Crowdfunding harnesses the power of social networks and the internet to give people the means to raise funds, help others overcome hardship, and meet aspirational goals. With crowdfunding, you can help a friend or help an entire community. You can do everything from pay for your own equipment to fulfill an artist’s dream of performing around the world—and so much more.
AMAG’s fundraising tools make it easy for artists and entrepreneurs to create, share, and raise money for campaigns. Support people or causes you care about by simply donating to a project, and writing it off on your taxes!
A project is a finite work with a clear goal that you’d like to bring to life. Think albums, books, or films. The funding goal is the amount of money that a creator needs to complete their project. A creator is the person or team behind the project idea, working to bring it to life. Backers are folks who pledge money to join creators in bringing projects to life. While AMAG does allow creatives to buy and sell products and services, we also allow backers to support a creative process. Rewards are a creator’s chance to share a piece of their project with their backer community. Typically, these are one-of-a-kind experiences, limited editions, or copies of the creative work being produced.
Backers that support a project on AMAG get an inside look at the creative process, and help that project come to life. They also get to choose from a variety of unique rewards offered by the project creator. Rewards vary from project to project, but often include a copy of what is being produced (CD, DVD, book, etc.) or an experience unique to the project.
Many backers are rallying around their friends’ projects. Some are supporting a new effort from someone they’ve long admired. Some are just inspired by a new idea, while others are motivated to pledge by a project’s rewards — a copy of what’s being produced, a limited edition, or a custom experience related to the project.
Backing a project is more than just pledging funds to a creator and is unlike purchasing items from a shop. It’s pledging your support to a creative idea that you want to see exist in the world.
Project creators keep 100% ownership of their work, and do not offer equity or financial returns.
When you make an investment in an early-stage venture 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 company 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.
AMAG follows SEC rules in determining how much investors can invest in each offering.
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 or Reg A+ offering. For Reg A+ offerings (Tier II), unaccredited investors may invest up to 10% of the greater of their net worth or their annual income per offering.
For Reg CF offerings, the SEC limits how much investors may invest in private companies in a given year. Reg CF investors may invest the greater of $2,200, or 5% of the lesser of their annual income or net worth, if the investor’s net worth or annual income is less than $107,000. 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 $107,000. There is a $107,000 aggregate investment limit across all issuers. Please review the SEC Bulletin about Regulation Crowdfunding for more information on investor limits under this exemption.
The SEC has only recently allowed crowd investors to get access to private investments thanks to Reg A+ and 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 companies (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 portions of the law called Title III (Reg CF) and Title IV (Reg A+). Title III & TItle IV allow people of any income to invest in companies.
__________ is a FINRA-registered broker dealer and AMAG 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 four regulatory exemptions investors invest through. Investors who invest via Regulation CF invest through our funding portal. Investors who invest via Regulation D, Regulation A+, and Regulation S (if they reside internationally) invest through our broker dealer.
Anyone can purchase securities (in equity crowdfunding) in private companies on AMAG. Investors in the U.S. fall under three categories, with different investment limits and requirements for reporting to comply with SEC rules. Reg CF Investors will conduct transactions through AMAG Funding Portal; Reg A+ & Reg D investors will conduct transactions through _______________.
Reg A+ & Reg CF investors can invest as little as $50, and up to any amount according to their individual limits. All investors may invest smaller amounts under Reg A+ and Reg CF, but if they want to invest above their stated limits, they will have to verify their accreditation through the platform and participate in a Reg D investment.
Reg A+, Reg CF and Reg D investors purchase securities of a company at the same price, but there are differences in their investment limits, rights as stockholders, and how they are categorized by the SEC.
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 AMAG.
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 often means investing in ideas, entrepreneurs, and innovation. It also may mean changing the way the world works, influencing people’s lives, and becoming an inextricable part of that story.
On AMAG, our objective is to give everyone access to those opportunities on an open, transparent online market.
Without early-stage investing, the world likely would be a very different place. Great ideas need you.
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 companies 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 ____________ and/or AMAG 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 private investments.
Private Stock with No Public Market:
Private 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 AMAG 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 AMAG website. AMAG only reviews a company’s self-verifications that it is free of “bad actors.” AMAG 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 company’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 Private Companies:
It can be 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 an early-stage company has the potential to succeed. AMAG does not recommend or endorse any of the materials that companies post on the AMAG website, and does not conduct diligence on the business plan, disclosures, risks, prospects, or other investment considerations of any company. 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.
*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.
When you open an account on AMAG, we will ask for your name, address, date of birth and other information that will allow ________ and/or AMAG Funding Portal to verify your identity. 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 A+ investors must self-certify that their investment amount per offering falls within the investment limits required by SEC rules, i.e. 10% of the greater of net worth or annual income.
Reg CF investors will be asked to report income or net worth, and any company investments made in the past year. AMAG 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 ___________ may do a soft pull of your credit report to verify your net worth.
AMAG will notify investors when the target offering amount has been met. If a company reaches the target offering amount in a Reg CF offering 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 in a Reg CF offering 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.
The transaction between the issuer and the investor will be completed through the AMAG 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’ AMAG account, and inquiries regarding the shares and communications with the Company for Reg CF investors can be managed through the transfer agent.
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.
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.
The required type of financial disclosure depends on how much an issuer has already raised within a year, and how much they intend to raise next.
$107,000 or less: If current offering plus previous raises amounts to $107,000 or less, the issuer provides information from its tax returns (but not the tax returns themselves) certified by the principal executive officer. If financial statements are available they must be provided, too, and again certified by the principal executive officer.
$107,000.01 to $535,000: If the current offering plus previous raises is between $107,000 and $535,000, financial statements are required and must be reviewed by a CPA. If audited financial statements are available, they must be provided.
$535,000.01 to $1.07 million: If current offering plus previous raises amounts to $535,000.01 or more, the required financial statements must be audited by a CPA. However, if the issuer has not previously sold securities under Reg CF, the financial statements will only be required to be reviewed by a CPA.
Note: An audit provides a level of scrutiny by the accountant that is higher than a review. The required information is filed with the SEC and posted at the start of the offering on AMAG and available to the public throughout the offering on the AMAG and SEC sites. It is available to the general public on both websites throughout the offering period – which must be a minimum of 21 days.
How does AMAG Funding Portal get paid?
AMAG Funding Portal charges fees to companies for listing on the platform and as a percentage (%) of the amount raised. The listing fee is determined by the complexity of each company. The percentage fee is a success-based fee that is typically 6% but is subject to change at any time and is disclosed in the offering document of the issuer.
Following completion of an offering conducted through the AMAG Funding Portal, there may or may not be any ongoing relationship between the Company and AMAG Funding Portal.
As a registered funding portal, AMAG Funding Portal cannot and will not: