Investment Crowdfunding Is a New Source of Funding for Startups and Other Private Businesses In North Carolina
Now that the Federal JOBS Act and the NC PACES Act investment crowdfunding laws are in effect, North Carolina businesses can get needed funding by offering both equity and debt securities to accredited and non-accredited investors. CrowdfundNC provides the education, partner resources and advisory to help make your company investible. We've partnered with the experienced broker/dealer securities company Localstake to provide the LocalstakeNC investment crowdfunding platform to facilitate the capital raise process.
What is Investment Crowdfunding?
It is a new way to raise capital from your community, customers, professional investors, and other supporters of your business. Investment Crowdfunding uses a specific set of securities exemptions, marketing strategies, and technology combined with your business's compelling story to facilitate the raise process in a way that is efficient and effective for both your business and the investors.
This is just for businesses who want to raise from non-professional investors, right?
Actually, it's for your business to raise funding from any type of investor. Your business can perform a private 'traditional' raise to 'strategic investors' or a known group of accredited investors. Your business can also perform a public raise allowing anyone to participate. Your business can even perform a side-by-side (aka "Concurrent") offering where you can strategically group accredited and non-accredited investors into separate exemptions, allowing you to potentially raise more funding.
Why is Investment Crowdfunding a strategic way to raise capital?
Unlike the offline raise process, Investment Crowdfunding provides your business the ability to make your raise strategy match your business strategy, not the other way around. You get to choose which investor base you're making an offering to and what your terms will be to each investor base. You can create equity and/or debt offerings, and you work with your advisors to determine the terms of the offering. Our advisory services and partnership with Localstake helps guide your business through this decision process.
How is my business able to raise capital from anyone, accredited or non-accredited?
Our partner platform is a registered Broker Dealer. As a Broker Dealer, they allow your business to sell any type of exemption available which means you can pick exemptions which best meet your business's strategy. A variety of traditional and new offering exemptions can be used by your business.
Traditional
Another option is to make a website yourself if you prefer to use a smaller offering type called a Local Public Offering (LPO). But if you make your own, your website has to be compliant with the PACES law and the rules on the NC Secretary of State website, so you should get familiar with those too. Read the FAQs first, then the PACES Act rules to get a good idea how this all works.
How much can be raised using Investment Crowdfunding?
Based on results across the industry, typical raises are $100K minimum, $250K on average and can go into the millions based on the exemption chosen.
Exemption fundraising limits are as follows
How do I raise money with Investment Crowdfunding?
What is Investment Crowdfunding?
It is a new way to raise capital from your community, customers, professional investors, and other supporters of your business. Investment Crowdfunding uses a specific set of securities exemptions, marketing strategies, and technology combined with your business's compelling story to facilitate the raise process in a way that is efficient and effective for both your business and the investors.
This is just for businesses who want to raise from non-professional investors, right?
Actually, it's for your business to raise funding from any type of investor. Your business can perform a private 'traditional' raise to 'strategic investors' or a known group of accredited investors. Your business can also perform a public raise allowing anyone to participate. Your business can even perform a side-by-side (aka "Concurrent") offering where you can strategically group accredited and non-accredited investors into separate exemptions, allowing you to potentially raise more funding.
Why is Investment Crowdfunding a strategic way to raise capital?
Unlike the offline raise process, Investment Crowdfunding provides your business the ability to make your raise strategy match your business strategy, not the other way around. You get to choose which investor base you're making an offering to and what your terms will be to each investor base. You can create equity and/or debt offerings, and you work with your advisors to determine the terms of the offering. Our advisory services and partnership with Localstake helps guide your business through this decision process.
How is my business able to raise capital from anyone, accredited or non-accredited?
Our partner platform is a registered Broker Dealer. As a Broker Dealer, they allow your business to sell any type of exemption available which means you can pick exemptions which best meet your business's strategy. A variety of traditional and new offering exemptions can be used by your business.
Traditional
- 504 – Private Accredited and Non-Accredited
- 506(b) – Private Accredited
- 506(c) – Public Accredited
- Regulation Crowdfunding (aka Reg CF) – Public for anyone to participate
- NC PACES – NC Businesses only and public for any NC resident to participate
- Reg A+ aka Online Public Offering (OPO) - Public for anyone to participate
Another option is to make a website yourself if you prefer to use a smaller offering type called a Local Public Offering (LPO). But if you make your own, your website has to be compliant with the PACES law and the rules on the NC Secretary of State website, so you should get familiar with those too. Read the FAQs first, then the PACES Act rules to get a good idea how this all works.
How much can be raised using Investment Crowdfunding?
Based on results across the industry, typical raises are $100K minimum, $250K on average and can go into the millions based on the exemption chosen.
Exemption fundraising limits are as follows
- 504 – usually up to $5M per year
- 506(b) – no cap
- 506(c) – no cap
- Reg CF – up to $1.07M per year - Potentially Raise More with a Concurrent Offering
- NC PACES – up to $2M per year
- Reg A+ – up to $50M
Both established businesses and new startups or small businesses can leverage investment crowdfunding. Again, there are multiple exemptions and offering types businesses can use in order for their raise strategy to match their business strategy.
If your business is just getting started, first, just as you would with any other source of funding, create a viable business model and plan, and build traction points. Successful traction points could include:
If your business is just getting started, first, just as you would with any other source of funding, create a viable business model and plan, and build traction points. Successful traction points could include:
- Successful Minimally Viable Products (MVPs) or Proof of Concepts (PoC)
- Strategic partnerships established
- Purchase Orders or Letters of Intent secured
- Revenue generation
All of these and more will be evaluated by your potential investors. You don’t have to
be profitable yet, but you do need to show traction and that there is demand
for your product or service. If you are too early stage, you may want to
consider a donation and rewards campaign as an option to get bootstrapped.
Next, educate yourself by studying the educational materials
that the crowdfunding sites provide to understand how this works and what you will
need to do to have a successful fundraising campaign. For North
Carolina businesses, CrowdfundNC.com and Localstake NC
Next, study the campaigns of other companies that are
similar to yours to see what they have done right (and wrong). Then pick a good legal advisor to work with as
you create your offering and prepare to fundraise. Our team helps make your business investible, but get ready to work hard
to accelerate your traction points, promote your offering and find new investors. Nothing will happen
automatically, so be prepared to put in plenty of time to make it happen.
And CREATE YOUR CROWD!
How do businesses get
funded on Localstake NC
Step One: Build a compelling story and offering
On the company profile webpage on Localstake NC
The investment
crowdfunding mission of a startup or small business is to create a great
company profile and offering on Localstake
NC
- The company vision
- The problem to be solved
- The product or service
solution
- Identification of the target
market and how to reach it
- A business plan and model
that works
- The team that that can make
the business a success
- The traction the company as
achieved
- The milestones and metrics
the company anticipates
- Use of funds to achieve those
milestones
- An analysis of the
competition
- The existing financial
condition of the company
- A reasonable financial
projection going forward
- The terms and disclosures of
the investment offering
Step Two:
Create and run an effective campaign
The next step is to run an investment
crowdfunding campaign to raise the needed funding. The goal is to find
investors in the community and around North Carolina Localstake NC
How do I put a profile and offering together?
The first step in putting together a good profile and offering
is to do your research on how others have done it. The Indiana
To get started with your fundraising account and for initial Crowdfunding Advisory, please say hello@crowdfundnc.com.
For additional services and resources to help you with your crowdfunding campaign click on the tabs above.
