Investor F.A.Q's
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Quick Reference Guide
StartEngine
The #1 platform for crowdfunding. Offers a variety of investment options including bonus shares and early bird perks. They are very high tech, AI, and solid companies.
WeFunder
One of the oldest platforms out there. They have a good mixture of offerings to choose from. Very community centric type of investing.
They house some of the biggest IPOs that have come to the stock market. Therefore they are geared towards high net worth investors. Majority of investments are in the test the waters phase.
TruCrowd
Platform has a mixture of innovative and second tier investments to select from.
HoneyComb Credit
A very basic community base friendly platform for investors looking to support local businesses.
AstraLabs
It's an up and coming platform currently accepting funding under the Startengine platform.
How long before I see a ROI on my investment?
To be honest with you, that is not really an investor question. Pre-IPO and Crowdfunding can take years to go public for you to see a return. Airbnb started in 2007 and did not go public until April of 2021. Big tech companies tend to take decades because they are heavy capital intensive businesses that continuously need refining before going to the public markets. Watch training video on Airbnb IPO for more info.
Where can I sell my Pre-IPO shares?
There are only 2 open marketplaces available to none accredited investors right now that I am aware of, MicroVentures and StartEngine. Please read your investment account for rules and policies regarding the sale of your shares. So what is the marketplace then? It is the internal backoffice of an investor platform that allows individual investors within a platform to sell or trade their pre-ipo or crowdfunded investment. This is a private sale.
How do I cancel my investment?
This answer is based on a number of factors. (1) On your initial investment -you are given a date to cancel for a full refund. (2) If there are any updates to the company, you are asked to reconfirm or cancel your initial investment. (3) Before funding round closes you are warned of your last chance to cancel. (4) After funds are funded, you cannot cancel. But you can sell your shares on a secondary exchange like MicroVentures or StartEngine, if these investments are on those platforms. (5) Your only last chance to sell after that is via your IPO expiration date which is 6 months after the company goes public. (6) There is a small chance that you may be able to sell via your transfer agency before going public. Please see your investment platform’s rules and polices for more information.
What is Reg C?
Reg C is a standard classification of the type of funding round that an investing is regulared under. There are set limits of cap for which limits the amunt of money they can raise during each round of funding. Reg C, is the most common type of fundraising but also stricter than Reg A because your maxiumm funding capacity is limited to a percentage of your household income in an annual basis. Please see your investment platform’s rules and polices for more information.
What is Reg A?
This regulation type is much more looser based on all of your accummulated assets minus your house. Reg A typically last 6 months or more with a market cap of $75M per funding round since March 2021. It is not based on your income status but rather a combination of spousal income over 2 years, any liquid posessions that can be sold or be considered for collatoral. Simply put, Reg A+ is highly desireable amongst investors and entrepreneurs due to its flexibility and lesser restriction of funding sources. Since August of 2020, new laws were put in place that redefined what an accredited investor should look like on paper. Please see your investment platform’s rules and polices for more information.
What is the #1 mistake new investor make?
The #1 mistake of new investors is not following up on updates and keeping watch of your investment until funds have been invested. Base on the popularity and demand of the investment, the end of a funding round can be long or short. But in between are many confirmed updates that you need to confirm else your investment will be cancelled. Click here to watch video training on this topic.
What if you miss an opportunity?
You will just have to wait and see if it does come back for a future round of funding again. Best solution is to follow the company and put it in your favorite’s base on the platform you are on. Join their mailing list to ensure that they did not switch to another platform instead of opening a new round on the same one you found them in. There is nothing that guarantee you that they will come back for another round of funding. If it is a small company, chances are rare. If it is a tech company, chances are high that most likely they will come back but at a higer entry point than you had hope for.
Why do some investments close early than others?
When a company has met their minimum investment goals, they can choose to close an investment round early to avoid further dilution of shares by having more capital poured into them than they actually need. This is one reason why you should never hestitate to make a solid investment when you know you like the company and what it stands for. This is especially true with regular C. Reg A tends to open a few months longer than Reg C.
What's the difference between Crowdfunding & Pre-IPO?
The term crowdfunding is loosely used to label an initial public offering round of funding that intends on going public on the stock market vs a crowdfunding platform like Indiegogo who helps small business owners raise initial capital to fund their project. Whereas a Pre-IPO company raising capital has been well established for a number of years and is focus on building the infrastructure to launching their business on the stock.exchange. A crowdfunded investor is taking a higher risk on an unestablished business that may or may not have a prototype to begin with but is seeking to raise capital to get the concept off the ground. Meanwhile a Pre-IPO company has either a product or service to offer with paid clients. They are typically looking to grow or expand the business nationwide vs locally. Both type of investments carry different levels of risk for which you must decide on the fundaments of each company and how much are you willing to lose if they go bust.