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.
No, there are absolutely no fees for investors. Accredited investors have free access to the site. Companies pay a small commission to Fundme Securities LLC, a wholly owned subsidiary of CircleUp Network, Inc, if the investment round successfully closes. If the minimum investment amount is not raised, 100% of investment dollars committed are returned to investors.
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 US 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, US 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 firstname.lastname@example.org
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 email@example.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 firstname.lastname@example.org
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.
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