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we earn a “success fee” only if your funding is successful.
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Most frequent questions and answers
Title3Funds helps startups and small businesses receive funding so they can fulfill their company vision. In short, we manage the logistics of fundraising, so you can focus on what you do best — growing your business.
Crowdfunding is a financing method in which money is raised through soliciting small individual investments or contributions from a large number of people. Over the last few years, crowdfunding websites like Kickstarter have become a popular way to solicit donations and to raise money for artistic pursuits like films, music, and creative performances.
Yes, but it’s fairly new. Under rules adopted by the SEC in 2015, startup and early-stage businesses may raise capital with crowdfunding. This new regulation allows companies to use securities-based crowdfunding to offer and sell securities to the investing public. Learn more here.
Title3Funds lets investors own a small stake in a business, while Kickstarter only allows investors to purchase products. This makes the investing process exciting, but investing in startups is also VERY risky. Educate yourself thoroughly and know the risks before you get started. You should never invest so much that it would impact your lifestyle or retirement plans if your entire investment is lost. Only invest what you can afford to lose.
Through the process of crowdfunding, you will gain a passionate squad of evangelists who are rooting for your success. This group of devotees could provide you with a steady stream of feedback, a ready-made focus group, an expanded network, free PR, and deeper connections to the people who matter most. By turning your customers into owners, you are opening the door for assistance and maximizing your chances of success. Someone with a vested stake in your company is a much more valuable asset than a standard customer.
Welcome! We are happy to guide you through the Crowdfunding process and strongly believe that the first step is self-education. We suggest you start by reading through all of our Frequently Asked Questions for Businesses and also reviewing our Glossary of Terms. Once you are familiar with the logistics, you may want to dig deeper and learn more about both crowdfunding and investing. We also recommend reading through the wealth of information offered on the following websites:
- FINRA (Financial Industry Regulatory Authority)
- SIPC (Securities Investor Protection Corporation)
- SEC (US Securities and Exchange Commission)
- SBA (Small Business Association)
Learn more about crowdfunding: Click Here.
Read the SEC Investor Bulletin: SEC Investor Bulletin: Crowdfunding (February 16, 2016)
Once you are ready, we encourage you to submit an application for your first fundraising campaign. We will review and evaluate your company profile and campaign objective, as detailed on your application. If your campaign is approved for the Title3Funds website, you will be assigned a company profile and will be able to activate your first round of fundraising.
No. We will only accept fundraising applications and create a company profile if your campaign is approved.
We are highly selective about choosing businesses that represent our values and mission. For us, it’s about quality over quantity; we would rather have 10 exceptional businesses on our platform, than 1000 mediocre ones.
Our evaluation process is extensive. We will review your team, traction, market size, value proposition, and other factors to determine if your company is a good fit for our platform. Your fundraising campaign will be evaluated based on objective, budget, plan, feasibility, and additional criteria.
We ultimately want to showcase businesses that have a unique idea or a new spin on an old concept. And we will only consider companies with a track record that indicates they will be able to effectively manage the newly acquired funds. We prefer to work with founders have already demonstrated accountability by investing their own capital in the business.
In essence, we wanted to level the playing field for startups and investors. We set out to create a FAIR and equitable place where these two entities can come together for a common cause.
Title3Funds has established itself as an excellent option for startup crowdfunding. There are several factors that make us unique.
Selection process: We want our investors to feel confident with their investment options on Title3Funds, so we put substantial effort into vetting companies who apply with us. Our team of advisors carefully chooses partners to work with based on the needs and wants of our investors.
Accountability: We are committed to improving the process. Collectively, our team has processed nearly $500 million in transactions and we use the latest technology to improve efficiency and accountability in the Crowdfunding Space.
Startup Services: Each startup will be paired with an Title3Funds advisor who may personally connect you with industry-appropriate attorneys, accountants, website developers, marketing consultants, and more. There is a suggested investment of $5-10K in services to ensure that your campaign is a success, and we can help facilitate connections with people who get the job done.
You can use Title3Funds to raise $100,000 or more. We fund companies at all stages but the more established you are, the more likely you are to receive funding. It helps to have a business plan, a prototype, a good track record, and maybe even some paying customers.
We also suggest at least one experienced investor that publicly endorses your company to help set the terms of your fundraise.
We are open to working with for-profit U.S. Corporations or LLCs across most industries — from retail, to entertainment, to technology, and more.
Prior to fundraising, you should do your own due diligence and research potential legal issues with Crowdfunding platforms.
We support Regulation Crowdfunding.
We support raising funds with any security, such as a loan, convertible note, SAFE, revenue share, or priced stock. You can upload your own investment contract, or, if you’d rather not hire a lawyer, we include several investment contracts you may use free of charge.
Fundraising With Title3Funds
First, tell a compelling story. Talk about your motivations for starting the business, your detailed qualifications, your vision, team, goals, how far you have come, and how far you have left to go. Be specific about your current goals and why you need the money to take things to the next level.
Second, support everything with numbers; statistics and dollar amounts help tell your story and build support around your business.
Third, make sure your profile is 100% true. You are legally liable for every piece of information you include on your profile. Avoid future promises and forward looking numbers, eliminate exaggerations, and be sure you haven’t omitted anything vital that investors should know about the business or your team.
Yes. You are legally responsible for providing accurate information to the investors. This means your company profile must contain factual information that is 100% accurate, without any vital omissions.
When you fundraise with Title3Funds, you are legally liable for every statement on your profile, so make sure it is 100% truthful and accurate, without omitting information investors should know about (i.e., a lawsuit).
When building your profile, avoid future promises and forward-looking numbers like “we plan to make $7 million next year.” Instead try, “We hope to continue growing by doing x, y, and z.”
The short answer is to set your target at the lower end of your range.
When you fundraise with Regulation Crowdfunding, you must hit your funding target in order to get funded at all. But, you are allowed to accept over-subscriptions.
Our best recommendation is to set the funding target to the lowest dollar amount that would benefit your business, and then outline how you would use any extra money received. If it costs $40,000 to purchase a new machine, but you could use $800,000 to buy more equipment, set $40,000 as your funding target then indicate what you would do with the $800k. This should maximize your chance of receiving funds.
Sorting and Curation
Promoting a Campaign
Yes. For Regulation Crowdfunding, you are only allowed to promote/advertise after your Form C is filed with the SEC.
Advertisements must be limited to factual information, so avoid qualifiers like ‘the best’ and ‘the greatest’. By law, all advertisements must also include a link to your Title3Funds profile and it is recommended that you avoid any reference to the SEC having “approved” your offering.
There are not any restrictions on advertising type, so you are free to advertise in whatever way is best for your business – PPC ads, email, Facebook, social, print, whatever.
Yes. For Regulation Crowdfunding, you are allowed to talk to the public about the facts of your business or products, provided you do not mention the terms of your fundraise. The SEC specifically states that their rules do not restrict an issuer’s ability to communicate other information that might occur in the ordinary course of its operations and that does not refer to the terms of the offering.
In other words, if you meet someone in the coffee shop who may be a potential investor, you should still talk to them. You can answer their questions about your business and point them to your Title3Funds profile page to review terms and make an investment. You should only state true facts during your conversation and do not discuss or reveal the terms of your fundraise.
After the Campaign
If a material change in your business has occured during your fundraise, you must disclose it to your investors before you close the round. All investors must then reconfirm their investment within 5 days of receipt of notice.
A material change is anything a reasonable person would think should be disclosed to investors because they might change their mind, such as your co-founder quitting, a deal falling through, or an unexpected drop in sales.
If you do a Regulation Crowdfunding offering, you need to file an annual report once a year with financial statements and a discussion of your business, no later than 3 months after the end of the fiscal year. If you neglect to file a report, you will be unable to fundraise with Regulation Crowdfunding again until you file the annual report (however, you may still raise funds from accredited investors with Regulation D)
Companies are not obligated to file annual reports if they file for an IPO, are acquired by a purchaser, repurchase all crowdfunded investments, file for bankruptcy, have fewer than 300 shareholders after 1 year, or have less than $10 million in assets after 3 years.