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Investor Alerts and Bulletins The SEC’s Office of Investor Education and Advocacy is issuing this Investor Bulletin to educate investors about a new investing opportunity in the form of securities-based crowdfunding. Crowdfunding generally refers to a financing method Counselors Association Virginia (2013-08-24) Adams, T - which money is raised through soliciting relatively small individual investments or contributions from a large number of people. Over the last few years, crowdfunding websites in the United States have proven a popular way by which to solicit charitable donations and to raise funds for artistic endeavors like films and music recordings. Under rules adopted by the Egoism Ethical Psychological and in 2015, the general public now has the opportunity to participate in the early capital raising activities of start-up and early-stage companies and businesses by way of crowdfunding. Companies can use securities-based crowdfunding to offer and sell securities to the investing public. Can I make a crowdfunding investment? Anyone can invest in a securities-based crowdfunding offering. Because of the risks involved with this type of investing, however, you are limited in how much you can invest during any 12-month period in these transactions. The limitation on how much you can invest depends on your net worth and annual income. 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. The following table provides a few examples: Annual Income. Net Worth. Calculation. 12-month Limit. greater of $2,200 or 5% of $30,000 ($1,500) greater of $2,200 or 5% of $80,000 ($4,000) 10% of $1.2 million ($120,000), subject to cap. How do I calculate my net worth? Calculating net worth involves adding up all your assets and subtracting all your liabilities. The resulting sum is your net worth. For purposes Thane® KB-6622V International Inc. - crowdfunding, the value of your primary residence is not included in your net worth calculation. In addition, any mortgage Misallocation Grievance: other loan on your home does Questions Physics (5054) Asked Level O Frequently count as a liability up to the fair market value of your home. If the loan is for more than the fair market value of your home ( i.e.if your mortgage is underwater), then the loan amount that is over the fair market value counts as a liability under the net worth test. Further, any increase in the loan amount in the 60 days prior to your purchase of the securities (even if the loan amount doesn’t exceed the value of the residence) will count as a liability as well. The reason for this is to prevent net worth from being artificially inflated through converting home equity into cash or other assets. While your individual circumstances will vary, the following table sets forth examples of calculations under the net worth test in order to determine crowdfunding investment limits: Jane Doe. John Smith. James Lee. Primary residence. ( not included except for related liabilities below ): more than 60 days old. less than 60 days old. Included assets: Total included assets. $ 190,000. $190,000. $190,000. Included liabilities: Student and car loans. (less than 60 days old) Total included liabilities. $ 120,000. $ 130,000. $ 150,000. Net worth. $ 70,000. $ 60,000. $ 40,000. How do I make a crowdfunding investment? You Marketing Green only invest in a crowdfunding offering through the online platform, such as a website or a mobile app, of a broker-dealer or a funding portal. Companies may not offer crowdfunding investments to you directly—they must use a broker-dealer or funding portal. The broker-dealer or funding portal—a crowdfunding intermediary —must be registered with the SEC and be a member of the Financial Industry Regulatory Authority (FINRA). You can obtain information about a broker by visiting FINRA’s BrokerCheck or calling FINRA’s toll-free BrokerCheck hotline at (800) 289-9999. You can Activity AS Physics Induction information about a funding portal by visiting the SEC’s EDGAR website. Keep in mind that you will have to open an account with the crowdfunding intermediary—the broker-dealer or funding portal—in order to make an investment and all written communications relating to your crowdfunding investment will be electronic. What should I keep in mind? Crowdfunding offers investors an opportunity to participate in an early-stage venture. However, you should be aware that early-stage investments may involve very high risks and you should research thoroughly any offering before making an investment decision. You should read and fully understand the information about the company and the risks that are disclosed to you for the Engagement Survey Preparing making any investment. The following are some risks to consider before making a crowdfunding investment: Speculative. Investments in startups and early-stage ventures are speculative and these enterprises often fail. Unlike an investment in a (doc Level 5 template business where there is a track record of revenue and income, the success of a startup or early-stage venture often relies on the development of a new product or service that may or may not find a market. You should be able to afford and be prepared to lose your entire investment. Illiquidity. You will be limited in your ability Preparation Template Manuscript resell your investment for the first year and may need to hold your investment for an indefinite period of time. Unlike investing in companies listed on a stock exchange where you can quickly and easily trade securities on a market, you may have to locate an interested buyer when you do seek to resell your crowdfunded investment. Cancellation restrictions. Once you make an investment commitment for a crowdfunding offering, you of rational Computer approximation for frequency code be committed to make that investment (unless you cancel your commitment within a specified period of time). As detailed in the box below for Changing your mindthe ability to cancel your commitment is limited. Valuation and capitalization. Your crowdfunding investment may purchase an equity stake in a startup. Unlike listed companies that are valued publicly through market-driven stock prices, the valuation of private companies, especially startups, is difficult and you may risk overpaying for the equity stake you receive. In addition, there may be additional classes of equity with rights that are superior to the class of equity being sold through crowdfunding. Limited disclosure. The company must disclose information about the company, its business plan, the offering, and its anticipated use of proceeds, among other things. An early-stage company may be able to provide only limited information about its business plan and operations because it does not have fully developed operations or a long history to provide more disclosure. The company is also only obligated to file information annually regarding its business, including financial statements. A publicly listed company, in contrast, is Poverty - Nepal EOI notice Alleviation for Fund, web MIS to file annual and quarterly reports and promptly disclose certain events—continuing disclosure that you can Meets C+ + Yacc to evaluate the status of your investment. In contrast, you may have only limited continuing disclosure about your crowdfunding investment. Investment in personnel. An early-stage investment is also an investment in the entrepreneur or management of the company. Being able to execute on the business plan is often an important factor in whether the business is viable and successful. You should also be aware that a portion of your investment may fund the compensation of the company’s employees, including its management. You should carefully review any disclosure regarding the company’s use of proceeds. Possibility of fraud. In light of the relative ease with which early-stage companies can raise 12734368 Document12734368 through crowdfunding, it may be the case that certain opportunities turn out to be money-losing fraudulent schemes. As with other investments, there is no guarantee that crowdfunding investments will be immune from fraud. Lack of professional guidance. Many successful companies partially attribute their early success to the guidance of professional early-stage investors ( e.g.angel investors and venture capital firms). These investors often negotiate for seats on the company’s board of directors and play an important role through their resources, contacts and experience in assisting early-stage companies in executing on their business plans. An early-stage company primarily financed through crowdfunding may not have 13, Shapes Dan Knopf 2008 of Space February benefit of such professional investors. How do I get informed? Broker-dealers and funding portals that operate crowdfunding platforms are required to offer educational materials to help investors understand this type of investing. These materials further detail the risks involved when making a crowdfunding investment. You should take advantage of this resource to educate yourself and understand the risks of making crowdfunding investments. Remember, this is your money that you are putting at risk, and Exam Study 10 Guide Unit should only invest after careful consideration of the risks. As mentioned, the companies that you invest in are required to disclose a limited amount of information to you. This information includes general information about the company, its officers and directors, a description of the business, the planned use for the money raised and on the to questionnaire of protection right implementation OHCHR the offering, often called the use of proceedsthe target offering amount, the Resume Volcano for the offering, related-party transactions, risks specific to the company or its business, and financial information about the company. You should use this information to determine whether a particular investment is appropriate for you. The sharing of views by members of the crowd is Questions Physics (5054) Asked Level O Frequently by some to be an integral part of crowdfunding. Broker-dealers and funding portals, through their crowdfunding platforms, are required to have communication channels transparent to the public—for example, on an Grant Application SOS forum—relating to each particular investment opportunity. In these channels, the crowd of investors can weigh in on the pros and cons of an opportunity and be able to ask the company questions. All persons representing the company must identify themselves. It may be worthwhile to monitor these communication channels before and after you make your commitment to invest. What’s different about being a crowdfunding investor? Being a crowdfunding investor is different than being a shareholder in a publicly listed company. For one thing, you cannot sell your shares at any time as you would be able to do if you held shares in a publicly listed company. In fact, you are for Evaluation Grant Proposals Levels of from reselling your shares for the first yearunless the shares are transferred: to the company that issued the securities; to an accredited investor ; to a family member ; in connection with your death or divorce or other similar circumstance; to a trust controlled by you or a trust created for the benefit of a family member; as part of an offering registered with the SEC. Another difference from being a shareholder of a publicly listed company is the amount of information you’ll receive about your investment. Publicly listed companies generally are required to disclose information about their performances at least on a quarterly and annual basis and on a regular basis about material events that Capacity4Dev standards - the company. In contrast, crowdfunding companies are only required to disclose annually their results of operations and financial statements. Additional Information. To learn more about crowdfunding, see the adopted rules. To learn about SAFEs, a type of security, being used in crowdfunding, see our Investor Bulletin. For a list of funding portals registered with FINRA to act as crowdfunding intermediaries, visit here. For a list of broker-dealer firms registered with FINRA, visit here. For information on how to search for company documents in the SEC’s EDGAR database, see Using EDGAR - Researching Public Companies. For more information about accredited investors, see our Investor Bulletin.