seriesOne is a crowdfinance platform designed to liberate corporate finance from the big banks and corporate elites that have historically dominated the space. What this means for businesses and entrepreneurs is easier access to capital. It means giving investors greater access to investment opportunities, particularly in innovative private companies that were historically available only to a limited group of investors. And it means expanding financing and transaction options for both. seriesOne enables businesses and entrepreneurs to raise money through digital security offerings using blockchain technologies, as well as through traditional equity and debt offerings. seriesOne also allows investors to transfer funds in the way that works best for them: via cryptocurrencies as well as credit or debit cards, ACH or wire transfers. All of this is financing unchained—a new world of freedom and opportunity for businesses, entrepreneurs, and investors. This is seriesOne.
Why invest as part of a crowd?
First and foremost, the reason to invest as part of a crowd is because corporate finance has traditionally been dominated by the big banks and large corporations, and the vast majority of investors have never had an opportunity to invest in innovative, early-stage companies. Crowdfunding, as provided by seriesOne, gives investors greater access to investment opportunities. The process is still nascent, but the seeds were planted in the aftermath of the 2008 global financial meltdown. Today, digital transformation through blockchain and other technologies — coupled with updated exemptions available under the US securities laws and the new Regulation Crowdfunding (Reg CF) rules implemented by the SEC at the end of 2016—is helping to decentralize the world of finance. This shift is creating new levels of transparency and security and new kinds of opportunities for businesses and investors without the need of intermediation by the big banks. seriesOne builds on this trend, unchaining finance to enable businesses, entrepreneurs, and investors to directly connect and interact.
How is seriesOne different from its competitors?
seriesOne has been in the crowdfunding business since 2013 and helped drive the evolution of the regulatory process that opened equity crowdfunding to all investors in 2016. We have continually refined the technology that supports equity, debt, and digital security offerings. seriesOne provides a versatile solution that is designed to help entrepreneurs conduct a regulatory compliant financing.
Why did you create seriesOne?
We created seriesOne to embrace the Jumpstart Our Business Startup Act (JOBS Act) liberation of securities crowdfinance, enabling investors to support new businesses. Start-ups and young businesses are the engine of innovation and job creation, yet banks and venture capitalists only support a small percentage of those that are deserving, and until now, the average person was shut out from investing in them. We founded the parent company to seriesOne in 2013 because we thought there was a better way to finance businesses and to enable investors to directly participate regardless of their net worth. We lobbied at the federal and state levels to help advance the JOBS Act.
Why invest in private, early-stage companies?
Early-stage companies are far more likely to fail and are much riskier investments than established companies. However, new companies are also where the greatest innovations take place, and it is the development of new companies that creates jobs and drives our economy forward. That said, you should only make this type of investment if you believe in the management team, their vision, and business model, and if you think the company has a good chance of being successful. Never invest more money than you can afford to lose without changing your lifestyle.
Is an equity investment appropriate for me?
If you can't afford to lose every dollar you invest in an offering on seriesOne, the answer is no. Investments are not liquid, and you may have to wait many years before you see a return or can sell your investment. You might have a strong belief in the future success of a company, but it's safer to think of an equity investment more like a lottery ticket that might pay off in the very long term. Unlike investments in stable mature companies whose equity trades on public exchanges, investment outcomes in early stage companies are much more binary (i.e., complete failure or wild success), and there is no liquid market or exchange that will allow you to easily re-sell your private investment stake to someone else, and you may have to wait until the company is acquired or prepares for an IPO to see any return on investment.
Is a debt investment appropriate for me?
Compared to equity investments, loans can be slightly less risky, but they also have less of an upside. You should still assume that any loan may not be paid back. Never invest more than you can afford to lose.
Just how risky are early-stage companies?
You should not allocate more than a few percentage points of your investment portfolio to this investment class. You should never invest so much that it would impact your lifestyle or retirement plans if your entire investment is lost. Every investment listed on seriesOne is much riskier than an investment in a publicly listed company on the stock market.
How can I decrease the risk?
You can potentially reduce some of your risk exposure by diversifying your investments, focusing on areas where you have expertise, and investing in companies whose products and/or services you are a passionate user of. Even professional investors often find it difficult to predict exactly how startups will earn money in the future (e.g., Amazon in 1999). Investing in what you know and find personally valuable is an important signal of a promising investment.
How many investments should I make?
Diversify your risk. We recommend making a few small investments each year, rather than one large one. You should never invest more than you can afford to lose.
Can I easily re-sell my investment?
It's safest to assume you cannot resell your investment to another investor. First, there is not yet a liquid secondary market like the New York Stock Exchange for unregistered equity in privately held companies. Second, as required by federal and state securities laws, almost every security offered through the seriesOne portal is restricted from being resold by applicable securities regulations and the terms of your contract. Third, Regulation Crowdfunding expressly prohibits the resale of any securities for at least one year, except to the issuer, an accredited investor, a family member or their trust.
Will my equity investment have voting rights?
It is rare for a company that posted an offering on seriesOne to offer voting rights directly to smaller investors because founders often fear that a large investor base will deter venture capitalists who invest in later rounds, due to the hassle of collecting thousands of signatures. You should assume your investment does not include voting rights, unless specified otherwise.
Will my equity ownership be diluted?
Yes. An equity stake will almost certainly be diluted. Successful, growing companies typically host multiple series of financings, potentially all the way to an IPO. For each round of financing, the company issues additional stock to the new investors. As long as the value of the company increases with each funding round, this is healthy and normal. In addition to the dilution via an increase of capital, there are also other mechanisms used in future investment rounds, such as liquidation preferences, that may further dilute your investment. Sometimes, when things are not going well, a company will be given the option of declaring bankruptcy or raising additional money in a "down round," which means the value of the company has decreased since the last financing. This is very bad for both the founders and past investors because the dilution happens much more rapidly, but such dilution is preferable to the company going bankrupt and the investors losing everything.
What happens in the case of default if the investment is a loan?
A business loan under seriesOne loan documents is considered in “Default” when the borrower has failed to make payments for 121 or more days. The loan becomes a “Charged Off” when there is no longer a reasonable expectation of further payments. Charge-offs occurs no later than when a loan is 160 days past due or 30 days after the default status is reached. seriesOne will not pursue repayment of a loan once it has been declared as charged off. Investors will no longer receive principal and interest payments. However, investors may seek to recover the remaining principal investment and past due interest from the borrower directly.
What rights will holders of a Digital Securities have?
A Digital Securities may be characterized as either debt or equity under the securities laws. We treat them as investment contracts and require companies with offerings posted on our website to comply with all applicable securities laws. Investors will receive an interest in the profits or losses of the company offering the digital securities. Any profit that you may receive on your holdings of Digital Securities may be based on the commercial utility of the tokens, or on potential capital appreciation associated with the tokens to the extent realizable through trading activity.
What are the risks of a Digital Securities?
Transactions in the Digital Securities may be irreversible, and, accordingly, a purchaser of the Digital Securities may lose all of his or her investment in a variety of circumstances, including in connection with fraudulent or accidental transactions, technology failures in wallet software or cyber-security breaches. Losses due to fraudulent or accidental transactions may not be recoverable.
How to Invest
Which businesses should I fund?
seriesOne is a funding portal that acts as an intermediary, connecting investors with businesses that need to raise money. seriesOne does not provide advice or make recommendations about which business you should invest in. In an effort to reduce fraud, we initially screen companies before clearing them to fundraise on seriesOne, but you should conduct your own due diligence on each company to decide which prospective investments, if any, are right for you. The information regarding companies on seriesOne is provided by the companies themselves. seriesOne may assist a company in presenting this information, but we do not verify its accuracy or endorse the company. If you are going to invest in a seriesOne offering, make sure you read and understand the offering documents first.
To what extent does seriesOne assess businesses seeking loans?
Each application must meet preliminary business requirements set by seriesOne as well as legal requirements if it is offered under Regulation Crowdfunding. seriesOne considers the company’s historical financial performance, credit history (which sometimes includes personal credit histories of company officers), industry experience of key personnel, and certain indicators of the risk of the industry in which the company operates. A seriesOne risk assessment is not a guarantee of success. Investing in loans to businesses is very risky and highly speculative, and this kind of investment should not be made by anyone who cannot afford to lose their entire investment. Each investor is ultimately responsible for conducting their own independent review of company documentation and performing their own independent due diligence.
How should I conduct due diligence?
You are responsible for carefully reviewing offering documents and conducting your own independent due diligence. For example, you can check out the issuer’s website, sample its products, and seek background information on the managers. When companies are fundraising, investors are highly encouraged to ask detailed questions. If the founder or CEO gives answers that are not convincing, then you should not invest.
How much am I allowed to invest?
It depends on the regulations pursuant to which the company is fundraising. For Regulation Crowdfunding offerings, seriesOne will offer a calculator that determines your annual investment limit based on the net worth and income provided upon account opening. Investment limits are for every twelve-month period. Every investment in a Regulation Crowdfunding offering counts towards the annual limit on any crowdfunding platform. You should always track how much you invest on seriesOne and other platforms and not exceed that limit. Here are the rules for Regulation CF offerings:
Everyone can invest at least $2,200.
If either your net worth or income is below $107,000, you may legally invest a maximum of 5% of the lesser number.
If both your net worth and income are above $107,000, you may legally invest a maximum of 10% of the lesser number.
No one may invest more than $107,000. Accredited investors are subject to the same investment limitations as everyone else.
For Regulation D offerings, only Accredited Investors may invest, and there are no limits on how much they can invest. Accredited Investors are affluent: typically earning more than $200,000 per year ($300,000 if joint with spouse) or having more than $1 million in assets, not including their primary home.
How does seriesOne handle bank account or other investment account verification?
To make an investment, we need to collect the following information from you:
Personal information, such as your current address and phone number
Net worth and income information
Social Security number or government-issued identification
ABA bank routing number and checking account number
What is the minimum investment?
The minimum amount you can invest depends on the offering. Check the “Offer Details.”
Can non-U.S. citizens invest?
If you are a non-U.S. citizen, you can invest on seriesOne if you reside in the U.S. However, you must comply with your local laws if you are a non-U.S. citizen who wishes to invest from outside the U.S.
How do I invest?
Review the different companies you might be interested in investing in, and read about the business, investment terms, and related risks. You should also do your own due diligence. If you want to invest, simply click on “Invest” button on the business profile page to start the process. The system will lead you through a few easy steps to register and determine your investment limitations. Once confirmed, you can transfer funds to make your investment using a cryptocurrency, your bank ACH or wire transfer, or your credit or debit card. Your investment will be held in an escrow account until the fundraising closes. Both you and the issuer will electronically sign investment documents, and you will receive a security in the form of stock, convertible note or SAFE agreement if you have invested in an equity; you will receive a convertible loan offering, tokens or the promise of tokens through a SAFT agreement if you have invested in a digital security offering; and you will receive a promissory note if you have invested in a loan.
How do I track investments I make on seriesOne?
As a registered investor, you can sign in at any time to seriesOne.com and check your Investor Dashboard, which offers a view of all your investments. Following the closing of an offering, seriesOne has no obligation to continue a relationship with the issuer or provide investors with any information regarding the issuers or the investor’s investment.
What does it mean if I am waitlisted?
You will be placed on a waiting list if an offering receives more money than it needs or if the offering becomes oversubscribed. You can decrease your chances of being waitlisted by applying to invest early.
How long does a financing campaign stay up on seriesOne?
Each campaign has a specific duration usually ranging from several weeks to several months. It is generally up to the business owner. This information is provided in the offering documents and the “Offer Details.”
How are contracts signed?
Everything is handled electronically using RightSignature. After signing contracts on seriesOne, you will be emailed a PDF of the executed documents signed by both parties. A physical copy of your contract is also available.
Do my funds go in an escrow account?
Yes. Your investment is placed in an escrow account hosted by Prime Trust. For Regulation Crowdfunding offerings, funds are transferred to the startup only after the fundraising target has been met, and the round is closed.
How are securities delivered to me?
After an investment is successfully executed, you will receive an e-mail with your electronic contract signed by both parties. All of your contracts are always hosted on seriesOne.com on your dashboard.
How is seriesOne compensated?
Issuers pay fees to seriesOne according to the type of offering they choose, which may include a setup and/or maintenance fee and a success or subscription fee. Offerings pursuant to Regulation CF are operated by seriesOne.com and seriesOne LLC and will receive sales commissions equal to 5% of the total offering proceeds.
What is my cost?
You may be charged $5 for each investment you make to offset transaction-related costs such as compliance checks and money transfer fees.
Can I cancel my investment and get a refund?
Yes. You can change your mind at any time up to 48 hours before the fundraising closes, even if you have already signed the investment contract. You will receive a full refund, for any reason.
Can the company cancel my investment?
It is rare, but yes, a company can cancel your investment. Your investment may be canceled if your funds are still in escrow: issuers have the same cancellation rights that you have. Legally, issuers can cancel your investment for any reason. Once the fundraising round is officially closed, and the issuer has accepted the funds in the escrow account, your investment cannot be canceled.
When will the fundraising round close?
A fundraising round will close at its offering deadline. However, a round may close earlier if its funding target has been met or a minimum offering amount has been received. In this case, you will receive a notice before the close date via e-mail.
What happens if the fundraising fails?
You'll be notified via e-mail and receive a full refund of your investment, along with any administrative fees you've paid, if the fundraising fails.
What updates should I expect after investing?
seriesOne encourages companies to update their investors once per quarter, but they are under no legal obligation to do so. Regulation Crowdfunding requires that most companies issue an annual report.
Do I have direct access to the founder or CEO?
No. We do not give out their email addresses or phone numbers. All communications with founders are handled via the seriesOne website.
Will I receive an annual report?
If you are an Accredited Investor investing in Regulation D offerings, you will not receive annual reports, but you may receive periodic updates. If you are an investor in a Regulation Crowdfunding offering, the issuer will issue an annual report that includes financial statements and a discussion of its business no later than 3 months after the end of each fiscal year. Private companies have limited disclosure requirements and you may struggle to get updated and current information. Some startups that can easily raise funding from venture capitalists may decide not to file annual reports. In that case, they may not use Regulation Crowdfunding again until they file the annual report.
Will an issuer use seriesOne in the future?
There is no guarantee an issuer will continue to use seriesOne for fundraising after completing their first offering.
How can I help the businesses I invest in?
You are rooting for the businesses you invest in to succeed. You can buy their products, recommend them to friends, offer positive reviews online, and support them in a variety of other ways. Be creative.
How do I earn a return on an equity investment?
There is no guarantee you will earn any return on an equity investment. Most startups on seriesOne use a Convertible Note or Simple Agreement For Future Equity (SAFE). The Convertible Note or SAFE could convert to equity if the company raises a "qualified round" from professional investors that trigger the conversion. The value of the equity may increase with each subsequent round of financing and investors may potentially realize such increases if the company is acquired or goes public. Companies might have drag-along provisions that force you, together with all the other shareholders, to sell your equity to the acquirer in case the Company is sold. If the company has a public offering, you will be free to sell stock that is not subject to certain lock-up periods. These lock-up periods might force you to keep your stock for an additional six months or longer. Please always keep in mind that the company may be unsuccessful, it may not attract subsequent investors or buyers, and it may not be able to exit at all. You might not make any return. Remember that investing in an early stage company is always a very risky endeavor in which you might lose your investment.
How is the valuation determined when a company is sold?
Valuations are determined based upon negotiations between the parties or upon a business appraisal. There is no guarantee a company will be sold or that investors will receive a return on their investment or a return of their capital contribution.
How long until I see a return?
There is no guarantee that investors will receive a return on their investment or a return of their capital. It depends on many factors, such as the evolution of the company, its services, and products; the way the market evolves; etc. The process can take many years.
If the business is funded and I’m a lender, how do I get paid back?
If your investment is accepted, your funds will be released from escrow to the business Issuer and you will receive a promissory note. Pursuant to the note, you may be entitled to a monthly payment for the duration of the loan period directly to the bank account registered in your profile. It will be based on the loan amount and interest rate agreed to in the investment documents. The borrower may default and you may never see a return of your investment.
What happens if the business pays off its loan early?
Your investment principal will be reimbursed sooner than you anticipated and your interest earnings will cease on the day of repayment.