- What is EquityShack?
- What is crowdfund investing (a.k.a. equity-based crowdfunding)?
- Do I have to pay to use EquityShack?
- Why can’t I invest on the EquityShack platform right now?
- How much will I be able to invest in each company?
- How will I make money as an investor?
- What types of businesses will be allowed to raise money on EquityShack’s platform?
- How will I know if my business is allowed to raise money on EquityShack’s platform?
- What is the maximum amount of money I will be able to raise on EquityShack?
- Can EquityShack invest in my company?
- What is the minimum amount of money I can raise on EquityShack?
- Will I be giving away control of my business by raising money on EquityShack?
- Do you accept single founders on your platform?
EquityShack is a crowdfund investing platform that will allow you to invest in private businesses. Our focus will be on helping you to invest in promising young businesses, especially those in your own community.
Crowdfund investing is when a company raises money from a relatively large number of investors, typically using the internet, social media, and word of mouth marketing. In exchange for their investment, the investors are given equity (ownership) in the company.
It will be completely free for both businesses and investors to sign up on EquityShack’s platform. Businesses will only be charged once they successfully reach their funding goal, and when that happens they will be charged a fee that is proportional to the amount of money they raised. Investors will be charged a transaction fee when they invest in a business.
The Securities and Exchange Commission (SEC) is currently creating the rules and regulations that will govern crowdfund investing. The SEC has 270 days (starting on April 5, 2012) to develop the regulations, and until then unaccredited investors cannot engage in crowdfund investing. For this reason, unaccredited investors will most likely have to wait until 2013 to invest on the EquityShack platform.
If you are an accredited investor, you are allowed to invest as much as you want right now, subject to applicable law. However, by law, unaccredited investors cannot invest in private companies via crowdfunding. Once the crowdfunding rules go into effect, unaccredited investors will likely be limited in the amount of money that they can invest in private companies during any 12 month period. The exact rules governing how much you can invest are still being developed by the SEC, but in general the amount you can invest will be determined in the following way:
If you have a net worth of less than $100,000 and an annual income of less than $100,000 you will be allowed to invest the greater of (a) $2,000; (b) 5% of your net worth; or (c) 5% of your annual income.
If you have a net worth of more than $100,000 and an annual income of greater than $100,000 you will be allowed to invest the lesser of (a) 10% of your net worth; (b) 10% of your annual income.
First, we cannot guarantee that you will make money. As with all investments, there is a certain degree of risk that your investments will not succeed. For this reason, please only invest amounts that you can afford to lose. EquityShack will take considerable measures to verify the high quality of the businesses on our platform, but we cannot predict the future and we cannot guarantee that the businesses will succeed or that you will make money on your investment.
If the businesses that you invest in do succeed, you can make money in several primary ways.
1) If you own equity in a business, your equity may grow over time and may be purchased in the future for an amount that is greater than what you paid for it (a.k.a. appreciation).
2) If the business agreed to pay a dividend, you can receive income via these dividend payments.
3) If the business agreed to a revenue sharing arrangement, you can receive part of the businesses profits on a regular basis.
We will not limit the types of companies on our platform. The businesses will range from restaurants and pubs to technology companies and dentists’ offices
We will screen all businesses that want to raise money on the EquityShack platform. To find out if your business is eligible, all you will have to do is fill out the information necessary to submit a pitch and we will review your submission.
According to the JOBS Act (insert link) the maximum amount of money that a business can raise through crowdfunding in any 12 month period is $1 million. This includes the money raised on EquityShack as well as any money raised elsewhere during that 12 month period.
In short, no. Due to current regulations we will only be allowed to serve as the intermediary between investors and the company. We are not allowed to invest in the businesses on our platform. We are also not allowed to make investment recommendations, and we will maintain an unbiased position on ALL companies.
However, in order to help both investors and businesses take full advantage of our platform, we will be providing extensive educational material about best practices related to crowdfund investing. We are also open to suggestions about what you would find beneficial, so please feel free to email us any time at email@example.com.
At this time, we do not plan to have a minimum funding amount
This will depend on a case-by-case basis, but in general, no. Although your investors will own part of your business, they will likely not have a say in how your business is run. This will be achieved by issuing non-voting shares to your investors.
Yes. If you’re a single founder and have proven that you’re capable of getting your business off the ground we’d love to have you on our platform. However, one of the things we will take into consideration when deciding whether your business is well suited for our platform is the strength of your team. In our experience, businesses with a solid team have a much greater chance of success. If you want us to introduce you to people that may be able to help you build a well rounded team, please contact us at firstname.lastname@example.org.