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Frequently Asked Questions


What is FlashFunders?
FlashFunders connects global investors with groundbreaking companies raising capital through its equity crowdfunding platform, enabling everyone to own a piece of a company they believe in for as little as $50. Offering investment options for the crowd, international and accredited consumers, FlashFunders provides investors access to a whole new asset class and the opportunity to empower innovation.

FlashFunders is comprised of entities specifically created to assist you in making your offering both successful and compliant. FinTech Clearing, LLC, member FINRA/SIPC, is a registered broker dealer that facilitates Reg D offerings and offering deposit accounts. FlashFunders Funding Portal, member FINRA, is a registered funding portal that facilitates Reg CF offerings. FlashFunders Shareholder Services, LLC is an SEC registered Transfer Agent that allows investor holdings to be recorded and transferred electronically. FlashFunders, Inc. is a technology company focused on making the online interaction between companies and investors intuitive and efficient. This unique combination of expertise, regulatory registrations and technological know-how empowers FlashFunders to offer tools that connect companies and investors in entirely new ways.

*FlashFunders, Inc. does not actually participate in securities offerings or activities
How is FlashFunders different from traditional crowdfunding sites like Kickstarter and Indiegogo?
On FlashFunders, consumers purchase securities (including but not limited to equity, debt, and revenue participation notes) in privately held small businesses and startups.

Crowdfunding sites like Kickstarter and Indiegogo allow people to donate money to campaigns in exchange for rewards. Once the backer receives the reward, the transaction is finished. The backer does not share in the company's potential upside success and the company does not give up any portion of equity ownership to the crowd.

On FlashFunders, investors purchase securities in startup companies. They do not receive rewards, they receive stock or another type of investment in private companies. If the startup becomes successful, shareholders have the potential to receive a return on their initial investment.
What are the risks and rewards of investing in startups?
When you make an investment in a startup involving equity, you own a piece of that company until it makes an 'exit'. Getting purchased by another company, selling shares on a public stock market (known as an initial public offering, or IPO), or bankruptcy are common exit scenarios.

That makes startup investing one of the most potentially rewarding, and most risky, ways to invest your money. Some companies grow to become icons of an era, like Google, Facebook, or Apple. But for every superstar, there are numerous respectable but quiet exits, and many failures.

That's why due diligence is so important. Investors need to be as well-educated and confident in their decisions as possible. Losing some or all of your investment is a very real possibility.
How much may I legally invest on FlashFunders?
FlashFunders has a simple calculator that calculates how much Reg CF investors may invest. The SEC defines people who make over $200,000, or have a net worth over $1 million, as accredited investors. Accredited investors do not have investment limits if they participate in a Reg D offering.

The SEC limits how much Reg CF investors may invest in private companies in a given year. Reg CF investors may invest the greater of $2,000, or 5% of the lesser of their annual income or net worth, if the investor's net worth or annual income is less than $100,000. A Reg CF investor may invest 10% of the lesser of their annual income or net worth if both their annual income and net worth are equal to or more than $100,000. There is a $100,000 aggregate investment limit across all issuers.
Why is there a difference between Reg CF and Reg D investors?
The SEC has only recently allowed crowd investors to get access to private investments thanks to Reg CF of the 2012 JOBS Act, which also allowed companies to solicit accredited investors publicly through changes to Reg D.

Before the Jumpstart Our Business Startups (JOBS) Act of 2012, private companies who wanted to raise capital had to solicit investments via private channels. The JOBS Act quickly allowed privately held companies to solicit investments on public platforms like the internet.

But only accredited investors had access to those investments until the SEC formalized rules for a portion of the law called Title III (Reg CF). Title III or Reg CF allows people of any income to invest in companies.
What rights do investors get on FlashFunders?
All companies fundraising on FlashFunders set their own investment terms according to their offering. All investors receive securities (including but not limited to equity, debt, and revenue participation notes) on FlashFunders, and all investors have the same access to startup opportunities as institutional investors. Larger shareholders may receive certain preferential rights such as pro rata rights, voting rights, conversion rights, a liquidation preference over common stock, and direct access to company founders. Shareholders investing lesser amounts still receive securities at the same price as large investors, but their investment rights are typically more limited given the smaller size of their investment.


Who can invest?
FinTech Clearing, LLC is a FINRA-registered broker dealer and FlashFunders Funding Portal is a FINRA-registered funding portal with the ability to facilitate investments from any individual over the age of 18 in the U.S., and from international investors.

There are three regulatory exemptions investors invest through. Investors who invest less than $20K invest via Regulation CF through our funding portal. Investors who invest $20K or more invest via Regulation D (in the US) and Regulation S (if they reside internationally) through our broker dealer.
What is the difference between Reg CF and Reg D investors?
Anyone can purchase securities (including but not limited to equity, debt, and revenue participation notes) in startup companies on FlashFunders. Investors in the U.S. fall under two categories, with different investment limits and requirements for reporting to comply with SEC rules. Reg CF Investors will conduct transactions through FlashFunders Funding Portal and Reg D investors will conduct transactions through FinTech Clearing, LLC.

Reg CF investors can invest as little as $50, and up to any amount less than $20k, according to their individual limits. All investors may invest smaller amounts under Reg CF, but if they want to invest $20K or more, they will have to verify their accreditation through the platform and participate in a Reg D investment.

Reg CF and Reg D investors purchase securities at the same price, but there are differences in their investment limits, rights as stockholders, and how they are categorized by the SEC.
Is there a minimum platform investment?
FlashFunders accepts any investment $50 and above through Reg CF offerings. Only accredited investors may invest in Reg D offerings, which may have different minimums – please review the offering documents specific to a given listing for more detail. [International investors are responsible for all banking and wire fees associated with transferring funds into the offering deposit account and/or escrow.]
Why are the investors called Reg CF and Reg D?
Reg CF refers to Title III (Regulation Crowdfunding) of the 2012 JOBS Act, which allows the general public to invest in early-stage private companies for the first time starting May 16, 2016. Reg D refers to Title II (506c) of the 2012 JOBS Act, which allows companies to sell private stock to investors who verify their accreditation status.
Why are there investor limits?
Because Reg CF allows early stage investing by non-accredited investors, the SEC put limits in place to protect the general public from investing more than they can afford to lose in early stage companies, due to the high risk and long horizon of the investment type.
Can I invest in more than one company under Reg CF?
You may invest in multiple companies on FlashFunders as long as your total amount of investments does not exceed your annual investment limit.
Does FlashFunders charge fees to investors?
FlashFunders does not charge any fees to investors; however, fees such as success, processing and service fees are assessed to issuers, which impacts the total proceeds available for use as described in the offering materials.
Are investments from entities accepted on the platform?
Only investors investing $20k and above are eligible to invest as an entity on the platform and investors making investments under $20k must be individuals.


What are the benefits of investing in startups?
The startup industry is rapidly growing and there are more high value companies staying private longer. Traditionally, only angel investors and venture capitalists had access to invest in these private companies, but now they're publicly available on FlashFunders.

It's not just about a potential financial return on investment. It's about becoming part of a company that may change the world. Think about all the companies that have fundamentally changed our culture. Early stage venture capital investing means investing in ideas, entrepreneurs, and innovation. It means changing the way the world works, influencing people's lives, and becoming an inextricable part of that story.

On FlashFunders, anyone can have access to those opportunities on an open, transparent online market.

Without startup investing, the world would be a very different place. Great ideas need you.
What are the risks of startup investing?
In investing, the greater risks can yield the greatest gains, but investors should be aware than they can lose some or all of their investments. Less than 10% of startups make it to a subsequent round of funding.

We're an open marketplace, and we believe that companies from anywhere in the world and from any sector, deserve an opportunity to be on our platform. Although FinTech Clearing and/or FlashFunders Funding Portal conduct a limited proprietary review of all offerings, your due diligence is vital. Investors should be familiar with and willing to accept the high risk associated with startup investments.

Private Stock with No Public Market:
Private company stocks are securities with no public market for resale. The investments are private and illiquid, so you can't convert them to cash easily. You should be willing to hold that investment indefinitely.

Need to Do Due Diligence:
Any securities offered on FlashFunders are offered directly by the companies themselves, and those companies are solely responsible for the contents of any materials made available to prospective investors on the FlashFunders website. FlashFunders only reviews a company's self-verifications that it is free of “bad actors.” FlashFunders also conducts corporate status checks using public databases, verifies the identities of key founders, and conducts anti-money laundering compliance checks.

Investors are responsible for conducting research on a potential investment, including understanding the startup's exit strategy. An exit strategy is how a company intends to “cash out” their shareholders' investments. However, there is no guarantee of when or whether that exit strategy will happen.

Difficulty in Valuing Companies:
It's incredibly difficult to value early-stage companies. They're just starting out, so the company's value generally can't be based on its assets, book value, or historical results of operations. You shouldn't consider the offering's valuation or share price a formal indication of the company's worth. Use your judgment to decide the worth of the shares you buy.

Risk of Total Loss:
Many companies fail - that's why due diligence is so important. It's up to you to judge if a startup has the potential to succeed. FlashFunders does not recommend or endorse any of the materials that companies post on the FlashFunders website, and does not conduct diligence on the business plan, disclosures, risks, prospects, or other investment considerations of any startup. You may lose some or all of your investment, and you need to be in a financial position to be able to bear that loss.
What are the risks of investing in notes & debt securities (including Convertible Notes & Revenue Participation Notes)?
  • Investing in private companies through any type of 'note' includes the risk of total loss and is extremely speculative.

  • Since notes are debt securities, there is an obligation by the company to pay back principal and interest to the investor. However, if the company encounters financial difficulties, there could be missed payments or total loss of the investment to the investor.

  • Revenue Participation Notes (RPNs) are a specific form of Note that bear an annual interest rate but also have an added feature of revenue participation whereby the investor can receive a percentage of sales if the amount is greater than the annual interest rate. RPNs allow investors to have upside benefits in a situation where a company has significant revenue growth. However, as is the case with many early stage businesses, revenue forecasts may not be met and investors in RPNs may not reap the benefits of any revenue participation. The expectation of revenue participation in an RPN is highly speculative and is not guaranteed.

  • Notes typically have maturity dates which means that investors may no longer hold the security past a specified date if the company has performed all obligations specified in the note.

  • If a company is liquidated, noteholders would receive their capital back prior to any equity investors (preferred or common shareholders). However, investors may, depending on the company's financial circumstances, be returned some, all or none of their invested capital and/or accrued interest.

What are the risks of investing in equity securities (Preferred Stock & Common Stock)?
  • Investing in private companies through any type of 'stock' or equity security includes the risk of total loss and is extremely speculative.

  • When an investor makes an equity investment in a private company, an investor has the opportunity to share in the benefits of a company's potential business success. However, there is no guarantee or obligation by the company to provide any returns, cash flows or dividends to the investor unless otherwise specified.

  • Equity investors may lose their entire investment or may not have a chance for a return for many years. Some equity investments take over a decade to see any returns.

  • If a company is liquidated, equity investors typically only receive their capital after all noteholders are paid their capital first, with preferred shareholders then receiving priority over common shareholders. However, investors may, depending on the company's financial circumstances, be returned some, all or none of their invested capital.



*Investors should always review the disclosures and risks specific to a given offering and its securities structure, which can be found in a company's offering materials.


How do I find a company?
Log in to the FlashFunders portal and go to the "Browse Companies" page. On this page, you can browse a variety of companies.
What do I need for the investment process?
When you open an account on FlashFunders, we will ask for your name, address, date of birth and other information that will allow FinTech Clearing and/or FlashFunders Funding Portal to verify your identify. We may also ask to see your driver's license or other identifying documents. Federal law requires financial institutions such as broker dealers and funding portals to obtain, verify and record information that identifies each person who opens an account.

Reg CF investors will be asked to report income or net worth, and any startup investments made in the past year. FlashFunders will automatically calculate your annual investment limit.

Reg D investors must verify their income or net worth in one of two ways. The easier way is to provide the contact information for an accountant, lawyer, or financial advisor, who completes a simple electronic form confirming that you qualify. Or, you can upload documents, such as financial statements or tax returns, and FinTech Clearing will do a soft pull of your credit report to verify your net worth.
How is ownership percentage calculated?
Ownership percentage is calculated on a fully-diluted basis assuming the maximum number of securities are sold.
How do I increase my investment in a specific company?
The easiest way to increase your investment is by canceling your original investment in your dashboard and then reinvesting at the higher amount on the offering page.
If I change my mind, can I cancel my investment and receive a refund?
Yes. For Reg CF offerings, an investor may cancel an investment for any reason until 48 hours prior to the deadline identified in the issuer's offering materials. Once the round is within 48 hours of ending, you will not be able to cancel for any reason. After an investment is cancelled, you will receive a full refund of your investment
How long does it take for me to receive my refund?
If you sent your investment via wire transfer, you will receive your investment refund within 1-3 business days. If you sent your investment via check, you will receive your refund in the form of a check within 5-7 business days.
How do I know when my transaction is complete?
FlashFunders will notify investors when the target offering amount has been met. If a company reaches the target offering amount prior to the deadline identified in its offering materials, it may close the offering early if it provides notice about the new offering deadline. This must be at least five business days prior to such new offering deadline (absent a material change that would require an extension of the offering and reconfirmation of the investment commitment).

If an investor does not cancel an investment commitment before the 48-hour period prior to the offering deadline, the funds will be released to the company upon closing of the offering and the investor will receive securities in exchange for his or her investment.
What is a successful close?
A successful close is when the company has reached either its target raise amount or its maximum raise amount.
What happens if an offering fails to close?
All investment funds are transferred into an offering deposit account and/or escrow account until closing. If a company does not close, all investments will be refunded from these accounts and back to the investors.

Post Investment

Can investors invest in the same company again?
Yes. Currently, the platform does not offer this ability as a built-in option, but a repeat investment can be facilitated by contacting investors@flashfunders.com.
How is communication managed?
FlashFunders Shareholders Services will manage all investor-relations communication between investors and companies after closing.
Does FlashFunders issue stock certificates to investors?
Where offerings on FlashFunders utilize FlashFunders Shareholder Services, investments in those offerings are held in book entry format. This means the shares are recorded electronically, and the company will not send a paper stock certificate once the deal closes. The shares will be accessible via the Investor dashboard in the investors' FlashFunders account, and inquiries regarding the shares and communications with the Company for Reg CF investors can be directed to FlashFunders Shareholder Services: contact@ffshareholderservices.com.
What happens to my share of ownership if the company issues new shares in future financing rounds?
As is the case with any equity financing round, companies will naturally be diluting the equity ownership of existing investors. That means your proportion of ownership will be reduced, unless you own FlashSeed Preferred stock and exercise your right to maintain proportionate ownership.
What happens if a business fails?
As with any investment, there is an inherent risk that the company in which you invest may fail. If that is the case, and there is a liquidation event, holders of FlashSeed Preferred and Flash CF Preferred Stock will have a liquidation preference over common stock holders of the company. However, in many cases, there are no assets left to distribute, and the entirety of the investment may be lost.
How are returns distributed to investors?
All distributions will be managed by the company itself. However, as Transfer Agent, FlashFunders Shareholders Services provides information to the company to facilitate any distributions.


What is the process for the offer, purchase and issuance of securities on FlashFunders?
The transaction between the issuer and the investor will be completed through the FlashFunders online platform, by registering an account, submitting an investment commitment, signing subscription documents, and providing banking information to fund your investment.

Any shares will be issued as uncertificated book-entry securities and records will be centralized and recorded electronically in a system managed by the Company's transfer agent, if elected. The shares will be accessible via the Investor dashboard in the investors' FlashFunders account, and inquiries regarding the shares and communications with the Company for Reg CF investors can be managed through the transfer agent.
Under what circumstances can my investment be cancelled by the issuer?
An issuer may elect to reject any investment commitment at the Issuer's discretion, prior to closing.
What restrictions are there on transferring Reg. CF securities?
Reg CF securities may not be transferred by the purchaser for one year after the date of purchase, except when transferred:
(1) To the issuer of the securities.
(2) To an accredited investor as verified by FlashFunders, Inc.
(3) As part of an offering registered with the Commission.
(4) To a family member of the purchaser or the equivalent, or in connection with certain events, including death or divorce of the purchaser, or other similar circumstances, in the discretion of the Commission.
What ongoing reports and information are issuers required to provide if I invest in their Reg. CF offering?
If an issuer has conducted a Reg CF offering, they are required annually to file with the SEC and post on their website, an annual report along with the financial statements of the issuer certified by the principal executive officer of the issuer to be true and complete in all material respects and a current description of the financial condition of the issuer.

If the issuer has available financial statements that have either been reviewed or audited by a public accountant that is independent of the issuer, those financial statements must be provided and the certification by the principal executive officer will not be required.

The annual report also must include the disclosure required by paragraphs (a), (b), (c), (d), (e), (f), (m), (p), (q), (r), and (x) of § 227.201 of Regulation Crowdfunding. The report must be filed in accordance with the Regulation Crowdfunding Filing Requirements for Form C - AR no later than 120 days after the end of the fiscal year covered by the report.

The annual reporting requirement is ongoing, but may terminate in the future if the issuer qualifies under various circumstances.
Under what circumstances may an issuer stop publishing ongoing annual reports?
An issuer who has successfully closed a Reg CF campaign and is required to provide annual reports under the regulation, may cease to publish said annual reports under the following circumstances:

(1) The issuer is required to file reports under Section 13(a) or Section 15(d) of the Exchange Act.
(2) The issuer has filed, since its most recent sale of securities pursuant to this part, at least one annual report pursuant to this section and has fewer than 300 holders of record.
(3) The issuer has filed, since its most recent sale of securities pursuant to this part, the annual reports required pursuant to this section for at least the three most recent years and has total assets that do not exceed $10,000,000.
(4) The issuer or another party repurchases all of the securities issued in reliance on Section 4(a)(6) of the Securities Act, including any payment in full of debt securities or any complete redemption of redeemable securities.
(5) The issuer liquidates or dissolves its business in accordance with state law.