Crowdfunding generally refers to a financing method in which money is raised through soliciting relatively small individual investments or contributions from a large number of people. Over the last few years, crowdfunding websites in the United States have proven a popular way by which to solicit charitable donations and to raise funds for artistic endeavors like films and music recordings.
Under recently adopted rules, the general public now has the opportunity to participate in capital raising for small businesses.
You can only invest in a crowdfunding offering through the online platform, such as a website or a mobile app, of a broker-dealer or a funding portal such as Funding Wonder. Companies may not offer crowdfunding investments to you directly - they must use a broker-dealer or funding portal.
The funding portal must be registered with the SEC and be a member of the Financial Industry Regulatory Authority (FINRA). You can obtain information about our funding portal by visiting the SEC’s EDGAR website. Keep in mind that you will have to open an account with our funding portal in order to make an investment, all written communications relating to your crowdfunding investment will be electronic. SEE MORE
Issuers that register with and are approved by the Site to sell securities are able to create and post offering materials on the Site for potential investors to review.
Information about specific offerings, including SEC-required documents, promotional material like videos, and communications about an offering, are publicly viewable on the site.
Potential investors interested in using the Site to participate in investment opportunities and/or to communicate on the site with others about them must register with the Site by opening an account. This entails providing certain personal and non-personal information to the Site, its affiliates and/or service providers prior to making an investment, including documentation related to the investor’s income and net worth. This information is used to verify an investor is qualified to invest in investment opportunities posted on this Site. For further information on investment limitations when using this Site, please see “Investment Limitations under Reg CF” below.
Once an investor decides to purchase securities from a particular Issuer, the investor authorizes a transfer of funds to an escrow account where they are held until the offering campaign is completed. The Site does not and cannot hold funds and they must not be sent to it. The escrow account is maintained by a separate qualified escrow agent with a depositary such as a bank. After completion of the campaign, the escrow agent will release the aggregate funds contributed from all investors and the Issuer will issue securities to all investors.
Securities sold on Funding Wonder are restricted and not publicly traded, and are therefore illiquid. No assurance can be given that any investment opportunity will continue to qualify under one or more of such exemptions under the Securities Act due to, among other things, the adequacy of disclosure and the manner of distribution, the existence of similar offerings in the past or in the future, or a change of any securities law or regulation that has retroactive effect.
Please be sure to read the “Investment Appropriateness and Risks” section below carefully. For a discussion of the specific risks involved in making an investment in a particular Issuer’s offering, please be sure to carefully review the risks discussed in each Issuer’s offering materials, including the section titled “Risk Factors” in such materials.
The Form C-AR contains updated disclosure substantially similar to that provided in the Issuer’s initial offering statement on Form C, including information on the Issuer’s size, location, principals and employees, business, plan of operations and the risks of investment in the Issuer’s securities; however, offering-specific disclosure is not required to be disclosed in the Form C-AR.
Investors should be aware that in certain circumstances, an Issuer may no longer be required to continue its annual reporting obligations under Reg CF, including in the event (i) that the Issuer has fewer than 300 stockholders of record after filing at least one Form C-AR in the last year, (ii) its total assets are equal to or less than $10 million after filing a Form C-AR for at least three years prior, (iii) the Issuer undergoes liquidation or dissolution or (iv) all of the Issuer’s issued securities are repurchased by the Issuer or another party. In the event that an Issuer ceases to publish annual reports, investors may no longer have available to them current financial information about the Issuer.
If an Issuer reaches its target offering amount prior to the deadline identified in its offering materials, it may close the offering early so long as it provides investors notice of the new offering deadline at least five (5) business days prior to the new offering deadline. The Site may continue to accept investment commitments during this 5-day period.
If an investor does not cancel an investment commitment 48 hours prior to the offering deadline, the funds will be released to the Issuer by the escrow agent upon closing of the offering. The investor will receive securities in exchange for his, her or its investment. If an investment commitment is cancelled, the Site will direct the return of any funds that have been committed by investors in the offering.
If a material change is made to the offering materials, including a change to the offering deadline, the Site will require investors to reconfirm their investment. If an investor does not reconfirm his, her or its investment commitment after a material change is made to the offering, the investor’s investment commitment will be cancelled and the committed funds will be returned to the investor.
You Are Solely Responsible for Determining an Investment is Appropriate for You.
Prior to registering on Funding Wonder or making an investment commitment, a potential investor must consider the risks of investing in crowdfunded securities offerings and determine whether such an investment is appropriate. The Site and its employees are prohibited from offering advice about any offering posted on the Site and from recommending any investment.
This means the decision to invest or contribute must be based solely on the potential investor’s own individualized consideration and analysis of the risks involved in a particular investment opportunity posted on the Site, which is made at the investor’s own risk.
Potential investors acknowledge and agree that they are solely responsible for determining their own suitability for an investment or strategy on the Site and must accept the risks associated with such decisions, which include the risk of losing the entire amount of their principal. Investors must be able to afford to lose their entire investment.
The Site has no special relationship with or fiduciary duty to potential investors and investors’ use of the Site does not create such a relationship. Potential investors agree and acknowledge that they are responsible for conducting their own legal, accounting and other due diligence review of the investment opportunities posted on the Site.
EACH INVESTOR IS STRONGLY ADVISED TO CONSULT LEGAL, TAX, INVESTMENT, ACCOUNTING AND/OR OTHER PROFESSIONALS BEFORE INVESTING, AND TO CAREFULLY REVIEW ALL THE SPECIFIC RISK DISCLOSURES PROVIDED AS PART OF ANY OFFERING MATERIALS, AND TO ASK EACH ISSUER OFFERING SECURITIES ANY QUESTIONS OR FOR ADDITIONAL INFORMATION PRIOR TO MAKING AN INVESTMENT.
There is no independent governmental or regulatory review of the offering or offering materials
No governmental agency has reviewed the investment opportunities posted on this Site and no state or federal agency has passed upon either the adequacy of the disclosure contained therein or the fairness of the terms of any such investment opportunity.
The exemptions relied upon for the investment opportunities posted on the Site are significantly dependent upon the accuracy of the representations of the Issuers offering securities through the Site and the potential investors registered with the Site. These risks highlighted in the following are non-exhaustive and are intended to highlight certain risks associated with investing in securities that are not registered with the SEC.
Securities issued in a transaction pursuant to Section 4(a)(6) of the Securities Act may not be transferred by any purchaser of such securities for a one-year period after such securities were issued, unless such securities are transferred: (i) to the issuer of the securities, (ii) to an “accredited investor” (as such term is defined in Rule 501 of Regulation D promulgated under the Securities Act) or such purchaser has reasonable belief that such transferee is an “accredited investor”, (iii) as part of an offering registered with the SEC, or (iv) to a member of the family of the purchaser or the equivalent, to a trust controlled by the purchaser, to a trust created for the benefit of a member of the family of the purchaser or the equivalent, or in connection with the death or divorce of the purchaser or other similar circumstance.
Among many factors to consider is that the Issuer's management may be inexperienced. Due to inexperience management may not be able to execute on its business plan. An investor may not be able to evaluate the Company’s operating history; indeed, there may be none.
The Issuer may have serious risks specific to its industry or business model. Demand for a product or service may be seasonal or be impacted by the overall economy. Small businesses, in particular, often depend heavily upon a single customer, supplier, or upon one or a small number of employee (s). It may have difficulty competing against larger companies who can negotiate for better prices from suppliers, produce goods and services on a large scale more economically, or take advantage of bigger marketing budgets.
There can be no assurance of no significant deficiencies or material weaknesses in the quality of the Issuer’s financial and disclosure controls and procedures. Indeed, if it were necessary to implement such financial and disclosure controls and procedures, the cost to the Issuer might even have a material adverse effect on the Issuer’s results of operations.
The Issuer's management may have broad discretion over how the Issuer uses the net proceeds of an offering.
Unless the Company has agreed to a specific use of the proceeds from the offering, the Issuer’s management will usually have considerable discretion over how to use the capital raised. You may not have any assurance the Issuer will use the proceeds appropriately. You should pay close attention to what the issuer says about how offering proceeds are to be used.