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FAQs

Seed Equity Basics

What is Seed Equity?

Seed Equity Ventures (Seed Equity) provides investment banking services for startups, helping startups around the world raise capital. We believe the best entrepreneurs in the world should be funded, no matter who they are or where they live.

Investors throughout the world, no matter where they are, should have a voice to choose what the future should look like. They should be able to support entrepreneurs that will build that future.

In contrast, right now, only entrepreneurs in a few select areas who know the right people can be funded and only then if the entrepreneurs' vision matches a VC or Angel Investors criteria or schedule.

There are a few thousand VCs in the world who control which entrepreneurial ventures live and which die. We believe that power should be given to millions of people throughout the world.

Seed Equity was founded to provide growth equity to Entrepreneurs and their startups in exciting industries throughout the world. Whether they are located in San Francisco, Sao Paulo, Bangalore, London, Shanghai or Tel Aviv, Seed Equity’s mission is to help find the best and brightest entrepreneurs and connect them with global investors.

Seed Equity's proprietary social investing platform allows global investors to like, follow, mentor and invest in promising startups throughout the World.

Built by successful and experienced entrepreneurs and investors, Seed Equity is a registered broker dealer with the U.S. Securities and Exchange Commission and is member of both FINRA and SIPC.

How does Seed Equity work?

Seed Equity’s proprietary online investing platform allows global investors to like, follow, mentor and invest in promising startups throughout the world.

Companies wishing to raise capital on Seed Equity’s platform will submit the required information that will be reviewed by the investment committee. Once the investment committee completes its due diligence, including background checks on all officers, directors and 20% shareholders, Seed Equity will inform the company if they have met the requirements to raise capital. A company can then list their offering on the Seed Equity platform.

What does the JOBS Act have to do with startups and fundraising?

The Jumpstart Our Business Startups Act or JOBS Act, is a law that encourages funding of United States startups and small businesses by easing various securities regulations. The new law passed with bipartisan support, and was signed into law by President Barack Obama on April 5, 2012. The term "The JOBS Act" is also sometimes used informally to refer to just Titles II and III of the legislation. Title II of the JOBS Act allows for the first time, general solicitation of Private Placements for Accredited Investors. Title II became effective on September 23, 2013. Title III of the JOBS Act, which will set forth the rules and regulations for companies and non-accredited investors to is still pending. It is currently anticipated that the final rules for Title III will be finalized by the end of 2015.

What is Crowdfunding?

Crowdfunding is the funding of a company by selling small amounts of equity to many investors. Crowdfunding has become a global phenomenon has recently received attention from policymakers throughout the world. In the United States, it is a significant component of the JOBS Act; legislation that allows a large group of small to invest and help fund startups.

What is social login? Is it safe?

Registering on Seed Equity should be an easy, rewarding experience, not one that frustrates our users. Social login with Seed Equity is the best way to offer a fast, seamless and secure login experience. It also helps our users complete their social profile and to personalize their experience. Seed Equity will never post to your social network.

What types of investments are featured on Seed Equity?

We primarily focus on technology-oriented companies that are in the forefront of disruptive changes in the technology industry and can scale quickly with real market potential. Some examples include: SaaS, gaming, e-commerce, mobile, social, software, data, financial technology, and telecommunications.

What is the investment criteria for raising capital on Seed Equity?

Technology companies that are looking to raise capital with Seed Equity, will be vetted based on the following criteria:

  • The company must have a minimum viable product.
  • Demonstrate traction in the marketplace by either showing an increasing user base, or growth in revenues.
  • At least two full-time members; having a technical co-founder is a plus.
  • Experienced founders with prior success.
  • It is a plus if teams can raise part of the targeted funds on their own.

How much does it cost to be listed on Seed Equity?

There is no initial up-front charge to apply to Seed Equity. However, when you are approved to be listed on the site, you have to pay a fee to set up an escrow account with U.S. Bank. Additionally, we will charge you a percentage of total amount you raise through us when the campaign successfully closes. The fee is similar to what companies pay to investment bankers in the traditional funding rounds.

Do companies give up equity or carry to Seed Equity in order to raise funds?

Seed Equity does not take equity or carry to list a company on the Seed Equity platform. If your company is raising capital through an equity offering, the company will give up equity to investors in exchange for their investment. If the company is raising money through a debt offering, the company will not be giving up equity to investors.

Does Seed Equity charge fees to investors?

Seed Equity is a free service to investors.

Where are the Seed Equity offices?

San Francisco, California and Salt Lake City, Utah.

What types of offerings are available to companies?

The majority of the offerings will be conducted using Series Seed Preferred Stock Documents. We also raise capital for companies using convertible notes. As part of the fundraising process, each company will complete Offering Documents and Risk Disclosures for potential investors. In the Offering Documents, the company will give detailed description of the "use of proceeds" and how the target amount being raised will facilitate the company’s goals and objectives in its business plan and financial forecasts.

For Investors

How do I become an investor?

To become an investor, you need to become a registered user first. In order to become a registered user click here to sign up with your social network OR you can register the old fashioned way by clicking here.

Once you’re registered, you will be prompted to complete the investor profile application.

Who can become an investor?

  1. Non-U.S. Investors
  2. U.S. Accredited Investors. US accredited investors must meet one of the following requirements:
    • Individual net worth, or joint net worth with your spouse, exceeding $1 million excluding your primary residence.
    • Have individual gross income of last two years of at least $200,000 ($300,000 with spouse) with the expectation of the same income in the current year.
    • Entities must have at least $5 million in assets (or all individual owners meet accredited investor tests).
  3. U.S. Non-Accredited Investors

On October 30, 2015, the Securities and Exchange Commission adopted final rules to permit companies to offer and sell securities through equity crowdfunding for non-accredited investors.

  • Individual investors, over a 12-month period, can invest in the aggregate across all equity crowdfunding offerings up to:
    • If either their annual income or net worth is less than $100,000, then the greater of:
      • $2000 or
      • 5 percent of the lesser of their annual income or net worth.
    • If both their annual income and net worth are equal to or more than $100,000, 10 percent of the lesser of their annual income or net worth; and
  • During the 12-month period, the aggregate amount of securities sold to an investor through all equity crowdfunding offerings may not exceed $100,000

*On May 16, 2016, non-accredited registered investors on Seed Equity's platform will be able to invest in Title III equity crowdfunding offerings.

How does the investment process work?

Companies wishing to raise capital on Seed Equity’s platform will submit the required information that will be reviewed by the investment committee. Once the investment committee completes its due diligence, including background checks on all officers, directors and 20% shareholders, Seed Equity will inform the company if they have met the requirements to raise capital. A company can then list their offering on the Seed Equity platform.

How do I make an investment?

As an Investor you can browse listed offerings and review all disclosures and company information. After reviewing all the information you will have an opportunity to invest in the company by clicking "Invest Now". At this point you will be emailed funding instructions for an escrow account of this specific company you have selected. Note: In an All or None offering, if the company does not succeed in reaching their target amount, all funds will be refunded from escrow. In a Best Efforts offering, the company will receive the proceeds from the offering, even if the target amount is not met.

When will I get my investment back? What do I need to know about early-stage investing? Are these investments risky?

Company listings on SeedEquity.com are only suitable for potential investors who are familiar with and willing to accept the high risk associated with private placement investments. Securities purchased in private placements are not publicly traded and are intended for Potential Investors who do not have a need for a liquid investment. There can be no assurance that the securities price/valuation is accurate or that it is in agreement with the market or industry valuations. In addition, Potential Investors will likely receive restricted securities that may require a holding period before resale is permitted. Companies seeking private placement investments tend to be in earlier stages of development and have not yet been fully tested in the public marketplace. A private placement investment requires high-risk tolerance, low liquidity concerns, and long-term commitments. Potential Investors must be able to afford to lose their entire investment because that is a very real possibility.

How much can I invest on Seed Equity? Is there a minimum? Is there a maximum?

Each campaign is different. You will find the detailed investment terms and conditions in the private placement memorandum for each campaign.

Can I fund a company anonymously?

Yes, you can choose not to show your investment portfolio to public.

Post funding, what interaction do investors have with companies?

Unless otherwise specified in the offering documents, companies determine the best way to keep their investors updated on the progress of the business. We encourage all companies to provide at least annual financial reports and quarterly investor updates to their investors. Also, Seed Equity provides an access to "Updates" and "Discussion" for issuers and investors to communicate more easily and efficiently.

How do I know if the team members and companies are who they claim to be?

The identities of the team members are all verified through a third-party company, and all companies are required to submit their articles of incorporation or similar type of document.

However, each individual investor is ultimately responsible to perform due diligence.

What are the tax implications of an investment?

Seed Equity cannot give individual tax advice and we encourage you to talk with your accountant or other tax advisor.

I'm not based in the United States, can I still invest on Seed Equity?

Yes.

When do companies receive investments?

In an All or None offering, a campaign will be successful when it reaches the target-funding goal. Until then, your investment is not final. In a Best Efforts offering, companies will receive the funds that have been raised, even if the target amount is not met. When you make the investment, your investment will be held in a separate escrow account with U.S Bank. Once the offering is completed and closing has taken place, shares will be issued to investors and funds will be released to the company.

Seed Equity will never hold your investment funds under Seed Equity’s name.

How do I become a Mentor?

If you are an expert or specialize in a certain industry, you can share your knowledge and help entrepreneurs by becoming a mentor. Becoming a mentor is indicated through your settings on your profile page. If selected, entrepreneurs will have an opportunity to reach out to you for advice.

How do I contact a company for diligence and general communication?

There are several ways to contact the company. If you have specific questions that you want to ask privately, you can send private messages to the team members on the company’s profile page. Also, you can check the company’s profile page for any upcoming webinars or any events.

For Entrepreneurs

How do I raise funds for my company?

Companies wishing to raise capital on Seed Equity’s platform will submit the required information that will be reviewed by the investment committee. Once the investment committee completes its due diligence, including background checks on all officers, directors and 20% shareholders, Seed Equity will inform the company if they have met the requirements to raise capital. A company can then list their offering on the Seed Equity platform.

How long does it take to respond to an application?

We will provide an initial response within 5 - 10 business days.

What types of financial instruments can companies use for raising capital on Seed Equity?

A common stock is a class of stock in a company, normally with voting rights. Corporations may have several classes of common stock, as well as preferred stock, or they may have a single class of common stock.

A preferred stock is a stock whose holders are guaranteed priority in the payment of dividends but whose holders have no voting rights.

The issuer (company) will determine the type of stock offered to investors.

Convertible Notes allow companies to delay establishing the valuation for their startup until a later round. Convertible notes usually include a discount rate to a future priced round and also a maximum cap.

Can I set a minimum or maximum investment size per investor?

Yes. You may set investment minimums during the Get Funding application process.

Will my company's information remain confidential?

General information on your company is available to everyone. For more sensitive information, we provide a data room that securely stores important documents that will only be available to verified investors.

I'm not based in the United States, can my company be featured on Seed Equity's platform?

Absolutely. Each company will go through an application process. However, non-US startups will need to comply with their local regulations and US regulations.

How is the valuation of my fundraising round determined?

As the issuer, you will set the valuation of your company. Valuations of companies on Seed Equity’s platform are intended to be in line with industry standards and the valuation will be vetted by Seed Equity’s investment committee.

Our company doesn't have a video. What should we do?

We highly recommend that every company provide a video - even if it is a simple 1-2 minute homemade video of the founders discussing the business. Some of the best startup accelerators explicitly ask that founders a simple home-made interview video as part of the application process.

What documents are necessary for a company to raise money?

Issuers should have at a minimum a founders/company video, a pitch deck and an executive summary. The data room will include additional documents available only for verified investors, such as: two year historical financials, three year projected financials, articles of incorporation, private placement memorandum, risk disclosures, use of proceeds and management bios.

How long does it take to raise money?

It depends on the company and not all companies succeed in raising capital. The time it takes to complete a successful fundraising round can vary widely but companies should expect that it will take 30 to 90 days to complete.

What is the Data Room?

The data room is a unique permissions-based file management system that allows companies to manage the uploading and sharing of fundraising files and documents with verified investors. Data room access is not available to the general public.

How much does Seed Equity charge companies to raise funds?

There is no initial up-front charge to apply to Seed Equity. However, when you are approved to be listed on the site, you have to pay a fee to set up an escrow account with U.S. Bank. Additionally, we will charge you a percentage of total amount you raise through us when the campaign successfully closes. The fee is similar to what companies pay to investment bankers in the traditional funding rounds.

Summary Chart of Exempt Offerings Alternatives

Type of Offering Dollar Limit Manner of Offering Issuer and Investor Requirements Filing Requirement Restriction on Resale Blue Sky Exemption
Rule 506 (c) None. General solicitation permitted, provided that all purchasers are accredited investors. All investors must be accredited investors. Issuer must take reasonable steps to verify accredited investor status. File Form D with the SEC no later than 15 days after first sale. Restricted Securities. No need to comply with state blue-sky laws. Most states require a notice filing.
Rule 506 (b) None. No general solicitation or general advertising. Unlimited number of accredited investors and up to 35 non-accredited investors that are sophisticated. File Form D with the SEC no later than 15 days after first sale. Restricted Securities. No need to comply with state blue-sky laws. Most states require a notice filing.
Tier 1 Regulation A $20 million within prior 12 months but no more than $6 million by selling security holders. "Testing the water" permitted before and after filing Form 1-A. Sales permitted after Form 1-A qualified. Eligible issuer. No investor requirement. File test-the-waters documents, Form 1-A, any sales material and report of sales and use of proceeds with the SEC. Not restricted securities. Subject to state blue-sky laws regarding pre-offering review, filing, and anti-fraud.
Tier 2 Regulation A $50 million within the prior 12 months, but no more than $15 million by selling security holders. "Testing the water" permitted before and after filing Form 1-A. Sales permitted after Form 1-A qualified. Eligible issuer. No investor requirement; however, investors who are natural persons and are not accredited investors are subject to an investment limit. File test-the-waters documents, Form 1-A, any sales material and report of sales and use of proceeds with the SEC. Issuer subject to ongoing reporting requirements. Not restricted securities. Not subject to state blue-sky laws regarding pre-offering review, however, subject to state blue-sky filing and anti-fraud requirements.
Regulation Crowdfunding Up to $1 million in a 12-month period. Offering must be made solely through broker/dealer, or a funding portal. Issuers are not reporting companies, not fund, and not subject to disqualification. Requires the preparation of a Form C, which resembles a Form 1-A. Subject to certain transfer restrictions for one year. No need to comply with state blue-sky laws.

General Help

I forgot my password, how do I log in?

Visit the Login Page and click the reset password link.

How can I change the email address associated with my account?

Visit the Private Settings page under your account. You can modify your email address there.

How do I change my email notification settings on my account?

Visit the Private Settings page under your account. You can change your email notification settings there.

Still need help? Contact us

Click here to visit the Contact Us page. We will respond as soon as we can!