Alright, Alright, Alright! I hope you’ve got your learning hat on because class is in session.
These Educational Materials have been prepared to serve as a guide to help you understand Regulation Crowdfunding, how to invest, as well as the associated risks with investing in Regulation Crowdfunding securities offerings.
Please review these educational materials carefully. You will be asked to reaffirm that you understand the content presented here before you make an investment on our platform.
You should carefully review all of the information provided to you in connection with every investment made on our platform and consider whether investing in the Issuer’s securities are appropriate for you and your financial situation.
For example, before participating in a Reg CF offering, you should consider whether you can afford to lose all the money you invest, whether you understand the company and its business, and whether you understand what you are purchasing.
Thunder Funder Portal LLC is a funding portal registered with the SEC and a member of FINRA. If you have any questions or need further assistance in understanding anything about these Educational Materials, please contact us at support@thunderfunder.com
Accredited Investor:
A person that meets certain enumerated criteria including, but not limited to:
(i) has a net worth equal to $1 million or more (excluding primary residence); and
(ii) has earned $200,000 or more for the least two years with a reasonable expectation for that income level to continue.
To review the complete definition of an accredited investor, please review § 230.501 of the Securities Act of 1933.
Issuer:
The issuer of the securities offered and sold under Regulation Crowdfunding.
FINRA:
The Financial Industry Regulatory Authority, Inc.
Regulation Crowdfunding:
The regulatory framework introduced with the JOBS Act in 2016 enables issuers to raise capital from the public subject to certain conditions. An Issuer that seeks to raise capital under Regulation Crowdfunding is required to engage an online intermediary registered with the SEC like Thunder Funder Portal LLC. You can learn more about Regulation Crowdfunding by visiting here.
SEC:
The U.S. Securities and Exchange Commission.
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You can view the available offerings on our platform prior to creating an account. However, you must first create an account with Thunder Funder and review and agree to our Terms of Use and Privacy Policy, as well as a consent to electronic delivery of document prior to making an investment. Before you make an account, please take time to understand these Educational Materials and understand the risks involved in investing in a Regulation Crowdfunding offering on our platform. You can review some of these risks in the section titled, “Risks Associated with Investing” below.
Once you have identified an investment opportunity you would like to participate in, you can begin the process by clicking “Invest” on the applicable offering page. You will then be directed to indicate how much you would like to invest and how you will pay for your investment. You can fund your investment by following the instructions provided to you on the platform. When you invest, your money will be held with an escrow agent until the offering is complete. If the offering reaches its deadline and/or the maximum amount has been reached, the escrow agent will release your funds to the Issuer.
Prior to confirming your investment commitment, we’ll also ask you to reaffirm that you have received the Educational Materials and understand the contents described. You’ll then be asked to sign the applicable security instrument. Don’t worry, you will have up to 48 hours before the end of the offering to cancel your investment commitment in the event you change your mind.
Once your investment commitment has been made, you will receive a notification via email with the details of your investment commitment. When your investment is ready to be finalized, you will receive an email confirmation with details of your investment. After the transaction is complete, the Issuer will reflect in its books and records the details of the transaction.
The following types of securities may be offered on our platform.
Priced Equity Securities:
When you purchase priced equity securities, you are purchasing equity interests in a private company at a pre-determined set price per equity interest. The price will be set by the Issuer. The value of your investment may appreciate or depreciate depending on the Issuer’s business, subsequent securities offerings, and other factors. There are several types of price equity securities that may be available for purchase including, common stock, preferred stock, or limited liability company interests.
Convertible Securities:
Some Issuers may offer convertible securities, which are securities that may convert into different types of securities. For example, an Issuer may offer a convertible note, which has the characteristics of a debt security, but depending on the specific conversion triggers, may be converted into equity (e.g., common stock). There is risk that the triggering event (e.g., a qualified financing) may not occur.
Simple Agreements for Future Equity (SAFEs):
A SAFE is a financial instrument that provides investors with the right to receive equity in a startup at a future date, typically during a subsequent financing round. While SAFEs are popular among early-stage companies for their simplicity, they are complex securities that investors should thoroughly understand before committing funds.
Check out the FAQ for a more comprehensive guide on SAFE notes
Issuers are required to file a Form C prior to commence offering securities under Regulation Crowdfunding. You can access the Issuer’s Form C by visiting the Issuer’s offering page on our platform or by visiting the SEC’s electronic database. The information Issuers are required to disclose include, among other things, the following:
1. Material information about the Issuer including its name, address, website, directors, officers, capital and ownership structure, and prior securities offerings;
2. The principal occupation and employment history for each director and officer;
3. Material terms of the offering, including the type of security instrument and rights associated with owning the securities;
4. The Issuer’s use of proceeds, including if the target amount is raised and if the maximum amount is raised;
5. Risk factors associated with an investment in the Issuer’s securities; and
6. Certain financial information about the Issuer.
The type of financial information an Issuer is required to disclose depends on whether the amount the Issuer seeks to raise under Regulation Crowdfunding and whether the Issuer has raised capital through a Regulation Crowdfunding offering in the past.
• If an Issuer seeks to raise $124,000 or less, financial statements and certain income tax return information is required to be disclosed to investors, which have to be certified by the Issuer’s principal executive officer.
• If an Issuer seeks to raise between $124,000 and $618,000, the financial statements must be reviewed by an independent public accountant and certified by the Issuer’s principal executive officer. The public accountant’s report is also required to be disclosed.
• If an Issuer seeks to raise between $618,000 and $5,000,000, if the Issuer is raising capital through Regulation Crowdfunding for the first time, and the Issuer is raising up to $1,235,000, then the financial statements must be reviewed by an independent public accountant. In all other situations within this category, audited financials prepared by an independent public accountant is required. The public accountant’s report is also required to be disclosed.
When you purchase a security offered and sold in reliance on Regulation Crowdfunding, the securities you purchase are subject to certain resale restrictions. Specifically, when you purchase securities through Regulation Crowdfunding, you may not sell or otherwise transfer the securities for one-year, unless the securities are sold to:
(i) the issuer;
(ii) an Accredited Investor;
(iii) as part of a registered offering; or
(iv) a family member, a trust for you or your family, or in connection with your death, divorce or similar circumstance.
The term family member includes a child, stepchild, grandchild, parent, stepparent, grandparent, spouse or spousal equivalent, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law. Adoptive relationships are included. The term spousal equivalent means a cohabitant occupying a relationship generally equivalent to that of a spouse.
If you are not an Accredited Investor, Regulation Crowdfunding limits the total amount you can invest in a given year in securities offerings under Regulation Crowdfunding. Specifically, the maximum amount you can invest in a year in all Regulation Crowdfunding offerings during any 12-month period is as follows:
1. The greater of (i) $2,500; or (ii) 5% of your annual income or net worth if your annual income or net worth is less than $124,000; or
2. 10% of the greater of your annual income or net worth, but not to exceed $124,000, if your annual income and net worth are greater than or equal to $124,000.
For example, if Investor A has an annual income of $100,000, Investor A may only invest in $5,000 in all Regulation Crowdfunding offerings in a 12-month period. If Investor B has an annual income of $45,000, then Investor B may only invest in $2,500 in all Regulation Crowdfunding offerings in a 12-month period.
Accredited Investors are not subject to the investment limits described above.
After you make an investment commitment to purchase securities, you can still change your mind and cancel your commitment until 48 hours prior to the offering deadline. When you cancel your investment commitment, you will receive a full refund, including fees, if any.
If the Issuer makes a material change to the terms of the offering you have made an investment commitment for, the issuer will provide you with an electronic notice. After receipt of such notice, you will have five (5) business days to reconfirm your investment commitment.
At Thunder Funder, we prioritize transparency and investor protection. In the event of a material change to the terms of an offering or to the information provided by the issuer, the following policy applies:
Notification:
If a material change occurs, Thunder Funder will promptly notify all investors who have made an investment commitment to the affected offering.
Automatic Cancellation:
Upon notification of a material change, your investment commitment will be automatically cancelled unless you take action to reconfirm it.
Reconfirmation Period:
You will have five (5) business days from the receipt of the material change notice to reconfirm your investment commitment.
Reconfirmation Process:
To reconfirm your investment, you must follow the instructions provided in the material change notice within the five-day period.
Failure to Reconfirm:
If you do not reconfirm your investment commitment within the five-day period, your investment will be automatically cancelled, and any funds will be returned to you.
No Action Required for Cancellation:
You do not need to take any action if you wish to cancel your investment following a material change notice. This policy ensures that you have the opportunity to reassess your investment decision in light of any significant changes to the offering or issuer information. We encourage all investors to carefully review any material change notices and make informed decisions about reconfirming their investments.
After your investment is complete, there may or may not have an ongoing relationship with the Issuer. The Issuer may raise additional funds through our Funding Portal or pay to use services provided by our affiliates.
In addition, Issuers are generally required to file an annual report with the SEC called a Form C-AR within 120 days after the end of the Issuer’s fiscal year. You can view an Issuer’s Form C-AR by visiting the Issuer’s website or by visiting the SEC’s electronic database. A Form C-AR will typically contain the same or similar information included on the Form C when you first made your investment, except the Issuer will provide updated financial statements and disclosures.
An Issuer is permitted to stop filing a Form C-AR upon if one of the following occurs:
- The Issuer has filed at least one Form C-AR and has fewer than 300 shareholders of record;
- The Issuer has filed at least three Form C-Ars and has total assets no greater than $10 million;
- The Issuer or a third-party purchaser buys all of the securities sold in the Regulation Crowdfunding offering;
- The Issuer registers its securities and is required to file reports under the Securities Exchange Act of 1934, as amended; or
- The Issuer dissolves under applicable law.
If the Issuer decides to stop filing Form C-Ars, the Issuer must file a Form C-TR with the SEC to indicate that it will stop filing its annual reports. In the event an Issuer files a Form C-TR, the Issuer will cease providing updated financial statements and disclosures to you regarding the securities you purchased via the Regulation Crowdfunding offering.
As is the case with any investment, investing in a Regulation Crowdfunding offering involves a significant amount of risk and are generally considered highly speculative. The Issuers seeking to raise capital on our platform are typically early-stage startup companies in speculative and competitive industries. Additionally, Issuers generally do not have significant operating history for you to review and may face challenges commonly associated with early-stage startup companies. As a result, there are no guarantees that you will profit from an investment made on our Platform and there is risk that you may lose your entire investment. Therefore, you should invest only in amounts that you are comfortable with losing.
Lack of liquidity; limitation on resales:
Unlike investing in publicly traded companies listed on a stock exchange that can be quickly and easily traded, an investment in securities sold under Regulation Crowdfunding is subject to resale limitations and restrictions. Your ability to resell your investment is limited and may only be sold if the transaction fits within an exception provided under Regulation Crowdfunding. As a result, you should expect to hold your investment for an indefinite period. In any event, there may not be a market available to provide liquidity and one may never exist. There is no assurance that the securities you purchase will ever be publicly tradeable.
You may only have access to limited information:
Although certain information is required to be disclosed to you when you invest in a Regulation Crowdfunding offering, many early-stage companies are only able to provide limited information about their business and operations because their businesses have only been operating for a relatively short period of time. Furthermore, the Issuers’ disclosures and filings have not been reviewed by any federal, state, or local government agency or regulator. Additionally, although Regulation Crowdfunding requires Issuers to file annual reports, an Issuer may stop filing annual reports if it is eligible. If such an event were to occur, you will not have access to financial information and material disclosures on an ongoing basis, unlike if you were to invest in a publicly traded company.
Not all Issuers will provide audited financial statements:
Not all Issuers offering securities on our platform are required under Regulation Crowdfunding to provide you with audited financials. In some cases, the financial statements available to you may not be audited or reviewed by third-party independent public accountants. If you decide to invest in an offering, your decision will be based, in part, on financial information provided by the Issuer which may not completely or accurately represent the financial condition of the Issuer.
Limited voting rights; minority interest:
The securities offered by Issuers on the Platform typically do not provide you with voting rights. As a result, you will not have a vote on certain corporate matters such as whether the Issuer can raise additional funds that may dilute your equity interest. In some circumstances, you may be required to vote with in the same manner as the majority equity owner or vote via proxy to a pre-determined third-party.
No institutional or professional investors:
Many companies have found success as a result of guidance received from venture capital firms and other institutional investors. These investors often invest early and even participate on the Issuer’s board of directors, playing a significant role in the Issuer’s early-stage development. An early-stage company that raises capital under Regulation Crowdfunding may not have the same benefits as a startup receives that raises capital from institutional and professional investors and advisors.
Tax Risks:
There are certain tax issues and risks relating to investing in Regulation Crowdfunding you should consider before participating in an offering. You should consult your tax advisors for information and to learn more about the potential tax consequences involved prior to making an investment on the platform.
Need more help? Please contact us at support@thunderfunder.com
The amount you’re able to invest on Thunder Funder largely depends on the type of offering and whether you are an accredited investor.
Accredited Investor? No Limits Here!
If you are an accredited investor, you can enjoy limitless investing on most of our offerings. Simply verify your status on our platform-if you haven’t already- and once certified, you can freely allocate your funds across our diverse opportunities. Do keep in mind that your accreditation status may be subject to random audits. We urge honesty in self-certifying to maintain the integrity of your investments and our community.
For the Non-Accredited Investor
Most of our community consists of non-accredited investors. If this includes you, here’s how your investment capacity shapes up under Regulation Crowdfunding (Reg CF):
Basic Allowance:
Everyone can invest at least $2,500.
Earning or Owning Less than $124,000:
You can invest up to 5% of either your annual income or your net worth, whichever is higher.
Earning and Owning $124,000 or More:
You may invest up to 10% of the greater of your annual income or net worth, up to a maximum of $124,000 annually.
Remember, these limits apply across all your Reg CF investments, whether on Thunder Funder or elsewhere. It’s crucial to keep us updated on your other crowdfunding investments to ensure you remain within legal limits.
Why It Matters:
Providing accurate and honest information about your financial status and investment history is crucial. Any discrepancies can lead to investment reversals and restrictions on your account so it is essential to maintain transparency.
Nope! Thunder Funder allows investors from outside the United States to participate in offerings on our platform. However, there are some important considerations:
1. Each campaign on Thunder Funder may have different terms regarding who can invest. Always check the specific offering documents for details on eligible jurisdictions.
2. International investors may have additional payment options available, such as credit/debit cards or wire transfers. These options can vary by offering.
3. If you’re investing from outside the U.S., it’s your responsibility to comply with all relevant laws and regulations in your home country. This includes obtaining any necessary governmental approvals or meeting other legal requirements.
4. Each issuer on Thunder Funder reserves the right to accept or deny investments from foreign purchasers at their discretion.
5. Thunder Funder and its issuers comply with all applicable U.S. securities laws and regulations. International investors should consult with legal and financial advisors in their home country to ensure compliance with local laws.
We encourage all investors, both domestic and international, to carefully review the offering documents and consider the risks before investing.
Yes, at Thunder Funder, each company has the discretion to decline any investment commitment, either in full or partially, at any point until the funds are transferred from the escrow account. Should your investment not move forward, rest assured, the entire amount will be promptly returned to you. This ensures that every financial engagement aligns perfectly with both the investor’s and the founder’s expectations.
The term “accredited investor” represents a specific group of individuals and entities defined by the U.S. Securities and Exchange Commission (SEC) Rule 501, effective as of March 15, 2021.
Here’s a breakdown of what qualifies someone or an entity as an accredited investor:
For Individual Investors:
- Net Worth: Individuals with a net worth exceeding $1,000,000 excluding the value of the primary residence.
- Income: Those with an annual income over $200,000, or $300,000 together with a spouse, consistently over the last two years, with the expectation of the same or higher income in the current year.
- Professional Licenses: Holders in good standing of specific FINRA licenses, namely Series 7, Series 65, or Series 82.
For Entities:
- Asset-Heavy Organizations: Trusts, partnerships, or LLCs with assets over $5,000,000 not specifically formed to acquire the offered securities, directed by a sophisticated person.
- All-Accredited Ownership: Entities where every equity owner is an accredited investor.
- Family Offices: Offices managing assets of at least $5 million, including their family clients.
- Spousal Equivalence: Allows spousal equivalents to combine their finances to qualify as accredited investors.
- Specialized Entities: Other entities as defined under Rule 501.
Investment Opportunities and Limits:
- Accredited Investors: Those who meet these criteria can invest in opportunities typically not available to non accredited investors without any imposed limits, subject to providing proof of accreditation upon request or during audits.
- Non-Accredited Investors: Can engage in Reg CF and Reg A+ offerings but are subject to Investment limits based on their financial circumstances.
- Verification: While Reg CF and Reg A+ investments do not typically require accreditation verification, Reg D offerings do.
At Thunder Funder, whether you are an accredited or non-accredited investor, a world of possibilities awaits. Our platform is designed to facilitate seamless investment opportunities, keeping transparency and compliance at the forefront of every transaction.
You need to make sure that you understand the criteria above and then fill out the appropriate details on your profile.
As long as you’re within the limits set by the SEC, you will be eligible to invest. Our platform records how much you have Invested through Thunderfunder and will limit you accordingly, but you have to be mindful if you have invested in deals through other platforms.
In the vibrant world of crowdfunding, the Form C is the golden ticket, the backstage pass that brings investors up close and personal with the inner workings of a startup’s campaign. This essential document is filed with the U.S. Securities and Exchange Commission (SEC) by startups who are gearing up to raise funds under the Regulation Crowdfunding (Reg CF) framework.
Think of Form C as the tell-all biography of a startup. It includes all the juicy details investors might need before they decide to commit their funds: the company’s business model, financial condition, planned use of funds, the price of the securities being offered, and the risks involved.
This form isn’t just bureaucratic paperwork, it’s a transparency tool, crafted to ensure that you, as an investor, have a clear understanding of what you’re getting into-the risks, rewards, and all the aspirations packed into the venture.
By diving into a Form C, investors step into a narrative woven with financial forecasts and strategic insights, enabling them to make informed decisions. This is where the excitement of potential meets the prudence of due diligence, ensuring every investment on Thunder Funder is made with clarity and confidence.
Yes, for all Regulation Crowdfunding (Reg CF) offerings, you can cancel your investment up to 48 hours prior to the offering’s deadline or intermediate close date. You will receive a full refund, including any fees you have incurred.
Investments can be made with dollars via an ACH transfer, Debit/Credit Card payment, and wire transfers.
As with any investment, investing in a Regulation Crowdfunding offering involves a significant amount of risk and is generally considered highly speculative. The issuers seeking to raise capital on our platform are typically early-speculative and competitive industries. Additionally, issuers generally do not have significant operating history for you to review and may face challenges commonly associated with early-stage startup companies. As a result, there are no guarantees that you will profit from an investment made on our platform, and there is risk that you may lose your entire investment. Therefore, you should invest only in amounts that you are comfortable with losing.
Reach out to us at support@thunderfunder.com and we’ll see what we can do.
Reach out to us and we will see what options are available: support@thunderfunder.com.
Simply post a question on the deal page and we’ll make sure that the founders see it.
Simply click on the “Forgotten Password” button on the Login popup and go through the simple process to reset it.
We charge a 2.1% administration fee to cover the operational costs associated with managing and maintaining the investment platform and services provided by Thunder Funder.
For example, if an investor contributes $1,000, the administration fee would be $21.
A SAFE, or Simple Agreement For Future Equity, are not immediate equity purchases. Instead, they grant the right to future equity when specific conditions are met.
The number of shares you receive upon conversion depends on your investment amount, the valuation cap, and any applicable discount rate. Conversion typically occurs during a qualified financing event, such as a priced equity round.
Key Features:
Valuation Cap: Sets a maximum valuation for converting your investment into equity.
Discount Rate: May offer a reduced price compared to future investors during conversion.
No Interest or Maturity Date: Unlike loans, SAFEs do not accrue interest or have a set repayment date.
Risks and Limitations:
1. Uncertainty of Conversion: There’s no guarantee that a qualifying event will occur, potentially leaving your investment unconverted indefinitely.
2. No Guaranteed Return: SAFEs are not loans; the company is not obligated to repay your investment.
3. Dilution Risk: Future funding rounds may dilute your potential ownership percentage.
4. Lack of Voting Rights: SAFE holders typically don’t have voting rights until conversion.
5. Company Failure Risk: If the company fails before conversion, you may lose your entire investment.
6. Liquidity Limitations: SAFEs are generally not transferable and may be subject to resale restrictions.
Investor Considerations:
– Carefully review the specific terms of each SAFE, as they can vary significantly between offerings.
– Consider how SAFEs align with your investment strategy and risk tolerance.
– Be aware of your total investment in SAFEs and other crowdfunding securities to ensure compliance with regulatory limits.
Regulatory Compliance:
– SAFEs offered through our platform comply with Regulation Crowdfunding (Reg CF) rules.
– Investment limits may apply based on your income, net worth, and accreditation status.
Before investing in a SAFE, we strongly encourage you to thoroughly review all offering documents, consider seeking professional financial advice, and carefully assess the potential risks and rewards.
Many early-stage startup companies elect to raise capital through SAFEs to reduce financing costs and to defer establishing the company’s valuation. When you purchase a SAFE, you do not purchase common stock or preferred stock. Instead, you purchase the right to future equity when a subsequent qualified financing occurs. For most SAFEs, the number of shares you will receive upon the conversion event will typically depend on the dollar amount you invest, the valuation cap, and the discount rate (if applicable). The valuation cap puts a maximum valuation at which your investment will cover into equity securities. Therefore, if and when a conversion event occurs, you will receive equity securities based on the valuation cap instead of the Issuer’s actual valuation during the conversion event. Notably, however, a SAFE is not a loan. Therefore, the Issuer is not obligated to pay the investment amount back and the SAFE does not earn you interest or have a maturity date.