Network Fundraising - Frequently Asked Questions
- How does the Steward Platform help farmers raise money?
- What exactly am I selling?
- What are “Regulation D” and “private placements” all about?
- Can I advertise this offering?
- How much can I raise?
- Who can invest in my offering?
- Can non-accredited investors invest in my offering?
- How long does it take?
- What are the costs involved?
- How is funding structured?
- What documents are involved in an offering?
How does the Steward Platform help farmers raise money?
Steward Technologies’ private platform hosts offerings of securities and provides a place for all of the required documents to be hosted, and provides the infrastructure for accepting payment from your investors, getting the necessary documents signed, and transferring money to you.
What exactly am I selling?
You’re selling “securities”, which on Steward will typically be debt issued by your company. Selling “debt” means issuing promissory notes to qualified investors wherein you promise to repay the debt in the future at a specified rate of return.
What are “Regulation D” and “private placements” all about?
The general rule is anyone selling securities must register those securities and that sale with the Securities and Exchange Commission, or the “SEC”. However, the law provides some exemptions from this registration requirement. One of the most commonly used exemptions from registration is what is usually referred to as Regulation D, or simply, “Reg D”. Under this regulation, there are several ways to sell securities so that your offering does not have to be registered with the SEC. Most offerings hosted on Steward's platform will be conducted pursuant to what is known as Rule 506(b).
This rule provides an exemption to the registration requirements but has several different components, and each must be complied with in order to qualify for the exemption. These are:
- No advertising. This is a private placement, meaning you cannot advertise this offering on social media, on your website, at a farmer’s market, or anywhere else.
- You can only sell to accredited investors, with whom
- You have a substantial, pre-existing relationship
Can I advertise this offering?
No. This is a “private” placement of securities with a specific kind of investor. The logic behind the exemption from registration is that these aren’t securities that just anyone can invest in and aren’t being advertised.
This means that you cannot advertise your private placement on Facebook or Instagram, you cannot tweet about it on Twitter, and you can’t have a “sign up to invest” sheet at your next farmer’s market.
You are only able to communicate this offering to people with whom you have a pre-existing relationship.
How much can I raise?
Using Steward's Network Fundraising tool to raise funds with a Regulation D, 506(b) offering, there is no limit on the amount that can be raised, and you may have unlimited accredited investors.
Terms may vary if you fundraise under an alternative securities exemption. We will advise of the specific terms in these cases.
Who can invest in my offering?
There are two requirements for investors, and these are the only people with whom you should share information about your offering.
To invest, a potential investor:
- Must be accredited, or qualify for accreditation
- You, as the issuer, must have a substantive, pre-existing relationship with that investor.
The first requirement is met by an investor self-certifying that they meet the accredited investor criteria and can properly evaluate the investment and determine if it’s appropriate for them. They must be able to understand the risks of investing, and the fact that they could lose their investment.
As for the second part, you must have a substantive pre-existing relationship with that investor. Because you cannot advertise your offering, you must only talk about the investment with people you’ve known previous to the offering.
Can non-accredited investors invest in my offering?
Steward can help you prepare an offering that is available to non-accredited investors in your network, too. To accept non-accredited investors is a lengthier process, with additional legal and compliance components and requires a greater degree of input from you, as the issuer.
Allowing non-accredited investors to invest costs $199 per month, with a $499 legal documentation preparation fee. Contact us if you would like to utilize this fundraising option.
How long does it take?
Network Fundraising is very much a self-service tool, and the time frame will depend on how quickly you submit information and what you offer to investors to reserve and complete their investments.
We aim to review all submitted project pages within one working week. Legal documentation is a collaborative effort, and we'll do our best to work with the information you provide in a reasonable time frame.
What are the costs involved?
A Network Fundraising campaign starts at $99 per month after the first investment has been received. It's free to create your project page and host a reserve investment period. The monthly fee will be applied during the fundraising period and ongoing investment management.
Steward does not take a % fee on funds raised from Network Fundraising campaigns.
How is funding structured?
Typically funding is structured as an unsecured loan to be used for general business purposes and working capital, though that is not a requirement, and we can adapt to alternative funding structures (i.e. revenue share, equity, secured loans, etc.) on a case by case basis.
What documents are involved in an offering?
- Subscription Agreement. This is the document whereby an investor actually “subscribes” to the offering and specifies how much they’re investing and the rate of return.
- Promissory Note. This is a document issued by you to the investor wherein you promise to repay the loan at a specific rate of interest.
The Steward Platform can help you generate these documents by using our templates during the fundraising process.