What are the criteria, rules and requirements for raising equity crowdfunding?
The SEC permits U.S.-based companies with a business plan to conduct a crowdfunding campaign through a registered intermediary that is either a funding portal (that’s us) or a broker-dealer. Each crowdfunding campaign must be held on a single intermediary, and a Startup can raise up to $5 million through all Reg CF activities within a 12-month period. Click here for more specifics on the related rule: 17 CFR § 227.100 -- " Crowdfunding exemption and requirements. "
Startups (also called the "issuers") must file Form C (more info , PDF template ) with the SEC before launching a crowdfunding campaign. They must share updates on funding progress during the campaign, which is simple on the Fundify platform. Within five days of the campaign’s end, the Startup must publish Form C-U to disclose the amount of securities sold.
The SEC rules set the max amount that individuals can invest across all crowdfunding offerings in a 12-month period. Fundify calculates this total for Investors in real time, making it easier for them to invest.
Funds raised through a Reg CF round must be held in escrow with a third-party company until the round closes. Our escrow vendor – Fund America of Prime Trust – handles this seamlessly.
The Startup sets the target offering amount, the offering deadline and any minimum investment levels. If the target offering amount is not raised by the offering deadline, investments are canceled and returned to the Investors, per SEC rules.
In addition, Fundify Experts conduct further review of Startups to assess the opportunity.