Equity crowdfunding is raising a small amount of capital from a large number of people (the crowd). The JOBS Act allows anyone the opportunity to become an investor in Regulation Crowdfunding offerings like those on Rise Up Crowdfunding. By using Regulation Crowdfunding, issuers may offer their company’s securities to potential investors in exchange for financing. In most cases, each investor is given a stake in the company proportional to their investment.

Rise Up Crowdfunding is a FINRA-licensed equity crowdfunding portal that will attempt to create a more level playing field for access to capital from the general public for women-owned and minority-owned private companies.

Our CEO and Co-Founder Ruth E. Hedges is one of the original pioneers of the legislation that was ultimately signed into law as Title III4(a)(6) in the JOBS Act on April 5, 2012. She was honored with an invitation to the White House for its “Crowdfunding Champions of Change” event and has been one of the people at the forefront of helping to grow this new industry for the past decade.

The Jumpstart Our Business Startups (JOBS) Act was signed into law by President Barack Obama on April 5, 2012. This Act changed regulations on capital raising by selling securities for certain private small businesses, allowing access to online equity crowdfunding. As President Obama stated when the JOBS Act was signed:

“This bill is a potential game-changer. Right now, you can only turn to a limited group of investors — including banks and wealthy individuals — to get funding…Because of this bill, start-ups and small businesses will now have access to a big, new pool of potential investors — namely, the American people. For the first time, ordinary Americans are able to go online and invest in entrepreneurs that they believe in.”​

With this the JOBS Act and the SEC rules related to it, private companies can now raise up to $5 million from both accredited and non-accredited investors annually through regulated online funding portals like Rise Up Crowdfunding. This law could be a game-changer for many kinds of entrepreneurs—from the tech company founder bringing her new innovation to global markets, to the Main Street small business owner opening a new store in his local community.

While America’s capital markets are strong and efficient, it’s still a fact that not every entrepreneur has access to needed capital. In the past, only a small percentage of America’s venture capital-backed startups have been led by women, and even fewer have been led by African-Americans and Latinos. In President Obama’s words, “We’ve got to unleash the full potential of every American – not leave more than half the team on the bench.”

Giving someone money on a rewards-based crowdfunding site, you are either making a donation or purchasing a product that doesn’t exist yet, but you do not own part of that company or product. If you invest money in Rise up Crowdfunding, you are investing in that company and will own part of that company in most cases.

Sites such as Kickstarter, Indiegogo, and GoFundMe are all rewards or donation-based crowdfunding platforms. These sites allow people to raise money for a project or cause by offering some sort of reward in exchange for contributions. These sites are not allowed to sell ownership or equity in a business to raise funds.

The securities sold on Rise up Crowdfunding utilize equity crowdfunding, which allows companies to raise money for their business by selling stock online to people like you. And, in some cases, you can also get perks!

Reg CF allows companies to raise up to $5M per year.

It comes from your efforts when you bring together your customers, vendors, employees, friends, family, local community, followers, and fans, and encourage them to invest in your business and become passionate evangelists and strong brand ambassadors for your company. Make your most loyal customers into owners. 

Offering — another word for a Regulation Crowdfunding campaign. Every campaign is an offering of securities to the public, hence the name.

Issuer — the company fundraising (running an “Offering”) on Rise Up Crowdfunding.

Investment commitment —  an application to invest in an offering.

Target (or Minimum) Offering Amount — the initial fundraising goal of the company raising capital. If the company does not reach their target or minimum offering amount, their offering has failed and all investors will be refunded their investment commitment.

When we accept you on Rise Up Crowdfunding, we provide a place for you to upload your video, images, financials, business plan, risk factors, company information, investor pitch materials, cap table, and other key information about your business.

We then help you craft a custom offering page for your company to provide the public with all of the information about your company in one place for potential investors to review – and make an investment decision.

Unfortunately, Regulation Crowdfunding only allows us to accept companies formed in the United States with their principal place of business in the United States.

Just click on the “Invest ” button and fill in the blanks. The entire process takes about 10-15 minutes and is much like opening an account on Amazon or any other e-commerce site. We’ll ask for additional information to identify you (as required by federal securities law) such as your SSN and date of birth. You have to electronically sign some forms to make it legal. We’ve tried to make the process as simple as possible, but if you have any questions feel free to email us at [email protected]

Rise Up Crowdfunding has partnered with Stripe, Enterprise Bank & Trust, and Dealmaker to provide escrow and payment processing technology solutions.

As a FINRA-licensed funding portal, we are required to have a “Qualified Third Party” hold funds in escrow during the investment process. We also wanted to make it easy to invest on our platform using credit cards, debit cards, bank-to-bank transfers (ACH), and wire transfers.

We partnered with these three companies to provide the technology needed to do all of those things.

If you see their names in the investment process or when investing, no need to worry – they are working with us to bring you the best online experience possible.

Yes, if your IRA, trust, or retirement account allows it. Most self-directed IRAs and retirement accounts allow you to invest in private companies, as do most trusts, so check with them first.

Yes, for most offerings, you can invest if you live outside the United States, as long as it is legal in the jurisdiction where you reside.

The limitation on how much a nonaccredited investor can invest during a 12-month period depends on his or her net worth and annual income:

The greater of $2,500, or 5 percent of the greater of the investor’s annual income or net worth, if either the investor’s annual income or net worth is less than $124,000; or

Ten percent of the greater of the investor’s annual income or net worth, not to exceed an amount sold of $124,000, if both the investor’s annual income and net worth are equal to or more than $124,000.

Please see a more detailed explanation by the SEC here:

https://www.sec.gov/oiea/investor-alerts-bulletins/ib_crowdfunding-.html

Calculating net worth involves adding all your assets and subtracting all your liabilities. The resulting sum is your net worth. 

An accredited investor, in the context of a natural person, includes anyone who:

earned income that exceeded $200,000 (or $300,000 together with a spouse or spousal equivalent) in each of the prior two years, and reasonably expects the same for the current year, OR

has a net worth of over $1 million, either alone or together with a spouse or spousal equivalent (excluding the value of the person’s primary residence)

There are other criteria. For more details check out this link on the SEC’s website:

https://ww.investor.gov/introduction-investing/general-resources/news-alerts/alerts-bulletins/investor-bulletins/updated-3

Yes. Most companies have the ability to accept or reject certain investors for any reason they decide, as long as they disclose this in their legal materials. To know for certain, read Form C on the offering page of the company raising capital on Rise Up Crowdfunding.

Go to the offering page of the company raising capital on Rise Up Crowdfunding and the date the securities offering is scheduled to end will be displayed on that page as well as in the company’s Form C filing.

In all Regulation CF offerings, if the company raising capital does not reach its “target” amount, anyone who applied to invest will receive a full refund of the amount you attempted to invest.

All contracts on Rise Up Crowdfunding are signed electronically. When you open an account on our site, you agree to use any electronic signature process we use. Your electronic signature, by law, is just as valid and legal as if you put pen to paper.

Issuers who would like to raise Rise Up Crowdfunding will need to go through our application process consists of filling out an initial form and if approved, signing a contract with our company. After the contract is signed, our due diligence process will begin. While we complete due diligence, we will also assist you with onboarding and other matters such as creating your offering page on our site.

If your business is scalable with the potential for growth, you have a community around you that wants to support your business, have a great pitch put together to get investors excited about your offering, and have a strong team, equity crowdfunding may be right for your business.

There are no up-front fees paid to Rise Up Crowdfunding. We charge 7% of the amount you raise plus 1% of the amount you raise in equity. We also charge a flat $5,000 fee that is deferred until you do your first closing.  You may have additional costs for third-party services such as legal fees, CPA fees for financial statements, and fees to marketing companies.

It is the issuer’s responsibility to disclose any and all risks involved with investing in their offering. You must outline in detail what investors can expect and prepare for in your offering disclosures that will be filed with the SEC as your company’s Form C before you can raise capital on Rise Up Crowdfunding.

Issuers may use any means to promote their offering as long as they follow certain rules and limitations on marketing of Regulation Crowdfunding offerings and of marketing securities offerings in general. Rise Up Crowdfunding will also send out communications to certain investors who have registered on our site.

If you decide to cancel your offering, you should notify us in writing at [email protected] and someone from our team will assist you in terminating your offering. You will also need to consult with your counsel as to any filings or other legal steps that must be taken under Regulation Crowdfunding or other securities laws.

The personal information you provide to us will be provided in an encrypted manner, and we do what we can within the limitations of the existing computer and online world to protect that information. We take your privacy seriously and will not distribute or sell your private information to anyone, other than regulatory bodies that require it or people like our broker-dealer who have to have it to do what is required under federal and state laws. 

However, please understand that we, like every other company in the world, are subject to possible criminal malfeasance or someone who attempts to hack our systems. We cannot ever (nor can anyone else) 100% guarantee that such criminal acts or hacking will never occur, but we take commercially reasonable steps, like any responsible company, to prevent that from happening. The personal information you provide to us will be provided in an encrypted manner, and we do what we can within the limitations of the existing computer and online world to protect that information. We take your privacy seriously and will not distribute or sell your private information to anyone, other than regulatory bodies who have to have it to do what is required under federal and state laws.

However, please understand that we, like every other company in the world, are subject to possible criminal malfeasance or someone who attempts to hack our systems. We cannot ever (nor can anyone else) 100% guarantee that such criminal acts or hacking will never occur, but we take commercially reasonable steps, like any responsible company, to prevent that from happening.

There are many factors that go into this equation. If you have any questions about this, we will be happy to give you our thoughts once you submit your company information to us. But as a general rule, the companies that do best with equity crowdfunding tend to fit into one or more of the following categories:

Your business is one that a wide range of individuals can understand quickly and you can clearly show the market opportunity and your company’s edge.

You can tell your story in an engaging, concise way that helps build a crowd of followers. Crowds are attracted to companies with significant potential and those with compelling missions.

You have a strong community of friends supporters, fans, or customers. Most successful offerings bring in the first 30% of their capital raise from this group, which is very important. Why would a group of strangers invest in your business if the people who know and love you the most will not?

Does your business already have a loyal customer or fan base who already know the value of your product or service and may be interested in taking a financial interest in your company’s success?

Do you have a business plan and two years’ financials to post online? 

Do you have a strong community of friends, supporters, fans, or customers?

You will need to bring in the first 30% from them, which is very important. Why would a group of strangers invest in your business if the people who know and love you the best won’t?  

Are you doing something innovative that no one has ever done before?

Does your product directly improve people’s lives?

People like to invest in things that do good in the world. 

Does your business have some traction?  Investors like proof you can execute.

You have enough financial runway; and can you afford the required legal, regulatory, and finance-related expenses required to launch a successful offering?

You and your team are willing to take the time and make the effort that it will take to run a successful Regulation Crowdfunding offering?

You have a team to help you. Historically, in all kinds of crowdfunding, chances of success increase by a significant percentage if you have a team of 4 or more people helping you.

Your company already has a large customer base or a large number of social media followers or has the ability to reach a large number of potential investors through some other means, like having a founder who is an internet influencer or who has a large online following.

You have a product or service that is innovative and the media will be interested in covering it.

You have a founding or management team with a history of success in business and with prior successful exits.

It is illegal to state or imply that the SEC has approved your offering or has in any way passed on the merits of your offering. Any misleading statement about the SEC could get you in serious trouble.

The SEC’s primary goal is always to protect investors.

Their rules are designed to ensure that all potential investors have access to the same factual information and that companies raising capital give full and fair disclosures of all material facts that an investor should know in making an investment decision. In all instances related to your Regulation Crowdfunding offering, you should keep this in mind and do everything possible to be truthful, forthcoming and never misleading in any way.

Learn more in this SEC guide.

Each Regulation Crowdfunding offering must be conducted through a single crowdfunding intermediary, per SEC rules, so you may only hold one at a time. It is possible to continue pursuing investments from other securities offerings at the same time as your Regulation Crowdfunding offering, but this can be legally complicated and a possible minefield of securities law issues. Any company wishing to raise capital through a separate sale of securities while running a Regulation Crowdfunding offering should consult with experienced securities law counsel and obtain legal advice as to how this must be done.

The maximum offering amount should be the most you are willing to sell at the dollar price specified in your offering.

If this is the issuer’s first Reg CF offering:

Issuers raising less than $124,000 in their Regulation Crowdfunding offering must provide management financial statements done to GAAP (generally accepted accounting principles). They must truthfully disclose specific items certified by a principal executive officer.

Issuers raising more than $124,000 in their Regulation Crowdfunding offering but at most $618,000 must-have financial statements reviewed by a public accountant independent of the issuer.

Issuers raising between $618,000 -$1,235M must have financial statements reviewed by a public accountant independent of the issuer.

Issuers raising more than $1,235,000 must have financial statements audited by a public accountant independent of the issuer.

If the issuer has run a Reg CF offering previously:

Issuers raising less than $124,000 in their Regulation Crowdfunding offering must provide management financial statements done to GAAP (generally accepted accounting principles). They must truthfully disclose specific items certified by a principal executive officer.

Issuers raising more than $124,000 in their Regulation Crowdfunding offering, but at most, $618,000 must-have financial statements reviewed by a public accountant independent of the issuer.

Issuers raising between $618,000 -$5M must have financial statements audited by a public accountant independent of the issuer.

The issuer sets the share price and valuation for their offering. Rise Up Crowdfunding cannot suggest how to structure the offering from a price and valuation perspective. We are acting only as an intermediary between the issuer and the investors.

A “Gauge Investor Interest” campaign allows a company that is considering raising capital to see how much interest exists in their Regulation Crowdfunding offering before they officially file with the SEC. For an issuer, the benefits include gauging the interest in your upcoming offering and also getting your initial investor base of close contacts (friends, family, co-workers, social media followers) engaged and into the Rise Up Crowdfunding system for easier investment processing later when you go live.

In nearly every Regulation Crowdfunding offering, a large amount of your initial capital raised will come from people who know you, your team, and your company. By far, the audience most likely to invest are people who are already a part of your marketing and messaging ecosystem. This generally means your customer base, your e-mail lists, your social media followers, your friends and family and those of your teammates, and even existing investors who may be interested in increasing their investment.

Getting these people lined up in advance, and into the Rise Up Crowdfunding system before your launch can lead to a more successful first few days of your offering once your Form C is filed.

Only companies who have filled out our initial information form, been accepted by our review process, and signed a contract to list their offering on Rise Up Crowdfunding are eligible to run a Gauge Investor Interest campaign.

Yes. It is very important to ensure you follow certain rules to avoid any non-compliance issues later for your company. All marketing and communications you make (e-mails, website pages, social media posts, etc.) must include a disclaimer containing the following:

NO MONEY OR OTHER CONSIDERATION IS BEING SOLICITED, AND IF SENT IN RESPONSE, WILL NOT BE ACCEPTED. NO OFFER TO BUY THE SECURITIES CAN BE ACCEPTED AND NO PART OF THE PURCHASE PRICE CAN BE RECEIVED UNTIL THE OFFERING STATEMENT IS FILED AND ONLY THROUGH AN INTERMEDIARY’S PLATFORM. AN INDICATION OF INTEREST INVOLVES NO OBLIGATION OR COMMITMENT OF ANY KIND.  “RESERVING” SHARES IS SIMPLY AN INDICATION OF INTEREST.

You must also be sure your marketing and communications are fair, balanced, and not misleading in any manner.

Avoid comparisons to public companies, statements that suggest future positive returns or growth statements promising any return on investment, suggestions that this is a low risk, or any promises to provide liquidity.

Be careful about statements that cannot be verified with a citation or are difficult to prove. Any statements you make about your company, your products or services, or your management team must be supported by proof. 

Any non-compliant marketing or communication made before you file your Form C could be construed as an unregistered offer of securities that may prevent you from being able to use Regulation CF or other securities laws. 

First, be sure to upload your pitch deck. to the “Gauge Investor Interest” page builder in the offering page management section containing your company information and your pitch deck as well as access to reserve an investment.  

You will need a pitch deck, or we cannot have a “Gauge Investor Interest” page for you.

A reservation is a potential investor’s non-binding commitment to investing. It becomes official after you file your Form C, your campaign goes live and the investor converts their reservation into an investment. 

Once your Form C is filed, Rise Up Crowdfunding will email everyone who has made a reservation directing them to your Offering Page so they can formally make their investment.

You can track your “Gauge Investor Interest” progress in your Issuer Dashboard.

While the potential investor’s indication of interest involves no obligation or commitment of any kind, we will collect and share with you each person’s name, address, phone number, and email address as well as the amount of their prospective investment.

No. No one is an “investor” or “investing” in your company at the “Gauge Investor Interest” phase, which is formally known as “Testing The Waters.”  

These people are “potential investors” or “supporters” who have “indicated interest” and “reserved shares.”  Do not mislead the public by saying things in marketing or communication that could lead others to believe these supporters are something they are not.