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Industry Terms

Preferred stock:

A class of ownership in a corporation that has a higher claim on its assets and earnings than common stock. Preferred shares generally have a dividend that must be paid out before dividends to common shareholders, and the shares usually do not carry voting rights. Learn more here:

Common stock:

A security that represents ownership in a corporation. Holders of common stock exercise control by electing a board of directors and voting on corporate policy. Common stockholders are on the bottom of the priority ladder for ownership structure. In the event of liquidation, common shareholders have rights to a company's assets only after bondholders, preferred shareholders and other debtholders have been paid in full. Learn more here:

Convertible note:

A convertible note is short-term debt that converts into equity. In the context of seed financing, the debt typically automatically converts into shares of preferred stock upon the closing of a Series A round of financing. In other words, investors loan money to a startup as its first round of funding; and then rather than get their money back with interest, the investors receive shares of preferred stock as part of the startup’s initial preferred stock financing, based on the terms of the note. Learn more here:

Safe (simple agreement for future equity):

Unlike a convertible note, a safe is not a debt instrument. Because the money invested in a startup vie a safe is not a loan, it will not accrue interest. Learn more here:

Equity-Based Crowdfunding:

The online offering of private company securities to a group of people for investment. Equity crowdfunding enables broad groups of investors to fund startup companies and small businesses in return for equity.

FINRA (Financial Industry Regulatory Authority):

FINRA is dedicated to investor protection and market Integrity through effective and efficient regulation of the securities industry. FINRA is not part of the government, it’s an independent, not-for-profit organization authorized by Congress to protect America’s investors by making sure the securities industry operates fairly and honestly. Learn more here:

SEC (U.S. Securities and Exchange Commission):

The mission of the U.S. Securities and Exchange Commission is to protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation. The SEC oversees the key participants in the securities world, including securities exchanges, securities brokers and dealers, investment advisors, and mutual funds. Here the SEC is concerned primarily with promoting the disclosure of important market-related information, maintaining fair dealing, and protecting against fraud. Learn more here:

General Solicitation (506(c)):

General solicitation is the act of marketing a capital raise publicly. Rule 506(c) permits issuers to engage in general solicitation so long as they take reasonable steps to verify that all purchasers are “accredited investors” as defined in Rule 501(a) under Regulation D. Learn more here:


A situation in which an entrepreneur starts a company with little capital. An individual is referred to as boot strapping when he or she attempts to found and build a company from personal finances or from the operating revenues of the new company.

Seed Round Funding:

Raising the initial capital used to start a business. The amount of money is usually relatively small because the business is still in the conceptual stage.

Series A Funding:

The first round of financing undergone for a new business venture after the seed round funding.

Venture Capital:

Money provided by investors to startup firms with perceived long-term growth potential.

Angel Investors:

Individuals who invest in early stage or start-up companies in exchange for an equity ownership interest.

Executive Summary:

The executive summary is often considered the most important section of a business plan. This section briefly tells your reader where your company is, where you want to take it, and why your business idea will be successful. If you are seeking financing, the executive summary is also your first opportunity to grab a potential investor’s interest. For tips on drafting an executive summary visit:

Term Sheet:

A non-binding agreement setting forth the basic terms and conditions under which an investment will be made. A term sheet serves as a template to develop more detailed legal documents. Once the parties involved reach an agreement on the details laid out in the term sheet, a binding agreement or contract that conforms to the term sheet details is then drawn up. Learn more here:

Pre-Money Valuation:

Refers to the value of a company not including external funding or the latest round of funding.

Post-Money Valuation:

The value of the company including outside financing or the latest injection of funding. Learn more here:

JOBS Act Overview

Title I: Reopening American Capital Markets to Emerging Growth Companies

The JOBS Act immediately created the concept of an emerging growth company (EGC) to encourage public offerings by small and developing companies. EGCs must have total annual gross revenue of less than $1 billion and are subject to less stringent regulatory and reporting requirements. The designation is elective; issuers that qualify as EGCs are not required to become EGCs. EGCs would retain special treatment until reaching any of the following milestones:

  • Reaching or exceeding total annual gross revenues of $1 billion
  • Five years from the date of the company’s initial public offering (IPO)
  • Issuing more than $1 billion in nonconvertible debt during the previous three-year period
  • Issuer becomes a large accelerated filer as defined by the SEC, typically having worldwide public float of $700 million or more
  • Learn more here:

Title II: Access to Capital for Job Creators

Title II of the JOBS Act, which became effective in 2013, lifted the ban on general solicitation for private securities offerings under the Rule 506(c) exemption of Regulation D. But 506(c) offerings are open only to accredited investors. Learn more here:

Title III: Crowdfunding

On Oct. 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, than the greater of:
  • $2,000 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. Learn more here:

Title IV: Small Company Capital Formation

Title IV of the JOBS Act required the SEC to adopt or amend regulations to encourage capital formation without requiring an SEC registration statement. The JOBS Act creates a new category of public offering, exempt from registration requirements, of up to $50 million in a 12-month period. This change will allow companies to conduct public offerings in a shorter period of time, and with lower associated costs than with more traditional public offerings. On December 18, 2013, the SEC released the proposed rules, expanding Regulation A into two tiers and making minor updates to existing Regulation A requirements. Offerings in both tiers are subject to the same basic requirements relating to issuer eligibility and disclosure. The proposal retains the concept of “eligible issuer”—nonreporting companies organized in the U.S. or Canada, excluding investment companies and delinquent filers. Eligible types of securities include equity, debt and convertible but would exclude asset-backed securities, which would be covered under Regulation AB. Learn more here:

Sample Documents

Safe doc:

Preferred stock agreement:

Common stock agreement:

Convertible note:

Pitch deck example:

SEC Guidelines and Types of Offerings

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.

How CoinZoom Securities Can Help with Your Reg. A+ Capital Raise

CoinZoom Securities can assist with your capital raising needs starting with the company’s offering materials, the eventual closing, and everything in between. We make sure that the Reg. A+ offering is compliant with all the applicable regulatory requirements.

CoinZoom Securities’s online investing platform was created to make capital raising seamless. We help manage the process so that you can do what you do best: grow your business. The CoinZoom Securities platform is able to do everything online for investors. We enable document execution, verify investor identities, suitability testing, investor communication, perform anti-money-laundering checks and provide an escrow account to easily track the transfer of funds.

What You Get with CoinZoom Securities

  • Online Investing Platform – CoinZoom Securities makes it easy and seamless for your customer base to invest. Our engineering team will work closely with your team to make sure the process is as painless as possible.
  • Communications Portal – You can communicate with all of your investors through our communications portal.
  • Suitability – CoinZoom Securities performs suitability on all investors in compliance with FINRA Rule 2111. Investor’s investment profile including the investor’s age, other investments, financial situation and needs, tax status, investment objectives, investment experience, investment time horizon, liquidity needs and risk tolerance and others.
  • AML – Instant Identification Verification. Complies with Section 326 of the USA Patriot Act. All Investors are checked against a comprehensive set of global terrorist watch lists, including the Office of Foreign Assets Control (OFAC), Politically Exposed Persons (PEP) and others:
    • BES: Bank of England Sanctions
    • CFTC: Commodity and Futures Trading Commission
    • DTC: Defect Trade Controls
    • EUDT: European Union Designated Terrorist Groups + Individuals
    • FBI: FBI Fugitives
    • FCEN: Financial Criminals Enforcement Network Special Alert List
    • FAR: Foreign Agents Registration Act
    • IMW: Interpol Most Wanted
    • OCC: Office of the Comptroller of the Currency Alerts
    • OSFI: OSFI – Canada Entities
    • SDT: State Department Foreign Terrorist Organizations
    • BIS: US Bureau of Industry and Security
    • UNNT: United Nations Named Terrorists
    • WBIF: World Bank Ineligible Firms

Instant Verification includes identity verification and instantly authenticates businesses and individuals.

  • Bank Level Security – All information is sent securely using bank-level SSL encryption.
  • Escrow Account – Set up and Management

Investor funding Options include:

  • Checks
  • Wires
  • Secure Data Room – Bank level security for offering documents and financials stored securely in an SSAE-16 (SOC 2) certified, FINRA compliant document storage system.
  • In House Legal Counsel to assist with SEC Filings – CoinZoom Securities has qualified compliance and in-house counsel that are familiar with Reg. A+ and you will have full access to them at any time. At the option of the company, CoinZoom Securities will help with drafting Form 1-A and will assist in resolving any issues that are brought to our attention by the regulators. CoinZoom Securities can be as involved as you would and your counsel would like.
  • Transfer Agent – Establish account with SEC Registered Transfer Agent. Coordinate shareholder list from Escrow agent to Transfer Agents records.
  • FINRA Member – CoinZoom Securities is a member of Financial Industry Regulatory Authority (FINRA), the largest nongovernmental regulator for all securities firms doing businessin the United States. All told, FINRA oversees nearly 5,000 brokerage firms, about 172,000 branch offices, and more than 676,000 registered securities representatives. Created in July 2007 through the consolidation of NASD and the member regulation, enforcement, and arbitration functions of the New York Stock Exchange, FINRA is dedicated to investor protection and market integrity through effective and efficient regulation and complementary compliance and technology-based services. For more information on FINRA, visit

What Investors Should Know


Investor’s Due Diligence Checklist

  • Is there at least a minimum viable product or prototype with proof of concept?
  • Is there any initial traction with active users?
  • Are there at least two full time team members?
  • Have any team members successfully founded companies in the past?
  • Was the team able to raise any funds prior to this raise?
  • What is the payback period on the investment?
  • Have you calculated when you are expected to see a return on investment?
  • Is the entrepreneur’s marketing plan realistic?
  • Do you fully understand the industry?
  • Have you looked closely at the competition?
  • How many investors are on the cap table?
  • How does the entrepreneur plan to use the next round of capital?
  • What is the startup’s burn rate?

Liquidity Options


An acquisition is a corporate action in which a company buys most, if not all, of the target company's ownership stakes in order to assume control. Acquisitions are often made as part of a company's growth strategy whereby it is more beneficial to take over an existing firm's operations and niche compared to expanding on its own. Acquisitions are often paid in cash, the acquiring company's stock or a combination of both. Learn more here:


An initial public offering (IPO) is the first sale of stock by a private company to the public. IPOs are often issued by smaller, younger companies seeking the capital to expand, but can also be done by large privately owned companies looking to become publicly traded. In an IPO, the issuer obtains the assistance of an underwriting firm, which helps it determine what type of security to issue (common or preferred), the best offering price and the time to bring it to market. Learn more here: