Glossary Terms

Funding Portal

A term created by the JOBS Act used to describe websites allowed to offer and sell securities under Regulation Crowdfunding. Rise Up Crowdfunding is a Funding Portal and we are registered with FINRA and the SEC.

Crowdfunding Intermediary

A funding portal or broker-dealer that is registered with the U.S. SEC and FINRA and authorized to facilitate equity crowdfunding transactions. Activities are governed by the U.S. JOBS Act Title III also known as Regulation Crowdfunding or Regulation CF.

Issuer

A company that raises money by creating and selling securities to investors.

Reg CF or  Title lll  Section (4) (a) (6) 

An abbreviated reference to Regulation Crowdfunding or Title III  Section (4) (a) (6) of the JOBS Act that gives companies the option of raising capital from the public rather than only from accredited and institutional investors.

Reg CF Campaign

When a private company raises funds from the general public through an online intermediary in accordance with Title III  Section (4) (a) (6) of the JOBS Act

Private Offering 

The sale of investment securities by businesses who do not wish to raise funds through public offerings can seek private placement with a small group of investors. Private offerings must adhere to the rules of any one of several SEC registration exemptions.

General Solicitation: The practice of advertising to potential investors outside of one’s current network with the intent of fundraising, as is now allowed by the SEC for private issuers under particular registration exemptions enabled in the JOBS act (Title II 506c, Title IV Reg A, and Title III Reg CF).

Testing The Waters

 Communicating with potential investors to gauge interest before raising money or formally registering with the SEC.

Security

A share of stock, a promissory note, a bond or any other instrument offered by an Issuer on Rise Up Crowdfunding.

Accredited Investor

Generally, an investor with a net worth of $1 million or more (excluding primary residence) who has earned $200,000 or more for the last two years with a reasonable expectation for that income level to continue. Other criteria include asset size, governance status, or professional experience as defined by the SEC. 

CIK Number

A Central Index Key (CIK) number is issued by the SEC to companies or individuals that file forms with the SEC. The number is used to track the filings in electronic databases such as EDGAR. For a Reg CF campaign, the issuer and the intermediary both have a CIK number.

CRD Number

The Central Registration Depository (CRD) is a database managed by FINRA that includes registration records of approved broker-dealers, information about their associated individuals and related information. Registered companies and individuals are assigned a CRD number through which their records can be accessed.

Discount

If the offering terms include the conversion of a current investment into future equity (for example with a convertible debit or a Simple Agreement for Future Equity, commonly referred to as a SAFE), the startup may include a discount to further reward early investors. If and when the investment converts to equity, the investor’s shares would be based on the company valuation discounted by the promised amount.

Investor Limits

Under Regulation Crowdfunding, non-accredited investors are limited in the amount they may invest.

  • If either 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 lesser of your annual income or net worth. 
  • If both your annual income and your net worth are equal to or more than $107,000, then during any 12-month period, you can invest up to 10% of annual income or net worth, whichever is lesser, but not to exceed $107,000. 

In addition to these Investor limits set by the SEC, each Reg CF campaign may have investment minimums set by the issuer raising money. 

Material Change

A change to the company or offering terms that would be considered important by a potential Investor. Some examples may include a change in company strategy, key contracts, leadership roles, funding campaign closing date, investment terms among many others.

Reward or Perk 

Something given to investors in exchange for their funds while using equity crowdfunding, such as the first run of an actual product, a discount on goods or services, or a shirt, sticker, or small object related to the project or company being funded, or even just a “thank you” acknowledgment.

ROI

In short, return on investment. The payback is earned from investing in something. Examples include a financial return through stocks such as a dividend payment, or the ability to sell the stock later for a greater amount than what was paid for the stock.

Trigger Event

An event defined in the offering terms where promised future equity converts to shares of the company. Good examples of trigger events (also called “exits”) include a company going public (IPO), being acquired by another company or merging with another company. Trigger events may also include additional funding rounds as specified in the offering terms.

Valuation Cap

The valuation of a company is basically the amount that company leaders believe the company is worth at that moment in time. To reward Investors who take the risk of making an investment at an early stage, some companies offer a valuation cap for a specific offered investment. This sets the maximum company valuation at which your investment will be converted into common stock equity if and when a trigger event occurs. Even if the value of the Startup grows beyond that cap, your investment is converted at the valuation identified as the cap. The intent is to make your investment more valuable.

Oversubscriptions

If your campaign reaches your maximum target offering amount that is less than the max the law allows ($5 million/12-month period) and other investors still want in, you may choose to accept the additional investments as oversubscriptions. On Form C, you must indicate if you will accept oversubscriptions and, if so, how those investments will be allocated.

Secondary Market

A marketplace that enables individuals to buy and sell securities from other investors

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