Frequently Asked Questions
If you’re over 18, you can invest with us! (If you’re younger, good for you for getting an early start! You’ll need a parent to set up a trust, or something equivalent, so that they can invest in your name.)
The SEC Investor Bulletin, linked here, will give you some additional information about how much money you can or should invest using platforms like ChainRaise. Because of the risks involved, there are some limitations in place contingent on your annual income and net worth.
For more than two hundred years investors have publicly traded stocks and bonds. But those types of investments have their limitations, leading investors to alternative securities for the purpose of generating income, diversifying portfolios, boosting returns, or raising funds for other projects.
These alternatives include real estate, stock or membership units in privately-held businesses, private equity, commodities, venture capital, farmland/timberland, mineral rights, tax lien certificates, hedge funds, annuities, art and collectibles, or even wine collections or antique coins. In short, a multitude of investment options are available beyond the floor of the New York Stock Exchange.
Why do people invest in alternative securities? Some of the most prevalent reasons include favorable economic conditions, less dependence on typical market fluctuations, leveraging specific knowledge or skills, tax advantages, illiquid investments, higher fees, and market volatility.
Title III limits how much you can invest each year – not only in any one company, or through any Funding Portal, but in all companies through all Funding Portals. These limits apply only to your investments under Title III (Regulation Crowdfunding). ChainRaise’ portal will calculate your annual investment limit based on your net worth and income. Investment limits are calculated on a rolling 12-month interval, and every investment in a Regulation Crowdfunding offering on any portal will count toward your annual limit.
For non-accredited investors, the maximum amount you can invest in all Title III offerings during a 12-month period is:
If your annual income or net worth is less than $107,000, you may invest the greater of:
- $2,200; or
- 5% of the greater of your annual income or net worth.
If your annual income and net worth are both at least $107,000, you can invest the lesser of:
- $107,000; or
- 10% of the greater of your annual income or net worth.
There are no investment limits for accredited investors. Once you are verified as an accredited investor, you are free to invest without limits.
You and your spouse may choose to combine your incomes and assets to invest, in which case you will both be treated as a single investor when determining how much you can invest.
To calculate your net worth, add up all of your assets and subtract all liabilities. For purposes of crowdfunding, the value of your primary residence is not included in your net worth calculation.
First, create and verify an account on the ChainRaise Portal. chainRaise may or may not ask for your proof of income to determine your investment limit. You can then browse listings and think about which offering to choose for your investment. You should strongly consider consulting a lawyer or professional advisor prior to investing to understand and assess any and all risks that come with a particular offering. You can then choose to invest in your selected offer(s) and pledge a dollar amount to the offer(s). By choosing to invest in an offer, you acknowledge the risks that come with investing on a Funding Portal and are able to afford losing your entire investment should the issuing company file for bankruptcy.
The SEC requires any amendment to an offering be reconfirmed with outstanding investment commitments within 5 business days; if an issuer fails to do so, or you as an investor fail to reconfirm your commitment, your commitment will be considered canceled. An issuer must also file Form C/A to disclose changes or updates with the SEC.
You can cancel an investment commitment at any time up to 48 hours before the offering deadline. If you make an investment commitment within 48 hours before the offering deadline, you cannot cancel your investment even if you have just made your commitment.
If you successfully cancel your commitment, ChainRaise will refund the investment amount to you. This refund process can take as many as 14 days.
No, you can only invest in a crowdfunding offering through a platform such as a broker-dealer or a funding portal. Companies cannot offer crowdfunding securities to you directly.
If an offering has more investors than needed or an issuing company reaches its target early, said issuing company will prioritize investors with a larger investment amount. While rare, the company may choose to reject or cancel your investment.
A third-party credit rating is not required for issuers on the ChainRaise Portal. Investors, therefore, have little to no objective measures to gauge an issuing company’s creditworthiness. You are strongly advised to conduct due diligence prior to making an investment commitment and to consult with a professional advisor to understand and assess all the risks associated with making a particular investment commitment.
Yes, unless your country’s regulations forbid you from doing so.
It could be a short time, a long time, or never. Investing in issuing companies on a Funding Portal, especially startups, involves high amounts of risk. ChainRaise therefore strongly recommends investors consult with a professional advisor prior to making an investment commitment. You must understand and assess the risks involved with your investment. There is no guarantee any companies in which you invest will make a profit. You might lose your entire investment if a company files for bankruptcy.
A fundraising round may close earlier than its published deadline on the offering. In this case, you will receive a notice of the new deadline at least 5 business days prior to the new deadline. The SEC requires that if an issuing company fails to reconfirm investors’ investment commitment within 5 business days of an offering’s changes, the investment commitment is considered canceled.
- Speculative. Investments in startups and early-stage ventures are speculative and these enterprises often fail. Unlike an investment in a mature business where there is a track record of revenue and income, the success of a startup or early-stage venture often relies on the development of a new product or service that may or may not find a market. You should be able to afford and be prepared to lose your entire investment.
- Illiquidity. You will be limited in your ability to resell your investment for the first year and may need to hold your investment for an indefinite period of time. Unlike investing in companies listed on a stock exchange where you can quickly and easily trade securities on a market, you may have to locate an interested buyer when you do seek to resell your crowdfunded investment.
- Cancellation restrictions. Once you make an investment commitment for a crowdfunding offering, you will be committed to make that investment (unless you cancel your commitment within a specified period of time). As detailed in the box below for Changing your mind, the ability to cancel your commitment is limited.
- Valuation and capitalization. Your crowdfunding investment may purchase an equity stake in a startup. Unlike listed companies that are valued publicly through market-driven stock prices, the valuation of private companies, especially startups, is difficult and you may risk overpaying for the equity stake you receive. In addition, there may be additional classes of equity with rights that are superior to the class of equity being sold through crowdfunding.
- Limited disclosure. The company must disclose information about the company, its business plan, the offering, and its anticipated use of proceeds, among other things. An early-stage company may be able to provide only limited information about its business plan and operations because it does not have fully developed operations or a long history to provide
Frequently Asked Questions
ChainRaise is a digital asset platform, that raises money for real estate opportunities and businesses. 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.
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.