Frequently Asked Questions
ChainRaise is a capital raising platform, that raises money for web 3.0 companies, blockchain companies, tech start-ups, real estate, and more. Using blockchain technology, we make startup investment and fundraising safe and secure for everyone involved.
ChainRaise offers a fast, agile platform that empowers your startup to seek new investments using a peer-to-peer approach.
Issuers pay ChainRaise a fee to use the ChainRaise communication Portal for Reg CF offerings. This fee may be paid as a flat fee, commission based on the amount of money issuers raise, or in other ways. Issuers may pay additional fees for specified services ChainRaise provides, including reimbursement of any expenses ChainRaise incurs on their behalf. ChainRaise discloses its compensation for each offering in which an issuer invests. If an issuer pays ChainRaise in whole or in part with its own issuing securities, these securities will always be the same class offered to investors on the ChainRaise Portal.
ChainRaise does not charge a fee to investors for offerings via Reg CF.
ChainRaise charges a flat fee for Reg D and Reg A+ offerings.
Private investment funds offered by ChainRaise may be managed by an affiliated entity. These affiliated companies may be entitled to:
- Management Fee: a stated percentage of the gross proceeds sold in an offering of a private investment fund
- Carried Interest: affiliated companies may receive a percentage of any profit realized when a cash distribution takes place.
- Distribution Fee: a stated percentage of any distribution made in conjunction with a private fund investment
- Cost Reimbursement: legal, banking, and accounting fees
Any fees related to an investment in a private investment fund will vary. Fee details are listed in the Private Placement Memorandum. Investors should carefully read these documents prior to making an investment. Fees paid are not contingent upon the financial performance of each company. Fees are due regardless of whether investors make or lose money on their investments. Fees and expenses will result in a reduction of the amount of money one can make on investments over time. Investors must understand what fees and costs they are paying.
After issuers have prepared and filed SEC Form C, Form C and other issuer offering documents will be publicly available on the ChainRaise Portal. The Portal also provides publicly viewable communications channels, or chat rooms, where investors can communicate with each other as well as representatives of the issuers listed on our Portal. These channels allow investors to discuss and converse with each other, as well as communicating with issuers’ representatives about investment opportunities or any other questions.
While ChainRaise will generally not participate in these channels, ChainRaise reserves the right to establish guidelines and moderate the channels to remove potentially abusive, hateful, fraudulent, or otherwise concern-raising content.
Rule 301(c)(2) requires an intermediary such as a Funding Portal to cancel an offer if it has a reasonable basis to believe that the issuer or the offering presents a potential for fraud or otherwise raises concerns about investor protection.
Rule 402(b)(10) permits a Funding Portal to deny access to its platform to, or cancel an offering of an issuer, pursuant to Rule 301(c)(2). An intermediary may also cancel an offering at any time in accordance with Rules 301 and 402, regardless of the status of the offering.
ChainRaise provides a platform for issuers to find potential investors. In exchange, issuers pay a service fee. Issuers may also pay for specified services. ChainRaise therefore has a financial interest in its issuers: they pay to be on the ChainRaise Portal; pay for additional specified services; and reimburse expenses ChainRaise incurs on their half. In certain Regulation CF offerings, ChainRaise will accept securities paid by issuers as compensation, but they will always be the same class of securities offered to investors.
Issuers may or may not have an ongoing relationship with ChainRaise after an offering is complete. Issuers may or may not continue using the Portal to raise money or use services provided by and pay compensation to entities affiliated with ChainRaise.
According to Rule 301(a), intermediaries must conduct due diligence to have a reasonable basis to believe an issuer will comply with the requirements of Section 4A(b) and Regulation Crowdfunding. An issuer must also have established means of keeping accurate records of the holders of securities. ChainRaise reserves the right to question or request additional materials to establish the reliability of issuers’ representations. According to Rule 301(c)(1), ChainRaise bears anti-fraud responsibilities and therefore must conduct background and securities enforcement regulatory history checks on issuers and their officers, directors, and beneficial owners of 20% or more of the issuer’s outstanding voting equity securities–calculated based on voting power.
Rule 301(c)(2) requires that if after allowing an issuer to use ChainRaise platform, ChainRaise acquires additional information indicating an issuer or its potential offering might have a risk of fraud or lack of investor protection, ChainRaise must promptly remove said issuer’s offering, cancel it, and return or direct the return of any committed funds.
Issuers and certain other people may be the subject of certain disqualifying events during the last 10 years, in which case Title III may not be used. “Certain other people” includes any predecessor of the issuer; any director, officer, general partner, or manager of the issuer; a person owning 20% or more of the Issuer’s voting power; any promoter associated with the issuer; any person who will be paid for soliciting investors; and any general partner, director, officer, or manager of such a solicitor. “Certain disqualifying events” involves improper actions in the securities business such as the conviction of a felony or misdemeanor in connection with the purchase or sale of any security or the loss of license of a securities broker for misconduct, among other “bad actor” incidents.
What types of financial information issuers must make available depends on three factors:
- How much capital an issuer is trying to raise with its current offering
- Whether this is an issuer’s first offering using Title III
- If this is not an issuer’s first offering, how much the issuer has raised in other Title III offerings during the last 12 months
If an issuer’s amount of Title III offerings totals $107,000 within the last 12 months, the issuer must provide:
- Its total income, tax income, and total tax as reported on the
- Issuer’s Federal tax return, certified by an issuer’s principal executive offer
- Financial statements certified by an issuer’s principal executive officer
- If available, financial statements reviewed or audited by a public accountant independent of an issuer
If an issuer’s amount of Title III offerings total more than $107,000 but less than $535,000 within the last 12 months, the issuer must provide:
- Financial statements reviewed by a public accountant independent of the issuer
- If available, financial statements audited by a public accountant independent of the issuer
If an issuer’s amount of Title III offerings totals more than $535,000 within the last 12 months, the issuer must provide:
- If this is an issuer’s first offering under Title III, financial statements reviewed by a public accountant independent of the issuer
- If this not an issuer’s first offering under Title III, financial statements audited by a public accountant independent of the issuer
All financial statements must be prepared in accordance with the United States government’s “generally accepted accounting principles.” Financial statement reviews must be conducted in accordance with the Statements on Standards for Accounting and Review Services issued by the Accounting and Review Services Committee of the AICPA. Financial statement audits must be conducted in accordance with either auditing standards of the AICPA or standards of the Public Company Accounting Oversight Board.
After one invests in an issuer, the issuer is generally required to file annual reports with the SEC and make them available online within 120 days after the end of the fiscal year. An annual report will typically include:
- Information included on Form C
- Updated financial statements certified by an issuer’s executive office (while reviewed or audited financial statements are not required, if reviewed or audited financial statements are available then they must be provided)
- Disclosure and updates about the issuer’s financial condition
At the very least, investors will receive current information about an issuer once a year in its annual report. The issuer, however, may be allowed to stop filing annual reports, in which case investors will have no current financial information about the issuer. An issuer can choose to stop filing annual reports on the date the issuer has filed at least one annual report and has fewer than 300 shareholders of record, the date the issuer has filed at least three annual reports and has total assets no greater than $10 million, the date the issuer or someone else buys all of the securities issued in the Title III offering, the date the issuer registers its securities and is required to file reports under the Securities Exchange Act of 1934, or the date the Issuer is dissolved under state law.
Before investing, an issuer must provide investors information on Form C. This information includes the issuer’s name, address, and website; the issuer’s principals, executive officers, and directors; the principal occupation and employment for the last three years of each director and officer; the names of each person owning 20% or more of the issuer’s voting power; the specific investment’s risk factors, the issuer’s business and business plan; in what ways any proceeds of the offering will be used; the issuer’s ownership and capital structure; how rights exercised by the issuer’s principals can affect investors; compensation paid to ChainRaise’ Portal for each offering; a description of previous offerings issued by the issuer; whether the issuer has previously failed to file any reports required by law; transactions with officers, directors, and other “insiders;” whether the issuer would be disqualified from offering securities under Title III under the “bad actor” rules, if the effective date of those rules were different; the issuer’s financial condition: how over-subscriptions will be handled; where and when annual reports are posted; financial information about the Issuer, and any other necessary information.
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At ChainRaise, we are passionate about helping startups succeed. We know that it takes more than just a great idea to create a successful business. It takes hard work, dedication, and access to capital. That’s why we’ve made it our mission to connect startups with the funding they need to grow and thrive. And we’re not alone in this endeavor.