Frequently Asked Questions

Quick Search

Investors

  • CircleUp primarily features existing U.S. consumer products companies. Companies typically have more than $1 million in revenue for the current fiscal year. All companies have a tangible product or retail outlet that you can touch, taste, use, or visit. On CircleUp, we focus on innovative consumer products and retail brands. Specifically, we look to work with companies in the food, beverage, personal care, pet products, sporting goods, apparel, household products, retail, and restaurant industries.
  • Companies request permission to list on the CircleUp site by joining CircleUp as an entrepreneur. Company applicants should be aware that CircleUp typically lists innovative consumer and retail companies with typically at least $500,000 in revenue in the previous twelve months. We review a company’s materials and consider whether the company is a good fit for the investors on the platform. We conduct background checks on both the company and entrepreneur and perform other industry specific research. Once reviews are complete, the company may be listed on the site. Currently, a small percentage of prospective companies have been accepted.
  • It is important to read the investor documents (Step 2 of the invest process) but investors typically receive preferred shares issued directly by the company. These shares represent an ownership stake in the company. If the business is sold at some point, these shares entitle the owner to a percentage of what is earned in the sale of the business. In addition, if there is a dividend, you receive your share of the distribution. Investors holding shares of preferred stock are often paid out ahead of the holders of common stock on dividends or proceeds from a sale, up to a certain amount. When the 'preference' is equal to the amount the investor originally paid for the shares, the holders are said to have a ‘1x’ liquidation preference. In other cases, investors may receive common shares, or convertible debt in the company. The rights of these investors will differ from above. As always, please review the offerings documents carefully to understand the investment. If you have questions or concerns, be sure to consult your advisors.
  • The companies you find on CircleUp are privately held companies. Their shares are not traded on a public stock exchange like larger companies such as Apple or Procter & Gamble. As a result, the shares cannot be easily traded or sold (they are what investors call 'illiquid'). As an equity investor in a private company, you would receive a return on your investment if and when the company distributes money. If a private company distributes money, it typically does so in one of three ways: 1) It gets sold to another company or a new set of investors such as a private equity firm; 2) It pays a dividend; or 3) It is listed on a stock exchange such as the NYSE. If those things happen, then you, as an investor, are entitled to your pro-rata share of the distributions that occur. For example, if you’ve invested in a food company that is purchased by General Mills, then you would receive your portion of the money that is paid out upon the sale of the business to General Mills. The company distributes the money directly to its shareholders. It is important to know that these investments can easily last years and there is no way to predict if or when you may receive a return. Private investments are risky and an investor can lose their entire investment.
  • Many small businesses in the U.S. go out of business every year. It is difficult to know how companies will grow, what changes might occur in the market, or the many ways a company can stumble. If the company goes out of business, your shares will be worth nothing. The securities offered on the CircleUp site are not publicly traded and may not retain any value. These investments are intended to be for investors who do not have a need for a liquid investment. Companies seeking private placement investment tend to be in earlier stages of development and have not yet been fully tested in the public marketplace. Investing in private placements requires high risk tolerance, low liquidity concerns, and long-term commitments. Investors must be able to afford to lose their entire investment.
  • Federal securities law requires that securities issued by companies to their investors must be registered with the Securities and Exchange Commission (SEC) unless the offering qualifies for an exemption from registration. Registration is a complicated and expensive process, which may be prohibitive for smaller companies. One exemption from registration is available if the company offers securities only to accredited investors in a private offering. Accredited Investors are defined by the SEC in a variety of ways, including (and we are paraphrasing) as having $200,000 of annual income per individual ($300,000 per couple) with the expectation of that continuing, or if one has a net worth of more than $1 million, excluding the value of the person's primary residence. A private transaction means that there can be no general advertising or publicity about the offering while the round is open. CircleUp is a private, password-protected network for accredited investors in order to meet these guidelines. CircleUp.com is a website operated by CircleUp Network, Inc. All securities related activity is conducted through Fundme Securities LLC, a wholly owned subsidiary of CircleUp Network, Inc. Fundme Securities LLC is a registered Broker/Dealer and member FINRA/SIPC. For guidance on how the JOBS Act may impact CircleUp, please see below.
  • Issuers set the valuation of the company whereby there cannot be any assurance the valuation is accurate or in agreement with the market or industry valuations. Valuations are intended to be in line with industry comparables on a revenue and net profit basis. See metrics for CircleUp Companies.
  • Your investment is not final until the company raises enough money to meet its Investment Target. When you make your investment, the money is held securely in an independent escrow account at a major national bank. Once the Investment Target has been raised, the money is transferred to the company and you become a shareholder. If the minimum is not met, the bank will return 100% of your investment directly to you. CircleUp will never receive or hold any investor funds during the process.
  • Yes. The minimum investment is different for each investment and is set by the Company, based in part on how much capital is being raised. In Step 1 of the Investment process, you will find the minimum investment amount for that particular opportunity listed. The Company, in its sole discretion, may accept investments below the threshold set forth on the CircleUp site if consistent with its legal documents. If you have questions please contact us at investors@circleup.com
  • Yes, a limited number of investors are accepted into each deal. Historically, the Securities and Exchange Commission limited the number of investors for any non-registered security to 500 investors. Unless changed, in the future, with the JOBS Act, signed into law by President Obama on April 5th, 2012, the number of permitted shareholders will increase to 2,000.
  • In each round there is a target raise and then a maximum raise. The companies must hit the target in order to "close" on the investment. If the target raise has been reached, the company may still raise up to the maximum amount listed. If the target is not reached, the money that investors had already sent to escrow will be returned to each respective investor. The round is first come first serve.
  • Unless otherwise specified in the investment documents, companies determine the best way to keep their investor community updated on the progress of the business. We encourage all companies to provide at least annual financial reports and semi-annual narrative investor updates to their shareholders. However, unless specified otherwise in the documents, there is no requirement for the company to provide ongoing communications. The investor community may not know the most recent or current status of his/her investment. As always, when you have questions about your relationship with the company we encourage you to ask the entrepreneur or others at the company.
  • Your access to the company you invested in, and information rights, will be based on the individual equity documents found in step 2 of the invest process. We also encourage you to ask the entrepreneur for their vision of the relationship with you and the other investors. We believe that most entrepreneurs on the site see value in having a "crowd" of passionate investors. One easy way to help the company after the investment round is closed (to prevent general solicitation) is to talk about them - on Facebook, LinkedIn, Twitter, with your friends and from the mountain tops. Word of mouth marketing is critical to the success of a small consumer products company. We also encourage you to speak with the CEO and other members of the company.
  • We cannot give individual tax advice, and we encourage you to talk with your accountant or other tax advisor. Please note that most companies listed on CircleUp are C corporations. For federal income tax purposes, a C corporation is recognized as a separate taxpaying entity. A C corporation conducts business, realizes net income or loss, and pays taxes separately from shareholders.
  • President Obama signed the JOBS Act on April 5th, 2012, establishing a new legal framework for private share offerings. After a SEC rulemaking period that is expected to end at some point in 2013, crowdfunding, as defined in that Act will be permitted for all Americans. As it stands today, issuer-led offerings may be permitted through an exemption including Regulation D, Rule 506. The JOBS Act may open up exciting new possibilities for investors in the future, but presently accredited investors can participate in private offerings through existing exemptions.
  • Yes. In those cases we complete the process offline and need some additional information from you. You would need to supply the following information in order for us to complete the investment: 1) A copy of the articles of incorporation or organization of the entity that will be investing; and 2) Signed investment documents signed on behalf of the entity rather than you personally. If you would like to invest in a company on CircleUp through your entity, please email us at investors@circleup.com.
  • Yes. In that case we complete the process offline and need some additional information from you. Please supply us with the following information: 1) A copy of your photo ID or passport. 2) A copy of the signed investment documents. 3) A completed W8 form, which we will supply to you. If you would like to invest in a company on CircleUp and you're located outside the United States, please email us at investors@circleup.com.
  • Currently, not through CircleUp. However, Regulation D Rule 506(b) does allow for up to 35 unaccredited investors. Issuers should be aware that they cannot have more than 35 unaccredited investors participate in the offering. Please consult your legal counsel if you have additional questions on unaccredited investors.
  • You may receive a maximum of five messages over a 30 day period. In the subscription center (located within “Edit profile & settings”), you can unsubscribe from “Messages from new entrepreneurs.”
  • In many ways, an LLC is similar to a corporation: members of an LLC have an equity interest in the business, and his/her personal assets are separated from the debts of the company. However, investing in an LLC has significant tax implications compared to investing in a corporation. For example, an LLC provides pass-through taxation, in which the LLC's individual members are responsible for reporting and paying all taxes on the business profits that flow-through to them. Each member receives a Schedule K-1 annually from the company, reflecting his/her share of the business's profits or losses. These profits or losses must be reported on each member’s personal tax return, and each member may be liable for tax payments even if he/she has received no proceeds from the LLC. Please consult your tax advisor for other issues that may affect your investment decision.

Entrepreneurs

  • Currently, not through CircleUp. However, Regulation D Rule 506(b) does allow for up to 35 unaccredited investors. Issuers should be aware that they cannot have more than 35 unaccredited investors participate in the offering. Please consult your legal counsel if you have additional questions on unaccredited investors.
  • CircleUp focuses on branded consumer product and retail companies. Consumer product companies have a tangible product that you can touch, taste, or use and is sold on the shelf in stores or online. Retail companies typically have more than one location. Examples of consumer product industries include, but are not limited to, food and beverage, beauty and personal care, apparel and accessories, household products, pet care, consumer electronics, and retail/restaurants.
  • At CircleUp, we are solely focused on working with consumer products and retail companies-it’s all we do. Even more significantly, companies benefit greatly from being part of the CircleUp community. Many of the investors on our platform have deep experience in consumer products and growth stage companies. They are able to provide strategic guidance and support to companies on CircleUp. Additionally, these investors often act as brand champions within their own networks, building recognition and support for the companies they’ve invested in. Other benefits may include the potential of accessing value from our partners.
  • First step is to apply to list a company here so we can conduct an initial assessment and let you know our thoughts on fit. Assuming a good fit, we will reach out to learn more about your company, conduct our own diligence, and we may ask that you execute an Engagement Letter. After the Engagement Letter is executed, you will gain access to the CircleUp Hub where you can upload relevant documents and compile your profile. Once complete, the profile will be reviewed by CircleUp. After the profile is reviewed and finalized, the company will launch on the platform and begin engaging with investors.
  • Companies are permitted to raise money in the same manner they have been doing for years, through private exemptions found in the Securities Act. All securities related activity is conducted through Fundme Securities LLC, a wholly owned subsidiary of CircleUp Network, Inc. Fundme Securities LLC is a registered Broker/Dealer and member FINRA/SIPC. Most offerings on the platform are done in accordance with Rule 506 of Regulation D. This rule is considered a "safe harbor" for the private offering exemption of Section 4(2) of the Securities Act.
  • Most companies on CircleUp conduct offerings in accordance with Rule 506 of Regulation D. CircleUp supports both 506(b) and 506(c) offerings. A 506(b) offering does not permit companies to utilize general solicitation. A 506c offering permits public advertisement or general solicitation, but the sale of securities must be restricted to only accredited investors. Companies should discuss these options with their legal counsel.
  • Every situation is unique, so the time it takes to complete a financing can vary widely. Recent experience suggests, 60 to 90 days to raise the Investment Target amount once your company has been listed on CircleUp. When investors make an investment in your company, the money is held securely in an independent escrow account at BOK Financial (Bank of Oklahoma). Once your Investment Target amount has been raised, the money is available for transfer to your company. If the minimum is not met, BOK Financial (Bank of Oklahoma) will return 100% of the investment directly to investors. CircleUp will not receive or hold any investor funds during the process.
  • In order to allow CircleUp’s investor community to make investment decisions, you will be required to share some information about your company. However, you choose what summary information is shared with our entire investor community to gauge initial interest. Should investors express interest in learning more, you decide who gains access to the dealroom where additional information is stored. One exception to this is when you set “allow auto-dealroom access” for the select investors from the Raise Setup tab. The investors who are enrolled in the auto-dealroom program are selected by CircleUp based on the likelihood and size of their potential investments. You control this setting, and can change at any time. Your company’s information is only available to registered users (accredited investors) who are logged into CircleUp, and each of these users has certified that they are an accredited investor. You choose the information you would like to share.
  • As the issuer, you will set the valuation of your company. Valuations on CircleUp are intended to be in line with industry comparables on a revenue and net profit basis. See metrics for CircleUp Companies. We don’t provide advice regarding valuation, but we will assess fit with our platform based on our criteria which includes valuation expectations and many other metrics.
  • Yes. Issuers may raise money through either equity or convertible debt. To learn more about convertible note offerings click here and discuss with your attorney.
  • You choose the minimum investment amount per investor and you also control who has access to invest through the dealroom feature. Once you allow investors into the dealroom, investments are on a first come first serve basis. CircleUp can also accommodate space for offline investments.
  • You can control this by setting a minimum investment size per investor, so this will determine the maximum number of investors you will have in the round. However, investors often make investments above the minimum amount, and thus, you may have fewer investors than the maximum number.
  • Companies structure the terms of their offering, including the rights that new investors will receive. These rights are typically laid out in the Investors Rights Agreement that you choose and you create (we encourage you to discuss this with your own advisors and counsel).
  • CircleUp is committed to putting interesting consumer brands on the platform. As former consumer private equity investors, we believe future investors will recognize the quality of these companies. Given the strong community of investors on CircleUp, successfully raising funds through our platform is likely to be a significant form of social proof for your company. With the limited number of current financing options for small consumer companies, CircleUp is able to provide exciting young brands with an opportunity to raise enough capital to continue to grow their business and ultimately reach a scale that will be more attractive to new investors.
  • There is no initial charge to apply to CircleUp. If approved to be listed on the site, CircleUp will generally assess a commission based on a percentage of the total amount raised. Our commission is intended to be generally consistent with what companies pay to investment bankers in the offline world for similar size fundraising rounds.
  • No, we partner with entrepreneurs in their fundraising efforts and they may continue to raise capital from other sources.
  • CircleUp focuses on faster growing consumer and retail brands. You can read about how we select companies here. Specific industries include food, beverage, personal care, pet products, sporting goods, apparel, household products, retail, and restaurants. See the companies we helped here.
  • Entrepreneurs may consider being broad in their fundraising efforts to avoid reliance on any one investor. Upon request, we can reserve funds for offline investor conversations.
  • A company may use reservations to measure investor interest in its raise and its terms ahead of investing the time and expense to assemble deal documents for a full raise. Instead a company summarizes the offering terms for investors through a term sheet. Reservations allow investors to indicate their interest in a company’s raise by reserving a portion of it before it begins accepting investments on CircleUp. When an investor makes a reservation, they are indicating their interest to invest but this does not constitute a legally binding obligation; the investor is under no obligation to invest once they make a reservation and is able to cancel at any time. Once there is enough investor interest in the raise and a company begins accepting investments, investors are given the option of converting their reservation amount into an investment or canceling the reservation.
  • The documentation required to complete your raise is intended to leverage the documentation you would need in a fundraise outside of CircleUp. Such documents may include an overview presentation, historical and projected financials, term sheet, full purchase agreement and operating agreement, investor rights agreement and organization docs.
  • You will determine the best way to keep their investor community updated on the progress of your company. We encourage all companies who list on CircleUp to provide quarterly financial updates to their shareholders. Informed investors may be more likely to offer advice or participate in future rounds.

Circles

  • Circles are separately managed private funds that invest in companies on the platform. They are managed by an affiliate of CircleUp, CircleUp Advisors LLC, and intended to provide investors an alternative to direct investments in the companies. Investors in a “Circle” will not be direct shareholders in the company. Instead, they will own a portion of the fund and the fund will make investments on their behalf in select companies on the platform.
  • Circles are both investor led and thematic, enabling investors to access multiple investment opportunities at a lower investment minimum, with no fees for investors. Investor led Circles allow individual members of our community with industry experience to lead a Circle. These Circles are available to members of our community with no fees charged to the investor (note: if the fund invests in a company on the platform, there may be fees paid by the company to CircleUp, but not by the fund or the fund investors. These funds are not offered by a broker dealer, and operate separately from the typical capital raises you see on the platform). Lead investors will receive a portion of the investment gains, the ‘carry’, but only if there are returns provided to investors within the fund. Please make sure to read the offering documents for more details on the offers.
  • Traditional Private Equity Funds
    Generally, a traditional private equity fund is a collective investment structure used to make investments in various equity (and equity-like) securities in companies that are not traded on a public exchange. Private equity funds are typically limited partnerships with a fixed term agreement of 7-10 years, usually with options for extensions. Investors typically commit an amount of capital to the fund, and the funds are then drawn down over the initial few years of the 7-10 year period as investments are made in private companies (these are known as capital calls). Many private equity funds have a 2 and 20 fee structure, meaning that there is a 2% management fee on the funds committed that go towards the operational/administrative costs of the fund, and 20% carried interest* (link to definition below) on the fund’s profit. Of course variations on this model do exist, and these generalities don’t apply to all private equity funds.

    CircleUp Circles
    Circles are also limited partnerships, however, the fixed term agreement is 5-7 years, with a twelve-month extension. Circles are managed by CircleUp Advisors LLC, a related CircleUp entity, and CircleUp covers all administrative/operational costs for the Circles, meaning there is no management fee for investors. Some Circles will have a lead investor, who can earn 20% carried interest* (link to definition below) on the fund’s profit. Other Circles have a thematic focus, rather than following an investor. These Circles will not charge carried interest, making them “0 and 0” funds in the language of private equity funds. Unlike most Private Equity funds, Circles can also invest in a single deal — providing access to a specific investment opportunity, rather than a fund.
  • Carried interest is usually defined as a share of the fund’s profit awarded to the manager. For example, if you invest $100,000 into a private equity fund, and the fund doesn’t earn any profit but manages to retain your $100,000, you get back $100,000, less any fees charged by the fund and/or manager. Generally, for funds that charge 20% carried interest (or ‘carry’), if you invest $100,000, and the fund earns an additional $100,000 on top of your original commitment, you would receive $180,000 (your original commitment, plus 80% of the profit earned), and $20,000 would be the carried interest paid to the manager. If the fund generates a loss, there is no carried interest. Typically, the carry is paid out after investors receive their original investment back first, but it all depends on the specific structure of the fund. It is very important to read the offering documents closely, and make sure you understand the fees, and ‘waterfall’ of how proceeds are divided up if there are positive returns.
  • Yes, it is noted on the main Circles page if a Circle will invest deal-by-deal rather than in a portfolio of companies. For these Circles, investors can follow the Circle and then choose which individual deals to participate in the investment. Individual deal participation will be on a first come, first served basis.
  • Circles are initially open for non-binding reservations and commitments which are accepted on a first come, first served basis. Some Circles are on a deal-by-deal basis, meaning your reservation will reserve the right to invest in a deal presented by the Circles manager. Other Circles will be for a basket of companies. In either case, as the close date of the offering approaches, investors will be asked to sign investment paperwork and process their investment.
  • Yes, the investment minimum is set at the Circle level. You can see the minimum listed on the Circle’s information page. For deal-by-deal Circles, the minimum listed is for each investment into a company that the Circle selects.
  • In deal-by-deal Circles, you get to pick which specific companies to co-invest in. You can also stop your future commitments at any time. In a portfolio Circle, your reservation or investment will go toward all companies selected by the Circle.
  • When your Circle chooses a new deal, you will be notified and given the option to opt out of converting your commitment into a reservation. You will be able to see information on the deal and the terms to inform your decision.
  • You are agreeing to invest in the selected deals presented by the Circle lead. You can choose to leave the Circle at any time, but then you will no longer be able to see the selected deals. You can also opt out of just specific deals but, if you do that more than once, the Circle may choose to give your spot to someone else.
  • Yes, you may increase or decrease your investment in a particular deal or opt out of a deal. There also may be cases where your investment will need to be reduced based on the amount of space available in a deal. However, if you consistently lower your investment amounts or opt out, you may be removed from the Circle.
  • Circles are high-risk illiquid alternative investments, so it is possible that a loss will occur. The private companies that Circles invest in may exit at different times, making the investments profitable at different times, or sometimes not at all. If one of the companies has a successful exit (generally if it is acquired or sells additional shares at a higher valuation than that at which the fund purchased equity and the fund chooses to sell its shares), the fund will make capital distributions. The distributions will be made based on the schedule in set by the governing documents of the Circle. Generally, initial distributions will be made on a ‘pro rata’ basis – meaning capital will be sent back to investors in the same proportion as they contributed to the fund. After all investors have their initial investment repaid, distributions will be made based on the carry (if any) split. For a fund that has 20% carry, for example, 20% of the remaining proceeds will go to the lead investor, and 80% will be distributed to the investors on a pro-rata basis.
  • When the Circle realizes an exit, and funds are returned from the company to the fund, the fund will distribute the proceeds to the investors in the Circle according to their pro-rata shares.
  • The information rights will vary depending on the Circle. However, they will generally be less than when investing directly in a company. As an investor in a Circle, you will receive updates on the business from the Circle lead, not directly from the company.
  • Please email investors@circleup.com or your individual Investor Executive if you are already accredited on CircleUp and know who this is.

Compliance

  • Many small businesses in the U.S. go out of business every year. It is difficult to know how companies will grow, what changes might occur in the market, or the many ways a company can stumble. If the company goes out of business, your shares will be worth nothing. The securities offered on the CircleUp site are not publicly traded and may not retain any value. These investments are intended to be for investors who do not have a need for a liquid investment. Companies seeking private placement investment tend to be in earlier stages of development and have not yet been fully tested in the public marketplace. Investing in private placements requires high risk tolerance, low liquidity concerns, and long-term commitments. Investors must be able to afford to lose their entire investment.
  • All securities related activity is conducted through Fundme Securities LLC, a wholly owned subsidiary of CircleUp Network, Inc. Fundme Securities LLC is a registered Broker/Dealer and member FINRA/SIPC. Like traditional private placement offerings in the offline world, private companies offer securities to investors under Rule 506 of Regulation D on CircleUp and through Fundme Securities LLC. In keeping with these regulations, opportunities to invest in these companies on CircleUp are open only to accredited investors.
  • As part of the sign up process, each user must identify specific information about themselves and specify which of the accredited investor requirements he/she meets. Additionally, at this sign-up stage, each user must certify that they are an accredited investor and accept the CircleUp Terms of Use, which outline additional accredited investor and site specific information. When making an investment, each investor again represents and warrants in the signed purchase agreement that they are an accredited investor. Finally, prior to accepting any investment, Fundme Securities LLC performs additional identity checks on each investor as required by law.
  • All information regarding active investment opportunities is only intended for and accessible to accredited investors. These accredited investors signed in using their own, unique username and password. Without signing in, users and other visitors will only be able to see information regarding the CircleUp platform and closed investment opportunities. The username and password intend specifically to prevent the general public from receiving information about active capital raises. Furthermore, prior to permitting an investment in any company listed on the site, we require a prospective investor to have a pre-existing, substantive relationship with that company.
  • CircleUp is not immediately impacted by this law change because of our focus on accredited investors and the fact our offerings are permitted through an existing exemption, Rule 506 of Regulation D. Companies have been raising capital through this exemption for years and are permitted to do so independent of the new rules outlined in the JOBS Act.
  • Like private placement offerings in the offline world, each company must provide information regarding the investment opportunity to potential investors. However, under the Rule 506 exemption of Regulation D it is not necessary to present a traditional private placement memorandum. You should consult your own counsel, but key documents typically include a 20-30 page investor presentation and the appropriate legal documents. Depending on the nature of the company and the securities offered, these documents could include a purchase agreement, the company’s organizational documents, such as its certificate or articles of incorporation, an investor rights agreement, and a note (if offering convertible debt). CircleUp provides certain templates for these documents, but ultimately, these documents are the responsibility of the company and its counsel.
  • In order to assist CircleUp’s investor community in making informed investment decisions, owners are required to share some information about their company. However, this information is only available to registered users who are logged into CircleUp. As long as appropriate disclosure is made and those disclosures are true and accurate, each company chooses the exact information that is shared.
  • Each company that lists on CircleUp is able to structure the terms of its offering, including the rights that new investors will receive. These rights are typically laid out in the investor rights agreement and other legal documents. We encourage you, and you should, discuss all of these matters with your own legal counsel.
  • Currently, not through CircleUp. However, Regulation D Rule 506(b) does allow for up to 35 unaccredited investors. Issuers should be aware that they cannot have more than 35 unaccredited investors participate in the offering. Please consult your legal counsel if you have additional questions on unaccredited investors.
  • Any fund vehicles offered on CircleUp are separately managed private funds that invest in companies on the platform. These funds are managed by an affiliate of CircleUp, CircleUp Advisors LLC, and intended to provide investors an alternative to direct investments in the companies. Investors in such funds will not be direct shareholders in the company. Instead, they will own a portion of the fund and the fund will make investments on their behalf in certain companies on the platform.

Accounts Receivable

CircleUp Rights+ FAQ for Investors

CircleUp Rights+ FAQ for Entrepreneurs

Investor Rights

  • Information rights are rights describing the manner in which a company will provide investors with regular updates regarding the company’s financial information.
  • Transfer rights are the ability for an investor to sell or transfer the securities he or she holds in a company provided that such transfer is in compliance with applicable securities laws.

What impact does this have on my raise?

  • Providing these rights to investors may make your raise more attractive to potential CircleUp investors. In addition, the standardized nature of the side letter should allow for these investors to readily understand the additional rights they will be receiving.
  • CircleUp’s Investor Rights Side Letter will be included as part of your dealroom documents. Please consult with your legal counsel regarding any other necessary changes to your other deal documents.
  • CircleUp will highlight raises that include these provisions in several ways - via labels on key sections of the web site; and through marketing channels such as email announcements and the Dealflow feed.

Information Rights

Transfer Rights

Side Letter

  • The side letter is broken up in two main sections: Information Rights & Transfer Rights.
    • Information Rights: This provision grants access to Company financial information as well as management’s commentary on the current standing of the business. Needless to say, we at CircleUp believe in full transparency between company management and their investor base. Why? Open communication through a sharing of information better equips our investor base on their investments and allows them the opportunity to be informed enough to be strategic. The information rights provision outlined in the CircleUp side letter facilitates the sharing of quarterly and annual financial information in accordance with GAAP (where practicable) as well as the opportunity to reasonably request additional information in most cases.
    • Transfer Rights: Our ability to provide a path to liquidity for our investors while maintaining enough checks and balances for our entrepreneurs is of utmost importance. The transfer rights outlined in our document deliberately references a Company’s existing Right of First Refusal (if any). The transfer will occur on CircleUp and will be facilitated through our platform.
  • Our goal with our CircleUp Rights+ Program is to facilitate efficiency while providing additional order to the process. The investor rights outlined in the CircleUp side letter is written to comply with a company’s existing documents at this stage of investment.
  • CircleUp’s agreement is meant to incorporate existing investor rights already in place. We felt this was the easiest way to alleviate potential administrative burdens and to continue to facilitate management’s relationship with its investors (and potential investors). Ease and efficiency in transactions (direct or secondary) aligns with our mission of helping entrepreneurs thrive.
  • Absolutely. Legal documents change all the time and as such, we have built in the ability to change the existing side letter to comply with your investor base (existing and future).
  • The agreement may be amended or modified upon written consent and with a majority of the then-outstanding securities held by the CircleUp investors.
  • Yes the side letter is applicable to only CircleUp investors (now and in the future).