Educational Materials

Please be sure to read our complete guide to Regulation Crowdfunding, which can be found HERE

 
 

Crowdfunding 101

 
 

Important Investor Information

Crowdfunding is a relatively new and evolving method of using the Internet to raise capital to support businesses. A company raising funds through crowdfunding typically seeks small individual contributions from a large number of people. Individuals interested in the crowdfunding campaign – members of the “crowd” – may share information about the project, cause, idea or business with each other and use the information to decide whether to fund the campaign based on the collective “wisdom of the crowd.”


1. It is important for each investor to consider whether or not investing in a security offered and sold through this portal is appropriate for him or her. All investment carries some amount of risk and there is no guarantee of return. Each investor should evaluate their own financial status, consult the materials provided by the issuer, and determine whether or not investing in a security is appropriate.

2. All investors should be aware that, following completion of an offering conducted through the intermediary, there may or may not be any ongoing relationship between the issuer and intermediary. Under certain circumstances, an issuer may cease to publish annual reports and, therefore, investors may not continually have current financial information about the issuer.

3. Securities issued in a Regulation CF transaction may not be resold or transferred by any purchaser of such securities for one year after the date of purchase unless such securities are transferred: (1) to the issuer of the securities;(2) to an accredited investor; (3) as part of an offering registered with the Commission; or (4) to a member of the family of the purchaser or the equivalent, to a trust controlled by the purchaser, to a trust created for the benefit of a member of the family of the purchaser or the equivalent, or in connection with the death or divorce of the purchaser or other similar circumstance.

4. An issuer that has offered and sold securities through the portal must file with the SEC and post on the issuer's Web site an annual report along with the financial statements of the issuer certified by the principal executive officer of the issuer to be true and complete in all material respects, and a description of the financial condition of the issuer, unless the issuer has financial statements that have been reviewed or audited by an independent certified public accountant, in which case, the audited or reviewed financial statements should be posted. This report must be filed no later than 120 days after the end of the issuer’s fiscal year. An issuer is not required to continue filing annual reports if:

(1) The issuer is required to file reports under section 13(a) or section 15(d) of the Exchange Act ( 15 U.S.C. 78m(a) or 78o(d));
(2) The issuer has filed, since its most recent sale of securities pursuant to this part, at least one annual report pursuant to this section and has fewer than 300 holders of record;
(3) The issuer has filed, since its most recent sale of securities pursuant to this part, the annual reports required pursuant to this section for at least the three most recent years and has total assets that do not exceed $10,000,000;
(4) The issuer or another party repurchases all of the securities issued in reliance on section 4(a)(6) of the Securities Act , including any payment in full of debt securities or any complete redemption of redeemable securities; or
(5) The issuer liquidates or dissolves its business in accordance with state law.

5. Investors may cancel an investment commitment at any time up to 48 hours prior to the deadline identified in the issuer’s offering materials. However, if an issuer reaches the target offering amount prior to the deadline identified in its offering materials, it may close the offering early if it provides at least five business days’ notice prior to that new deadline (absent a material change that would require an extension of the offering and reconfirmation of the investment commitment). The portal will notify investors when the target offering amount has been met, and in the case of an early closing, when the new offering deadline will occur. If an investor does not cancel an investment commitment before the 48-hour period prior to the offering deadline, the funds will be released to the issuer upon closing of the offering and the investor will receive securities in exchange for his or her investment. An investor may also cancel in the event it is notified by the issuer of a material change in the offering, by not re-confirming their investment.

 

General Crowdfunding Rules


●        The amount raised must not exceed $1,070,000 in a 12-month period;

●        Individual investments in all crowdfunding issuers in a 12-month period are limited to:

●        The greater of $2,200 or 5 percent of the lesser of the investor's annual income or net worth, if either the investor's annual income or net worth of the investor is less than $107,000; and

●        10 percent of the lesser of annual income or net worth (not to exceed an amount sold of $107,000), if both the investor’s annual income and net worth is $107,000 or more; and

●        Transactions must be conducted through an intermediary that either is registered as a broker-dealer or is registered as a new type of entity called a “funding portal.”

 

Investment Limitations


Both accredited and non-accredited investors may invest in crowdfunding offerings, which are subject to maximums based on their income and net worth. Over a 12-month period (on rolling basis), an individual can invest in the aggregate across all crowdfunding offerings up to:

●    If either their annual income or net worth is less than $107,000, they can invest the greater of $2,200 or 5 percent of the lesser of the investor’s annual income or net worth

●    If both their annual income and net worth are equal to or more than $107,000, investors are allowed to invest up to 10 percent of the lesser of their annual income or net worth

●    During the 12-month period, the aggregate amount of securities sold to an individual investor through all crowdfunding offerings may not exceed $107,000.

 

How To Assess an Investment Opportunity


Assessing an investment is all about doing the proper due diligence to be able to make an informed investment decision. Common factors that you should review include:

●        Management team backgrounds

●        Differentiation and defensibility

●        Business model

●        Market

●        Competitive landscape

●        Historical financial performance

●        Financial projections

●        Unit economics

●        Capitalization table

●        Use of proceeds

●        Legal

Usually investors are looking for an investment that represents an opportunity in an established or up and coming area with identifiable growth over a certain period of time, committed and skillful team, and momentum.

 

Investing On The Greenwood Project Portal


1. Browse Offerings

Conduct due diligence to determine which offerings appeal to you

2. Click “Invest”

Following your due diligence, click the “invest” button on the company’s offering page. This will start the investment process during which you will choose the amount of your investment and provide additional information. Your information will be pre-populated into the company’s offering documents, which you can sign electronically through the platform.

3. Funds

After signing the agreement, your funds will automatically be transferred and placed into an escrow account. The funds will remain in escrow until they are released to the company that you are investing in or returned back to you.

4. Confirmation

Once the fundraising round closes, you will receive confirmation of success and counter-signed legal agreements. In the case of an unsuccessful round or if you cancel your investment, the escrow agent will return the funds from the escrow back into your bank account.

Note: Companies are required to reach a minimum funding target to have a successful fundraising campaign. That means that investments are not finalized until the company raises enough money to meet its funding target and completes all other closing conditions. Once the funding target has been met, the money is released to the company and investors will receive the applicable securities. If the minimum funding target is not met, subscription amounts are returned to investors by the escrow agent. Greenwood Project does not receive or take custody of investor funds at any point during the investment process.