While launching your Regulation Crowdfunding campaign on WeFunder, or any other platform, you’re given a document to be filled to comply with the rules or SEC. This document is essentially known as Form C.
This 20-pages long document is required by the Securities and Exchange Commission (SEC) to allow you to raise money for your company. Before handing it to accredited or non-accredited investors to fill it, you must understand what it actually means for your company and what some of the most important sections involve.
Contents
All important information about your business offering to accepting funds from investors is described in this form. The document discloses certain terms and conditions of your business for investors and helps them assess the risks and potential wins of funding your project.
The link above redirects you to the Form C document structured in many fields with your company details. These fields involve detailed information on your company industry, business model, share’s price, and the aimed monetary goal the company aims to raise.
It includes information about your offering, the founder and co-founder, current investors, risks linked with the investment, and a summary of how you plan to manage the money received from the campaign, together with other fundamental financial information.
If, after the form is filled out and the campaign has started, you make any considerable update, such as onboarding a new executive officer or modifying the offering terms, you’re required to file a second form, named Form C/A to notify investors of the new conditions.
Also, you’re required to update the document after raising 50% and then 100% of your milestones with a Form C/U, followed by another amendment known as Form C-AR at the end of the year.
Find below an overview of the four important sections of Form C and their subsections.
A short summary of your business for investors to understand your company’s business model and the market you serve, as well as the relevancy, and plans for the near future.
As the name suggests, this section includes details about your team members, their respective positions, responsibilities, and their background and work history for the past three years.
This one section is important for investors and significantly affects their decision to either invest or not in your company. Outline and explain in detail what risks might lay in the future if potential investors decide to be involved in your company.
Avoid generalisms and delve into your specific industry and company conditions. These might include a limit in the manufacturing department, a sophisticated product, or the fact you are involved in an industry with many well-established competitors.
This section is an important part of Form C and requires attention and accuracy since you must portrait your financial information properly. Some of the fields include:
List all the members or current investors with more than 20% voting power in the business, while showcasing the difference between these voting shares and the ones you are offering to potential investors.
The Form C must include in this section financial statements spanning the timeframe of two years for investors to create a general understanding of how your company performed in the past two years and the reasons behind changes that could have happened. Here you should also mention your current capital sources, and if you plan on raising money in the future.
In this space, you ought to list other securities offerings in the last 3 years, and this may include offerings to your family and friends, or past Regulation Crowdfunding Campaigns.
After listing all these details now you must price the shares that are to be offered, and this is done by analyzing several factors. Usually, it is the company management department that takes into consideration factors such as financial performance, third-party contracts, IP ownership, and other companies in the same industry to estimate the company’s worth. Since there is no predetermined formula, you have to make your own reasoning. Most importantly, you must explain your conclusion in a way all investors can understand.
In this part of Form C, you must explain how you plan to manage and invest the money raised, showing where each portion goes in percentages and monetary values.
Transparency is crucial when you are filling out Form C and its amendments, as it is a major instrument for the launch of your Reg CF campaign and making the crowdfunding successful. Both accredited and non-accredited potential investors can be compelled to invest if you show that you know your numbers well and have a clear vision for the future.
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