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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.
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.
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.
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