Crowdfunding, as its name suggests, is a funding method where social networks of hundreds of ordinary people like you and me, henceforth the crowd, funds business projects with their own money.
The main difference between crowdfunding by donation base is that crowdfunding is tied to the Job Act that allows online sales of small stock to a large pool of investors, although the act is in its proposal stage and has not been passed yet. Nonetheless, you could still embrace the crowdfunding method to raise your project funds, as long as you don't sell any kind of stock to unaccredited, unsophisticated investors.
Investors agree they fully understand the high risk nature of investing in start-ups and early stage businesses, and self-certify themselves as an Accredited or Sophisticated Investor.
Entrepreneurs self-certify themselves to their legal status to participate and agree to a background check.
Seat Holders self-certify themselves to their legal status to participate and agree to a background check as well as agree to the OurExchange Code of Conduct.
Enter your full name, email address, username and password. Reconfirm the email and password.
Each Investor with the help of their Seat Holder sponsor creates an online Project profile explaining their business and what they aim to achieve with their investment. The Project will include several key elements:
The Target Amount: the total amount of money they wish to raise and invest in the business
The Price per share and the percentage of the business they are offering in return for raising the Target Amount
Seat Holder Offering Documents
Offering Circular (Executive Summary)
The Investor Presentation Deck
The Private Placement Memorandum
Link to EDGAR's Database located at SEC.gov to the Regulation D Form D Offer Exemption.
Seat Holder's and Investor then promote their Offer to potential Investors. Investors then invest money in the Offer and over a period of time where investments accumulate until the Target Amount is reached.
The minimum investment is just $500 but investors can of course invest larger sums.
Why should I invest in an Offer?
There are a number of reasons you may want to invest in an offer:
To make a return on your investment
To help a friend or family member launch their business
To support a business or industry which you believe in
To promote entrepreneurship in your community
To help small business growth in the United States
To give back once you have been successful in business
To mentor entrepreneurs and remain relevant in business
For the fun of it
With the help of you advisor Investors should implement a diversification strategy when building an OurExchange investment portfolio. Diversification involves spreading your money across multiple investments and will give you, as an investor, greater peace of mind that your investments will sustain any adverse market conditions and cushion expected losses. However, it will not lessen all types of risk.
By registering as a Seat Holder on OurExchange you agree to build your portfolio with a spread of investments worth at least $5,000 to $20,000 over a 12 month period.
Each Offer has six months to raise the Target Amount. In some circumstances the offer may be extended for a further period of time and this is at our discretion.
Once the Target Amount is reached, and all of the paperwork and legal documentation are completed, the money will be transferred to the Entrepreneur's bank account and Shareholder Certificates will be issued. This process can take a couple of weeks.
Funders will be emailed an investor questionnaire, returned with a copy of the executed Subscription Agreement and given three working days to review them. During this period an Investor can ask any questions that they may have and edit their name as they wish.
What are the average time frames involved in getting my offer live and receiving the money?
Depending on your investment readiness, getting your Offer live on the site can take from a couple of days to a few weeks. The average time for a Offer to reach its Target Amount is around 45 days, although some have secured their funding in just a few days. Upon successfully completing your offer, the timeframe for completing the compliance documentation and transferring the funds over to you is around six weeks.
What happens if the Target Amount is not reached?
If the Target Amount is not raised within the time period then the offer will expire and no money will be taken from Funders' credit card or bank accounts. In some circumstances the Offer may be extended for a further period of time and this is at our discretion.
Yes, once an Offer has reached its Minimum Target Amount it is possible to set a maximum target and continue to receive more investment until either the maximum target is met or the Offer completes its duration. We call this "Overfunding" and it is proving really popular, enabling Founders to capitalize on the demand created to raise further funds.
The minimum Target Amount is $100,000. There is no maximum Target Amount, however our optimum range is $500,000 - $1,000,000. If you are looking to raise over $1,000,000 you will need to have a very compelling proposition to convince a Finder to Sponsor your business on OurExchange.
Once the SEC crowdfunding portal rules are in place, FINRA will issue a final funding portal application that will be necessary for us to file to become a FINRA member. OurExchange is authorized and regulated by the FINRA to act as a funding portal. You can see full details of our authorization and permissions on the FINRA Register.
FINRA is an independent non-governmental body. While FINRA is not part of the government, it is an independent, not-for-profit organization authorized by Congress to protect America's investors by making sure the securities industry operates fairly and honestly.
They do this by:
Writing and enforcing rules governing the activities of more than 4,100 securities firms with approximately 635,800 brokers;
examining firms for compliance with those rules
fostering market transparency; and