Questions for investors
What is equity crowdfunding?
You’ve probably heard the term “crowdfunding” before: perhaps in the context of a Kickstarter campaign or a GoFundMe page. It’s basically a financing model that collects small sums of money from a large number of people — i.e. the crowd — over the internet.
Equity crowdfunding uses that same basic model, but it’s appropriate for project finance companies or startups, rather than causes and creative endeavors, and in return the backer gets a percentage of ownership or a financial stake in the company.
Crowdfunding is not new, but until recently, “crowdfunding” in the U.S. meant donating money or buying a product. Separately, only wealthy people were allowed to invest in private companies for social or environmental good. Thanks to Raise Green and newly adopted laws called Regulation Crowdfunding, you can now be an impact investor in clean energy and climate solutions, no matter who you are or how much you make.
The law requires that before you invest, you first understand the risks and the rules of investing. Please review the educational materials we provide and consult the additional resources.
What personal information do I need to provide to Raise Green in order to invest?
Before you can commit to an investment on Raise Green you will need the following information:
A) Personal information such as your current address and phone number
B) Employment and employer information
C) Net worth and income information
D) Social Security Number
E) Payment information or credit card information, depending on what method of payment you select.
What happens to my money after I invest in a project?
Upon committing to an investment, your money will be transferred to an escrow account where an independent escrow provider will steward your investment until it is accepted by the issuer. You will receive a notice of investment commitment sent by Raise Green that tells you:
A) The dollar amount of the investment commitment;
B) The price of the securities, if known;
C) The name of the issuer; and
D) The date and time by which the investor may cancel the investment commitment.
If a campaign that you committed to meets its target, then your investment commitment will transition into a permanent investment unless you cancel within the limits identified on this page. Raise Green is prohibited by law from touching your money. When you invest, your funds are transferred to an escrow account held by TriState Bank in the name of North Capital Private Securities.
If the fundraise succeeds, your money will be released to the startup. Otherwise, it will be returned. Once your money is transferred from the escrow account to the issuer, you will receive a subscription agreement or certificate, which represents your investment. At that point, you will be a proud investor in the project offered by the issuer!
What happens if a project doesn’t raise enough money?
Your investment commitment is returned to you if the offering doesn’t hit its target.
What do I get when I invest?
When you invest on Raise Green you receive a financial stake in the project or company in the form of a security. Companies on Raise Green may opt to use a variety of different security types including, but not limited to: common stock, non-voting member units, convertible notes, callable notes, or debt notes. In addition, most companies choose to give out perks as a reward for your investment.
Impact investing can be fulfilling beyond the potential monetary return. Not only are you joining founders and community leaders on their exciting journey to be more sustainable and become more climate-resilient, you’re betting on a company’s future and gaining a chance to aid in their success.
Will I get a return?
There are no guarantees of a return. Crowdfunded impact investing is risky and many startups fail, meaning your initial investments could be lost.
But some projects will succeed to generate annual dividends. If the project gets acquired at a valuation higher than the one at the time of your investment, you will earn a return. If the company has another financing round, it can decide to repurchase shares which would payback initial investors or deliver returns through other means.
Can I cancel my investment for a refund?
Once you have committed to an investment, you can change your mind anytime up to 48 hours before a close, and you will receive a full refund of your investment commitment. Investments cannot be cancelled within 48 hours of the time the raise ends or before the raise closes. You can cancel at any point up until you hit the 48 hour window. If the investment opportunity is going to close earlier than identified at the beginning of the raise, and you have committed to invest in that project, you will receive a five day notice via email notifying you that the raise is closing.
If the project makes what’s called a “material change”, a change that could reasonably be expected to have a significant effect on the value of the securities or the company itself, the company must file an update to their campaign, known as a Form C/A. You will receive a notification within five business days and will be required to reconfirm your investment, otherwise it will be canceled and your funds will be refunded.
Are there any crowdfunding limits or rules I should know about?
Yes, there are limits on the dollar amount you can invest as well as rules regarding gifting or selling your newly purchased security.
#1 Limited investment amount
Raise Green’s platform requires a minimum $100 investment into each project. You can only invest up to a certain limit per rolling 12 months across all equity crowdfunding campaigns (not limited to those on Raise Green). Your limit is automatically calculated based on your income and net worth when you create an investor profile on Raise Green.
The amount of funding you can invest depends on your status as an investor, the applicable regulations, and any minimum investment size the issuer has chosen. This information is told to you before you make an investment, and we have a helpful calculator that you can use before making an investment. However, we encourage you to closely monitor and self-regulate your investments as we cannot see investments you might make on other platforms offering Regulation Crowdfunding securities.
With Regulation Crowdfunding, for non-accredited investors, those whose annual income or net worth is less than $107,000, are limited to the greater of $2,200 or 5% of the lesser, of his or her annual income or net worth. If the annual income and net worth of the investor are both greater than $107,000, the investor is limited to 10% of the lesser of his or her annual income or net worth, to an annual maximum of $107,000.
#2 Limited transfer of securities
The securities you get when you invest have limitations of transfer for the first year following the investment. You can only transfer (gift or sell) the securities:
1. Back to the company that issued them
2. To an accredited investor
3. To an immediate family member
4. See FAQ on selling securities for more details on additional selling options
Can I sell securities acquired on Raise Green?
You are restricted from re-selling your securities in the first 12 months post closing of the offering, unless the shares are transferred:
1) to the company that issued the securities
2) to an accredited investor to a nuclear family member: a child, stepchild, grandchild, parent, stepparent, grandparent, spouse or spousal equivalent, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law, including adoptive relationships.
3) in connection with your death, divorce, or other similar circumstance
4) to a trust controlled by you or a trust created for the benefit of a family member (defined as a child, sibling or parent of you or your spouse) or
5) as part of a later offering registered with the SEC.
Once the 12 month restricted period ends, any sale or disposition of the securities you hold must comply with applicable federal, state and foreign laws. Any transfer during this period is subject to state and foreign laws.
You should know that there may be no market for the securities after the initial 12 month restricted period. Because the project or company issuing the securities is private, you cannot sell your securities on the public market, making it potentially difficult to find a buyer.
It is important that you only invest capital with the expectation of holding your investment for an indefinite period of time, and with the real risk of a total loss of your investment in mind. Only invest an amount you can afford to lose without changing your lifestyle.
How long do I have to decide to invest in a company or project?
The time will be different for each project. Once a project or company lists a campaign, it will run for a set period of time, regardless of whether or not the project reaches its minimum or maximum funding goal at any point.
Each crowdfunding campaign has:
1. A start and an end date. Even if the project reaches their minimum funding goal before the deadline, the campaign will run and remain open for investments until the deadline.
2. Investment cancelation deadline. A deadline for canceling investments is common to all campaigns and is at the 48 hours mark prior to the campaign’s end date. Past that point, your investment will be final and you won’t be able to cancel or get a refund.
Is there a minimum Investment amount?
Yes, Raise Green requires at least $100 to be invested into a single project. Additionally, the project may set a minimum investment size they will accept. The project can also choose to limit the maximum investment amount, if they wish to allow more investors to participate.
Can a company or project change the terms during the campaign?
Yes. If a company or project makes a material change to the deal terms or other information disclosed on the campaign page while the campaign is running, they are required to notify you and get your confirmation that you still want to invest.
As an investor, you will have five business days to reconfirm your investment after the confirmation request has been sent to you. If you do not re-confirm within five business days, your investment will be cancelled, and you would have to reinvest if you still wanted to participate.
How is equity crowdfunding different from other types of crowdfunding?
There are essentially four kinds of crowdfunding: reward-based, donation-based, debt-based and equity-based.
1. Reward-based crowdfunding
Is when you contribute money and get a reward in return. This is mostly used for creative endeavors or campaigns like recording an album, and there are often varying levels of rewards, or perks, that correspond to pledge amounts. Think Kickstarter and Indiegogo.
2. Donation-based crowdfunding
Is when you contribute money without expecting anything of value in return. This exists largely to fund charitable causes, like building a well in Kenya, or personal campaigns, like helping someone pay their medical bills. Think GoFundMe, YouCaring and CrowdRise.
3. Debt-based crowdfunding
Is when you contribute money to help fund the growth of a company, and receive a contractually obligated payback at a certain percentage interest rate in return. These campaigns require the company to pay you back in the given timeframe or be in breach of their debt contract and face bankruptcy or liquidation.
4. Equity-based crowdfunding
Is when you contribute money to help fund the growth of a company, and receive an ownership stake of the financial pie in return (but you can get perks too). You may make money if the startup or project does well, but startups and projects are risky. You could lose your investment. Think AngelList, Republic and your community-driven platform Raise Green.
What are some of the risks involved in investing?
Crowdfunding impact investments are highly risky and even speculative. You should do your own research and scrutinize all disclosed risk factors before making an investment decision. The following are some, but not all, of the key risks applicable to Raise Green offerings:
Investments in startups and early-stage ventures are speculative and these enterprises often fail. Climate solution projects share many of these same risks, even when backed by a reliable set of cash flows coming from a long term contract with a buyer. Unlike an investment in a mature business where there is a track record of revenue and income, the success of a community climate cooperative, or early-stage venture often relies on the development of a new project or service that may or may not find a market. You should be prepared to lose your entire investment.
Your ability to resell your investment in the first year will be restricted with narrow exceptions. You 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, you may have to locate an interested private buyer when you do seek to resell your crowdfunded impact investment.
No voting rights:
A share of common stock (non-voting member units) may not provide voting rights to its holder, unless or until the investment is converted into an equity stake with voting rights. If and when you receive voting shares in a company, your voting rights will likely be diluted when the company raises additional funds.
Once you have committed to an investment, you can change your mind anytime up to 48 hours before a close, and you will receive a full refund of your investment commitment. Investments cannot be cancelled within 48 hours of the time the raise ends or before the raise closes. You can cancel at any point up until you hit the 48 hour window. If the investment opportunity is going to close earlier than identified at the beginning of the Raise, and you have committed to invest in that project, you will receive a five day notice via email notifying you that the raise is closing. If the project makes what’s called a “material change”, a change that could reasonably be expected to have a significant effect on the value of the securities or the company itself, the company must file an update to their campaign, known as a Form C/A. You will receive a notification within five business days and will be required to reconfirm your investment, otherwise it will be canceled and your funds will be refunded.
Valuation and capitalization:
Unlike listed companies that are valued publicly through market-driven stock prices, the valuation of private companies, especially startups, is difficult. Valuing project finance companies can also prove challenging, even when paired with long-term contracts with a buyer because there are risks related to the buyer’s ability to pay, the weather, and other unforeseen events. You risk overpaying for the equity stake you receive. The class of equity being sold via a crowdfunding offering may have fewer rights than other equity classes issued by a company.
The company or project must disclose information about itself, 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 more disclosure. The company or project is also only obligated to file information regarding its business annually, including financial statements. Under certain circumstances the company may cease to publish annual reports and holders of the securities will have no information rights.
Investment in personnel:
An early-stage investment is also an investment in the founding Originator and/or management of the company. Being able to execute on the business plan is often an important factor determining whether the business will be viable and successful. You should also be aware that a portion of your investment may fund the compensation of the company’s employees, including its management. You should carefully review any disclosure regarding the company’s use of proceeds.
Possibility of fraud:
As with other investments, there is no guarantee that crowdfunding impact investments will be immune from fraud.
Lack of professional guidance:
Many successful companies partially attribute their early success to the guidance of professional early-stage investors (e.g. angel investors and venture capital firms). These investors often negotiate for seats on the company’s board of directors and play an important role through their resources, contacts and experience in assisting early-stage companies in executing on their business plans. An early-stage company primarily financed through crowdfunding may not have the benefit of such professional investors.
What communication should I expect from the company/project I invest in?
Companies issued on Raise Green have legally mandated reporting obligations, but there is the possibility that those obligations may terminate in the future. An issuer must file an annual report unless the company:
1. has filed an annual report and has fewer than 300 investors;
2. has filed three annual reports and do not have assets exceeding $10,000,000;
3. purchases back all securities it offered on Raise Green;
4. liquidates or dissolves its business; or
5. Has to file section 13(a) or section 15(d) reports under the Securities and Exchange Act (15 U.S.C. 78m(a) or 78o(d));
If you do receive updates, you will be notified directly of these updates by the company – not by Raise Green. Though we try our best to maintain all of our relationships with the issuers on our portal, it may not last beyond the completion of the offering. Raise Green recommends that founders send out an update to their investor at least once a quarter, but you can also ask the founders for an update by posting on the comment section of their funding page or contacting them directly.
Most companies are also legally required to issue an Annual Report 120 days after the end of their fiscal year. The annual report, known as a Form C-AR, is a more comprehensive update with their latest financials, board members, new financings, and more. In some circumstances, an issuer may no longer be required to file this information, though we encourage them to do so regardless. Most companies have their fiscal year end on December 31st, so their annual reports would come out at the end of April.
What information are projects and companies required to disclose?
Companies fundraising on Raise Green must disclose a limited amount of information to you, including:
1. general information about the company,
2. its officers and directors,
3. a description of the business,
4. the planned use for the money raised from the offering, often called the use of proceeds,
5. the funding goal,
6. the deadline for the offering, related-party transactions,
7. risks specific to the company or its business, and
8. financial information about the company.
You should use this information to determine whether a particular investment is appropriate for you.
The type of financial information disclosed as well as verification of finances varies based on whether the company has raised via crowdfunding in the past, as well as the amount being raised.
> $107,000 or less – financial statements and certain specific line items from income tax returns are required, both of which are certified by the principal executive officer of the company.
> $107,000.01 to $535,000 – financial statements are reviewed by an independent public accountant and the accountant’s review report is provided as well as certification by the principal executive officer of the company. A review is some level of scrutiny of the financials by a CPA.
> $535,000.01 to $1.07 million – if first time crowdfunding, then financial statements reviewed by an independent public accountant and the accountant’s review report if available are disclosed: otherwise financial statements audited by an independent public accountant and the accountant’s audit report must be prepared and disclosed. An audit provides a higher level of scrutiny by the accountant than a review as well as some verification by the accountant.
Each offering has a discussion forum where you should ask any questions you have and review those asked by other investors. These channels can be useful both before and after making an investment.
Once an offering has closed, the company will provide updates on the results of its operations and financial statements through its website on an annual basis. These updates are likely to be less regular and robust than those provided by public companies to their shareholders. Raise Green likely will not retain any relationship with the company. Raise Green does not make the Company’s post-closing disclosure available to you through its website.
Am I responsible for doing my own research?
Yes. Raise Green conducts rigorous due diligence on each project listed on our marketplace, but does not and cannot recommend or endorse any company or offering.
1. Check company’s full filing (Form C) on SEC and get second opinions
2. Review risk disclosures in the risks section of the project’s campaign page
3. Review and participate in the discussion forum for each project offering you are interested in.
All companies that list on Raise Green register their fundraise through SEC. You can always find more information about each company if you follow the Form C link on their campaign page, or search SEC’s EDGAR database. Learn about the project or company through other public sources. The information on the deal page is submitted by project Originators and Raise Green is not responsible for factually verifying this information.
Review the deal terms:
Review the terms of each deal carefully, including rights associated with the offered securities. You generally will not have the same rights as other investors (including voting and information rights).
We recommend paying close attention to any disclosed dealings between the company and its officers, directors, employees or founders.
Questions for project creators
How are projects selected and approved by Raise Green?
Anyone can submit a project idea to Raise Green and our team will work with you to determine if the project is appropriate for crowdfunding.
All projects undergo our “R.A.I.S.E.” due diligence process. This is our way of ensuring that each project is in the best position possible to successfully raise money in our marketplace.
RAISE Model: Revenue—Ambition—Impactful—Social—Environmental
Does the project have a clear revenue stream, and what is the status of the contracted cash flows?
Is the project going to create ambitious and demonstrable additionality from a standpoint of reducing greenhouse gas emissions, air pollution and income inequality, and from the standpoint of strengthening resilience in the community? Is the idea (the problem and solution) compelling and ambitious? What are the execution, quality, attention to detail, and technology like?
Has there been measurable progress, growth, and social proof (i.e. user engagement, stakeholder engagement)? Will the proposed project be able to generate the impacts it intends to create?
Are the originator, founding team, and organizations socially conscious and responsible? Among the things we look for: dedication, diversity, location, charisma, experience, vision, track record, network, competence, long-term partners, ability to execute.
Is the project going to make the world a better place by creating environmental benefits?
After we determine the project is a good fit following the initial review, we evaluate the following 8 factors (in no particular order):
1) Business model: How reliable are those revenue streams? How much can it make?
2) Social and Environmental Impact: How big is their social and environmental impact and how will they fulfill their mission?
3) Community Driven: To what degree is this project community-driven, and how reliable can this project be?
4) Technology: What technology or green infrastructure approach is used to deliver climate solutions? How reliable and replicable is it?
5) Team: Does the originator, and other project partners have the right people in the appropriate roles to see the project through construction to the end of the project’s life. Or does the team have the appropriate plans in place via experienced advisors, contracting, or shared responsibility to provide consistent governance for the duration of the project?
6) Fact Checking: Is the information presented in the application factual? We verify key contracts and important agreements.
7) Terms: Are the funding goals reasonable for the project’s development timeline and the company’s use of proceeds? Is the valuation of the raise and share price appropriate at the project’s current stage?
8) Eligibility: Does the project meet the legal criteria for equity crowdfunding? We do a financial and legal review and run background checks on originators and officers. As well, all companies must be US based.
How much does it cost to raise money for a project on Raise Green?
Unless specified otherwise in the deal terms, Raise Green collects 5% of the total amount raised as a Success Fee. In addition, Raise Green may take up to 9% of securities offered in a successful financing. The 5% of the total amount raised comes out of the proceeds of the offering. Companies raising on Raise Green may also use the proceeds of their successful financing to pay for the escrow agent and other transaction-related fees.
Can I structure my project as equity or debt?
Yes. Raise Green allows issuers to offer several common forms of securities, the most common are equity or debt. The securities we offer include the following:
Common Stock/Non-voting member units
Conveys a portion of the ownership interest in the company to the holder of the security. Stockholders are usually entitled to receive dividends when and if declared, receive information about the company, including financial statements. Typically they are not permitted to vote on corporate matters related to regular operations of the projects, but may be called on for a vote when appropriate. Certain issuers may choose to have the common stock shares have voting powers. This is the riskiest type of equity security since common stock is last in line to be paid if a company fails. There is some further discussion of the risks of early-stage investing here, and pay special attention to the fact that your investment will only make money if the company’s business succeeds. Common Stock is a long-term investment.
Stock that has priority over common stock as to dividend payments and/or the distribution of the assets of the company. Preferred stock can have the characteristics of either common stock or debt securities. While preferred stock gets paid ahead of common stock, it will still only be repaid on liquidation if there is money left over after the company’s debts are paid. In certain circumstances (such as an initial public offering or a corporate takeover) the preferred stock might be convertible into common stock (the riskiest class of equity). You should review the terms of the preferred stock to know when that might happen.
Securities in which the seller must repay the investor’s original investment amount at maturity plus interest. Debt securities are essentially loans to the company and the major risk they bear is that the company does not repay them, in which case they are likely to become worthless.
This form of investment is popular with technology startups because it allows investors to initially lend money to the company and later receive shares if new professional investors decide to invest. The sort of convertible note that is most often offered on Raise Green may limit the circumstances in which any part of the loan is repaid, and the note may only convert when specified events (such as a preferred stock offering of a specific amount) happens in the future. You will not know how much your investment is “worth” until that time, which may never happen. You should treat this sort of convertible note as having the same risks as common stock.
Are there any minimums or maximums for fundraising?
Yes. Investors are required to invest a minimum of $100 into each project they choose to invest in. Before listing your project, you will need to establish a minimum and maximum funding goal:
Minimum funding goal
The minimum amount the project needs to raise. If the project doesn’t reach the minimum funding goal before the campaign end, their campaign is considered unsuccessful, and all investments are refunded to investors.
Maximum funding goal
Maximum amount of funds the project is willing to raise in this campaign, at these terms. When the project reaches their maximum funding goal, they stop accepting investments.
Learn more about funding your business from the Small Business Administration.
Learn more about impact investing from the US Forum for Sustainable and Responsible Investment.
To learn more about crowdfunding, see the recently adopted rules.
The SEC has issued an Investor Bulletin that is quite helpful to gaining an initial understanding.
FINRA provides a useful summary of considerations for crowdfunding investors.
The EDGAR database shows all investments registered with the SEC, including those securities offered by Raise Green.