Raise Capital FAQs
By broadening your potential investor pool, you gain increased exposure and more evangelism for your company/product/service. Crowdfunding is a strategic opportunity for you engage your communities and is an excellent means to validate your product or service.
Yes. As part of Breakaway Funding’s capital raising services and in an effort to help build pre-launch interest for your company, Breakaway Funding will create a marketing page which contains a variety of non-financial information.
- 30 minute telephone or in-person interview
- Sign Agreements with Breakaway Funding:
- Formalize our working relationship.
- Verify Yourself.
- Verify your company’s legal entity and all members of the company team.
- Populate the Repository with Critical Documents:
- Investor presentation.
- Financial model summary.
- Historical financials (if applicable).
- Annual P&L projections for the next 3+ years.
- Cash flow projections for the next 12 months.
- Projected uses of funds raised.
- Articles of incorporation or certificate of incorporation.
- Upload Investment Documents:
- Term sheet.
- All financing documents and agreements (e.g., convertible note, purchase agreement, subscription agreement).
- Get published (approved) as an Issuer on Breakaway Funding.
- Connect Bank Account:
- Link your company’s bank account with our third-party escrow provider so they know where to deposit funds upon a successful capital raise.
- Show Fundraising Traction:
- Offline Traction: Raise or obtain commitments for 10% of your round size from bona-fide investors.
- Online Traction: Obtain bona-fide indications of interest for 0% of your round size from investors on Breakaway.
Note: CrowdTrade will need to confirm traction directly with both offline and online investors.
Yes and No. Who you tell depends upon which securities exemption you have chosen to raise capital under (ex. 506©; 506(b). Work with your Campaign Manager to understand in greater detail what you can and cannot say to whom and when.
How long it takes to raise the money you seek depends on a number of variables. Not all companies succeed in raising capital. Funding speed can vary widely but companies should plan for 45 -90 days to complete once your Offering has been published. Offerings will be taken off the portal after 120 days.
Investments in private securities are high-risk opportunities and these companies may not retain their value. Investing in startups and small businesses is inherently risky and standard company risk factors such as execution and strategy risk are often magnified at the early stages of a company. In the event that a company goes out of business, your ownership interest could lose all value. Furthermore, investments in private companies and startups are illiquid instruments that typically take between three and seven years (if ever) before exit.
While there are no guarantees that this strategy will reduce your risk, most investors choose to mitigate risk by practicing portfolio diversification. Investing smaller amounts across a large number of opportunities is good practice in the private markets just as it is in the public markets.
More information on the risks of investing can be found in the private placement agreements for each individual investment. Breakaway Funding has a contractual agreement with the business owners to produce financial reports, business plan updates, and more.
A comprehensive due diligence list of company information is required for each offering. Our platform consists of a standardized set of due diligence documentation, organized and easy to use. Each Issuer and their representatives are responsible for uploading these materials. Our Community Capital Team is here to assist you through this process.
Our broker-dealer, CrowdTrade, will verify that you have complied with securities regulations prior to publishing your offering. At a minimum, key documents include but are not limited to: financial statements, business plan with 5 year projections, marketing materials, organizing documents, and information on key principals of the company.
A simple 1-2 minute homemade video of the founders discussing the business, video is a dynamic success-enhancing tool. Investing is a highly personal endeavor and evaluation of the management team is part of the due diligence executed by any investor.
Depending on the type of security you are offering on the platform there may be a limit to the number and type of investors you can accept. Please consult your legal counsel for specifics.
Companies choosing to issue equity will be required to provide investors with a business valuation. A business valuation can be obtained through third-party providers. Terms of the Offering established with offline investors, who are often professional “angel” or venture capitalists, may also serve as the basis of the valuation. These terms may be extended to online investors via the Breakaway Funding portal.
Information on your company overview page and your video is available to the public. By design, we encourage social and public evaluation of your company’s content. However, only those prospective investors who are legally eligible to invest and who have completed our investor registration process will have access to your due diligence package.
Yes. Issuers set investment minimums during the funding round setup process.
Each company will decide in advance of publication the terms and condition in the event of over-subscription.
Your capitalization table (“cap table”) is a record of all the major shareholders of your company, along with their pro-rata ownership share of all the securities issued by your company (debt or equity share, preferred shares and options). The table uses these details to show ownership stakes on a fully diluted basis, thereby enabling the company’s overall capital structure to be ascertained at a glance.
You should update your investors often enough to make them feel informed and included in how your company is growing and performing, but no less than annually. Breakaway’s Investor Relations Services program is designed to keep investors informed while you focus on running your businesses.
They may — and you will need to ensure that your communications with prospective investors in done in full compliance with securities and exchange regulation. The best way to ensure compliance is to ask the investor to direct their questions and inquiry through the Breakaway Funding Platform. On the platform a licensed security professional will answer questions related to your offering, and will moderate the communication between you and prospective investors.
Depending upon which securities exemption you elect for your offering, you may be able offer securities to and accept investments from unaccredited investors today. Please check with a securities lawyer for more information and help you define the parameters of your offering.
Based on regulations, eligibility, and your directions, a licensed securities professional will authorize a specific investment from a specific investor. The securities professional will be using the material collected on the Breakaway Funding from the investor using the Breakaway Funding investor application.
It depends. Rights of investors are typically provided for in your company’s bylaws and the subscription agreement.
Fees and costs are determined by a variety of factors. Please contact us for more information toll Free: (844) 871-3400.
Yes. Some companies are not ready to raise capital and need to work with other third-party professionals before beginning the capital raising process. There are also a number of other circumstances that may preclude us from approving an application such as a criminal record (company founder); inability to verify your identity; the company is not a for-profit organization; the company is not registered as a US Corporation; or it’s in violation of certain underwriting criteria (i.e. pornography, guns, illegal activities).
What Breakaway Funding Portal DOES NOT:
- Provide investment advice or make recommendations;
- Solicit purchases, sales, or offers to buy the securities offered or displayed on its website or portal;
- Hold, manage, possess, or otherwise handle investor funds or securities; or;
- Engage in any other activities the SEC prohibits in its crowdfunding rulemaking;
- Compensate promoters, finders, or lead generators for providing the intermediary with the personal identifying information of any potential investor;
- Allow its directors, officers, or partners (or any person occupying a similar status or performing a similar function) to have a financial interest in any issuer using the services of the intermediary.