charging fees to issuers, the company selling shares. Issuers can opt to offset the costs by having investors pay a percentage in the form of a processing fee. This fee will be charged to investors on top of the price of shares. Your total amount charged and shares will be stated clearly on the investment form.
Not all issuers on Stonegate FundEngines will have these processing fees and investors of these offerings can invest without paying anything beyond the actual investment amount.
In addition, if an investor has deposited money into escrow to purchase offered securities and the offering is cancelled, the money in the escrow account will be returned in whole to the investor. (Note: No securities will be exchanged in the event of a canceled offering.)
Can I sell my shares?
Once the live offering has closed, you may choose how to handle your shares. Once an offering has successfully closed, investors will be introduced to the company’s selected transfer agent who will be responsible for the transfer of your shares after the close of the offering. Please keep in mind that Stonegate FundEngine assists companies in raising capital and once the offering is closed, we are no longer involved with what occurs thereafter.