What is FlashFunders?
FlashFunders, an equity crowdfunding platform, connects global investors with companies raising capital, enabling everyone to own a piece of a company they believe in for as little as $50. FlashFunders' objective is to empower companies to convert their customers into shareholders and leverage investments from the crowd, international and accredited investors in a single fundraising round. With its deal execution and compliance procedures, FlashFunders and its affiliates support companies from regulatory form prep through post-fundraising with FlashFunders Shareholder Services, and aims to help entrepreneurs activate a passionate community of shareholders to advocate for their businesses through a streamlined process.
FlashFunders is comprised of entities specifically created with the purpose of assisting you to make your offering both successful and compliant. Sutter Securities Clearing, LLC, member FINRA/SIPC, is a registered broker dealer that facilitates Reg D & Reg A+ 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. Sutter Securities Group, Inc. is a technology company focused making the online interaction between companies and investors intuitive and efficient. FlashFunders believes its unique combination of expertise, regulatory registrations and technological know-how empowers it to offer tools that connect companies and investors in entirely new ways.
*Sutter Securities Group, Inc. does not actually participate in securities offerings or activities.
What types of companies raise capital on FlashFunders?
All investors can access the FlashFunders platform, and we welcome businesses from all sectors. Most companies on our platform are looking to raise between $500,000 and $2 million, but that can vary widely. Beyond our outlined requirements, FlashFunders does not conduct due diligence on companies. We believe the market picks the winner.
Whom can I raise money from?
Any individual over the age of 18 in the continental U.S. may invest within certain investment limits on FlashFunders, as well as accredited investors who can prove accreditation, and international investors. Reg CF Investors will conduct transactions through FlashFunders Funding Portal and Reg D & Reg A+ investors will conduct transactions through Sutter Securities Clearing, LLC.
What are the requirements to raise capital on FlashFunders?
Your company must be for-profit with a Tax ID number (EIN). You must be over 18, a U.S. resident with a Social Security number, a U.S. address, bank account and ID, and NOT a bad actor or criminal.
How much money can I raise on FlashFunders?
Companies can raise any amount on FlashFunders from accredited investors, who are individuals making over $200,000 per year ($300,000 for married couples), or have a net worth over $1 million (excluding primary residence).
Companies can raise up to $1,070,000 from the general public in a 12-month period, through a Reg CF round. Only capital raised from Reg CF investors counts towards the limit. Companies may raise more from accredited investors beyond this limit in the 12-month period. Companies may also raise up to $50 million from the general public in a 12-month period through a Reg A+ offering.
These limits also apply if you are connected to another entity that shares some form of control with your company (such as a parent company). For example, if your company is controlled by another company by contract or by stock ownership, any money raised by the owning company through Reg CF or Reg A+ counts towards the respective limit, and vice-versa if you have control or common control of another entity.
What is the difference between my target and my maximum offering?
When you raise capital on FlashFunders, you will set your target offering amount and your maximum offering amount, which can be no higher than $1,070,000 from Reg CF investors or $50 million from Reg A+ investors. You must reach your target offering amount to successfully close your round and receive your investments.
Can I accept more than my target offering amount?
Yes, any funding over the target offering amount is called an oversubscription. You can accept oversubscriptions, but you may not accept any funding over your maximum offering amount.
You are required to disclose how much you are willing to accept in oversubscriptions, how you would allocate the oversubscriptions, and the intended purpose of those additional funds.
Since FlashFunders Shareholders Services, LLC is a registered transfer agent, investments made by Reg CF investors will not count toward the SEC investor threshold rules that require an issuer to register its securities with the SEC under Section 12(g) of the Exchange Act. A company must be current in its annual reporting obligations, and have less than $25 million in assets.
What are the investment terms for my offering on FlashFunders?
Reg CF investors purchase Flash CF Preferred Stock and Reg D investors purchase FlashSeed Preferred Stock. They are the same price, but have different investor rights.
Flash CF Preferred Stock is held in book entry format, which means the shares are recorded electronically, and the company will not send a paper stock certificate. These stockholders have basic information rights, meaning they receive annual updates. This stock has liquidation preference, so if the company liquidates its assets, these stockholders will be paid out before common stock.
FlashSeed Preferred Stock, which is also held in book entry format, comes with more benefits. These stockholders have voting rights in the company, the right to retain proportionate ownership in future financing rounds, and the option to convert to common stock. These stockholders also have basic information rights, and may request unaudited financial statements if available.
How do I create an offering?
Companies can create their offering on FlashFunders using the offering editor. We always recommend that you're as transparent as possible to foster good relationships with investors. There are two sides to building a good offering - your enticing, but SEC and FINRA compliant, marketing materials, such as video, images, snappy taglines and a crisp elevator pitch and the business materials, such as your business model, projections and financials. Include bios of your team and your company's timeline.
What are the guidelines for posting a video on my offering page?
There's no formula for a great video. Try to capture the imagination and compel investors to read the rest of your offering. When you make a video, we suggest you introduce yourself and your company and discuss the problem you are solving, your growth, the market, and why you're raising money.
Format should be H.264 for the video and AAC-LC for the audio as a MOV, MPEG, AVI, or MP4 file. It must be 1GB or less with a width of 1280 pixels. Don't use any copyrighted music without permission.
Be passionate, enthusiastic, and compelling, but make sure we review your scripts before you record anything. Within guidelines, with which we can help, stand out. And have the courage to put yourself on camera - investors want to invest in people as much as in great ideas.
What are the guidelines for creating a pitch deck on my offering page?
To present a great pitch deck, we suggest companies include the problem you're solving, the size of the market you're addressing, the competitive landscape, a product roadmap and timeline, your business model (including revenue, pricing, sales, etc.), the use of process, and financials or projections. Be passionate, but be balanced, aware and inclusive of risks and uncertainties in your prepared marketing materials and presentations.
What are the guidelines for the Q&A section on my offering page?
For your Q&A section, be sure to include frequently asked questions that you think investors would want to know about your company.
What are the rules for promoting my offering?
When your company raises capital on FlashFunders, you must follow FINRA and the SEC's (depending on the offering type) guidelines for how you can market your offering on external channels, such as on social media and in cold outreach emails. Please be aware that FINRA and the SEC have rules about how you may communicate.
For companies using Reg CF, until the SEC accepts your Form C filing, you may not communicate any information about your offering. The SEC prohibits any "pre-shopping" or communication about your offering, before a Form C acceptance. You may, however, go about your normal course of business.
Once the SEC accepts your Form C filing, any information you publish, and all of your publicity, will generally be considered an "offer."
FlashFunders encourages all issuers to review FINRA Rule 2210 and SEC Rule 204 of Regulation Crowdfunding prior to initiating an offering to ensure understanding of what they can and cannot say or do.
What is the best way to market my offering?
Raising capital is a full time job, and it's just as much about building trust with your potential investors as it is about your business model. Your message should aim to explain your company as clearly as possible.
FlashFunders requires companies to have an articulated promotional strategy for the duration of their fundraising rounds. We recommend that you work with one of our crowdfunding agency partners who have a proven track record helping companies prepare and execute successful crowdfunding campaigns, but also come to us with questions about meeting regulatory standards.
Can FlashFunders promote offerings?
No, FlashFunders cannot promote specific offerings. FlashFunders is permitted to highlight certain offerings on our website based on objective criteria intended to show a broad selection of the offerings on our platform. Sutter Securities Group, Inc., FinTech Clearing, FlashFunders Funding Portal and/or FlashFunders Shareholder Services, LLC do not recommend securities and will not form an opinion of the merits or risks of any specific offerings.
Do any funds invest in companies on FlashFunders?
FlashFunders does not directly invest in any companies fundraising via our platforms. FlashFunders does, however, have relationships with a broad range of VCs, institutional investors and angels, and we consistently share our deal flow with them.
What investment documents can I use on FlashFunders?
Companies fundraising on FlashFunders set their own investment terms. You can choose to either use one of our templates below or bring your own documents. Our templates include: Flash CF Preferred Stock, FlashSeed Preferred Stock & SAFE.
Flash CF Preferred Stock (Reg CF) -- Term Sheet
FlashSeed Preferred Stock -- Term Sheet
SAFE (Simple Agreement for Future Equity) -- Term Sheet
Companies preparing their own investment documents have used securities such as Revenue Participation Notes and Common Stock. These documents should be drafted by the company's own law firm.
What are the investment terms if I use Flash CF or FlashSeed Preferred Stock templates on FlashFunders?
Reg CF investors purchase Flash CF Preferred Stock and Reg D investors purchase FlashSeed Preferred Stock.They are the same price, but have different investor rights.
Flash CF Preferred Stock is held in book entry format, which means the shares are recorded electronically, and the company will not send a paper stock certificate. These stockholders have basic information rights and receive annual updates. Flash CF holders have a liquidation preference, so if the company liquidates its assets, these stockholders will be paid out before common stock.
FlashSeed Preferred Stock, which is also held in book entry format, comes with more benefits. These stockholders have voting rights in the company, the right to retain proportionate ownership in future financing rounds, and the option to convert to common stock. These stockholders also have basic information rights, may request unaudited financial statements if available and have a liquidation preference over common stock.
What are the Conversion Rights on FlashFunders' templates?
FlashSeed Preferred Stock (Reg D) Conversion Rights
Flash CF Preferred Stock (Reg CF) Conversion Rights
Any investor may convert their shares of FlashSeed Preferred stock, at any time at their discretion, into common stock at a 1:1 ratio. Common stock has voting rights, but does not have any liquidation preference.
All FlashSeed Preferred shares will automatically convert into common stock if the Company completes an initial public offering (IPO), or if the holders of a majority of FlashSeed Preferred shares agree to convert. An automatic conversion event results in elimination of the FlashSeed Preferred preferences.
The Flash CF Preferred shall have no optional conversion rights.
Each share of Flash CF Preferred will automatically convert into Common Stock upon (a) the closing of a firmly underwritten public offering of Common Stock or (b) the election or consent of the holders of a majority of the then outstanding shares of the Preferred Stock (voting together as a single class on an as-converted basis). The conversion rate will initially be 1:1, subject to customary adjustments.
When do I receive my funds?
Once you've hit your target offering amount in an offering, you can choose to close your round, but be aware that once you close your round, you cannot open it again. In a Reg CF offering, you must also wait 21 days after your Form C is approved by the SEC before you are eligible to close your round. We will release your funds from the offering deposit and/or escrow account to your company's bank account once all these conditions are met.
FlashFunders Shareholder Services is an SEC-registered transfer agent. A transfer agent is an entity that manages communication with shareholders and maintains records of who owns a company's stock.
Why should I engage a transfer agent?
FlashFunders Shareholder Services makes managing investors easy and convenient.
Reg CF investors hold their shares in book-entry format through FlashFunders Shareholders Services and do not count toward the threshold that requires an issuer to register its securities with the SEC under Section 12(g) of the Exchange Act. A company must be also current in its annual reporting obligation, and have less than $25 million in assets.
We maintain accurate shareholder records and manage investor relations and record keeping through proxy and mailing services.