Equity Crowdfunding 101

Equity crowdfunding platforms like Weclimate enable startups and private companies to raise from the crowd, allowing everyday investors to invest as little as $100.

On Weclimate, investors can invest in startups that they believe in and are aligned with their climate values. Weclimate facilitates startups raise capital from the crowd through the sale of securities like equity, debt, revenue share and more.

How much can a company raise?

Regulation Crowdfunding (Reg CF) allows companies to raise $5m each year, every year. There is a minimal upfront cost involved and companies typically can get their campaigns up and running in 4 weeks or less. Prior to Regulation Crowdfunding, private companies could only raise capital from accredited investors which makes up only 2% of Americans.

All Regulation CF raises must occur through a single SEC/FINRA registered broker dealer or funding portal such as Weclimate.

Regulation A+ allows companies to raise up to $75m each year, every year. It takes typically 6 months to launch a Regulation A+ campaign and there are launching costs typically of $50,000 to $75,000.

Regulation D, rule 506b is used if you want to invite accredited investors that you already know to invest. They will be placed directly on your cap table.

Regulation D, Rule 506c helps you raise more than $5M (if you hit the Regulation Crowdfunding maximum) by moving over accredited investors into a parallel offering.

What is required to launch

If the total raise is under $107,000 the business owner can sign off the legal and financial paperwork. To raise between $1.07m -$5m, you will need a full financial audit. You will also need to file a Form C. Offerings are required to stay live for at least 21 days. Typically, the process lasts 60-90 days, but it can last a year but that would be unusual. Once the process is complete companies are required to file an annual report with the SEC, until certain requirements are met.

To raise up to $75m you will need both legal counsel and independent auditors. The Form 1-A (the legal document required for your raise is a big undertaking. The campaign usually stays live for at least 6 months. You will also need to file two reports a year with the SEC, unaudited and audited financials.

What we will do for you

We handle the heavy lifting so you can focus on your business.

  • We provide investment contracts such as (Convertible notes, SAFE’S free of charge). You can if you prefer use one that your lawyer drafts
  • We will provide an impact analysis document from our impact screening that you can provide on your page to interested investors
  • We will set up an SPV that is specifically for this funding round. This aggregates all investors into one entity on the cap table and you can assign a lead investor to represent you
  • We will file your Form C which is a compliance requirement. We can draft this for you and your lawyer can review it
  • We will handle the contract signing, payments and escrow accounts. Once all the finer details are taken care we will wire you the funds

Points to consider

No offline crowdfunding. As per letter of the law, all Regulation Crowdfunding investments must be made through a funding portal such as Weclimate or a broker/dealer. You cannot collect checks in person, you must therefore direct interested investors to your Weclimate pitch. One point of note is that you can accept funding in person from accredited investors investing in a concurrent Reg D fundraise.

Advertisements must be factual. It goes without saying that you should not mislead investors. Do not provide misleading info or omit important info. All info provided will be sent to the SEC database and therefore statements will be fact-checked.

Annual Reports. One year subsequent to your round closing, you will be expected to file an annual report updating your investors. If you fail to do so, you will be unable to fundraise with Reg CF again until the annual report is filed ( however, you may still raise funds from accredited investors with Reg D).

How is Weclimate different?

We make sure your money stays green.

Our strategy is to put the most financially attractive and impactful companies on the platform to give you the ability to maximise your returns and create a tangible, measurable impact.

We are different as we put impact first

Climate impact for us is taken as of equal importance to generating attractive returns. You will be investing in companies that have approved, science-led and evidence-based strategies for cutting down CO2e emissions. We go beyond ESG investing.

A whistle-stop tour of our process

How to start

Choose

Pick a climate tech startup you like.

Review key documents like the valuation, team, pitch and sector.

Invest

Invest a small amount to begin with.

You should diversify, ie invest small amounts in several companies.

Wait

Wait to see how the startup performs.

If the company performs you will see returns.