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Over $60 Million Raised on Our Platform

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Expertise

Equity crowdfunding is a new space, and we're one of the most experienced platforms. We've done the most online investments, processed the most money, we're one of the only platforms to have led an investment round, to have successful exits and to offer both early and late stage investment opportunities.

Security

We are a FINRA registered broker dealer specializing in equity. This means your money is safe with us. In fact, every single employee who deals with the customer investing – from the Founder, to our customer service reps— has their Series 7 license about equity crowdfunding, investing in startups and online investment opportunities.

Selectivity

Most equity crowdfunding platforms will take any start up they can get. We pick what we believe are the best, safest, most secure startup investment opportunities to present to investors. It's easier to get into Harvard than it is to get listed on MicroVentures (Harvard has a 7% acceptance rate, we have a 1% acceptance rate).

Due Diligence

Everyone knows that startup investing is risky. But it's currently much riskier than it needs to be since most equity crowdfunding platforms simply don't do any research or due diligence into the companies they list. MicroVentures completely rejects that idea. Every company we feature has been through multiple rounds of due diligence and professional analysis by our experienced financial team.

Customer Service

Even with all of our due diligence, startup investing is very risky. We want to help you understand if an investment is suitable for you in any way we can. In fact, we love helping investors so much, our phone number is on the site. It actually works – call it and one of our licensed brokers will pick up and talk to you about anything you want.

Access

Equity crowdfunding platforms may begin to accept non-accredited investors when the SEC publishes The JOBS Act Title III rules. However, MicroVentures has experience allowing non-accredited investors under current SEC regulations since 2011 and has proven success by accepting non-accredited investors alongside Venture Capital investments for a portfolio company that was later acquired.

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Featured In:

How We Add Value & Reduce Risk

Expertise

Equity crowdfunding is a new space, and we're one of the most experienced platforms. We've done the most online investments, processed the most money, we're one of the only platforms to have led an investment round, to have successful exits and to offer both early and late stage investment opportunities.

Security

We are a FINRA registered broker dealer specializing in equity. This means your money is safe with us. In fact, every single employee who deals with the customer investing – from the Founder, to our customer service reps— has their Series 7 license about equity crowdfunding, investing in startups and online investment opportunities.

Selectivity

Most equity crowdfunding platforms will take any start up they can get. We pick what we believe are the best, safest, most secure startup investment opportunities to present to investors. It's easier to get into Harvard than it is to get listed on MicroVentures (Harvard has a 7% acceptance rate, we have a 1% acceptance rate).

Due Diligence

Everyone knows that startup investing is risky. But it's currently much riskier than it needs to be since most equity crowdfunding platforms simply don't do any research or due diligence into the companies they list. MicroVentures completely rejects that idea. Every company we feature has been through multiple rounds of due diligence and professional analysis by our experienced financial team.

Customer Service

Even with all of our due diligence, startup investing is very risky. We want to help you understand if an investment is suitable for you in any way we can. In fact, we love helping investors so much, our phone number is on the site. It actually works – call it and one of our licensed brokers will pick up and talk to you about anything you want.

Access

Equity crowdfunding platforms may begin to accept non-accredited investors when the SEC publishes The JOBS Act Title III rules. However, MicroVentures has experience allowing non-accredited investors under current SEC regulations since 2011 and has proven success by accepting non-accredited investors alongside Venture Capital investments for a portfolio company that was later acquired.

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How MicroVentures is compensated
MicroVentures charges a commission for each Issuer. These fees can vary for each Issuer so you should reference the Form C or the offering page for each individual Issuer to get the full details.
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Types of investments offered
MicroVentures offers various types of investment opportunities based on the needs of the Issuer. That could be equity or convertible debt. Please see the risk section in the education section for Risks. For additional information, you can consult the Issuer’s Form C which can be found on the Issuer’s offering page or www.sec.gov for details on the type of security being offered and the risks associated with that security. Investments in private companies are risky. Do not invest if you cannot afford to lose your entire investment.
Investors Demo Page

Invest with MicroVentures in500 StartupsHighly diversified, early and seed stage-stage venture capital fund

The 500 Startups accelerator affords entrepreneurs and startups the opportunity to engage in a four month program with an international network of founders, mentors, and other experts. Located in San Francisco, Mountain View, and Mexico City, admission into the accelerator program is highly selective with each startup typicaly receiving a $100,000 investment. Our 500 Startups Fund is available to Accredited Investors.

  • Equity crowdfunding managed by a registered FINRA broker/dealer
  • Invest alongside experienced Angel Investors and Venture Capitalists
  • Participate with as little as $10,000

 

 

 

Join investors in 500 Startups today

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Over $50 Million Raised on Our Platform

Feburary 2012

July 2011

November 2011

September 2013

April 2013

August 2013

August 2011

January 2014

Featured In:

How We Add Value & Reduce Risk

Expertise

Equity crowdfunding is a new space, and we're one of the most experienced platforms. We've done the most online investments, processed the most money, we're one of the only platforms to have led an investment round, to have successful exits and to offer both early and late stage investment opportunities. - See more at: https://microventures.com/international-investors#sthash.x8SFjvba.dpuf

Security

We are a FINRA registered broker dealer specializing in equity. This means your money is safe with us. In fact, every single employee who deals with the customer investing – from the Founder, to our customer service reps— has their Series 7 license about equity crowdfunding, investing in startups and online investment opportunities. - See more at: https://microventures.com/international-investors#sthash.x8SFjvba.dpuf

Selectivity

Most equity crowdfunding platforms will take any start up they can get. We pick what we believe are the best, safest, most secure startup investment opportunities to present to investors. It's easier to get into Harvard than it is to get listed on MicroVentures (Harvard has a 7% acceptance rate, we have a 1% acceptance rate). - See more at: https://microventures.com/international-investors#sthash.x8SFjvba.dpuf

Due Diligence

Everyone knows that startup investing is risky. But it's currently much riskier than it needs to be since most equity crowdfunding platforms simply don't do any research or due diligence into the companies they list. MicroVentures completely rejects that idea. Every company we feature has been through multiple rounds of due diligence and professional analysis by our experienced financial team. - See more at: https://microventures.com/international-investors#sthash.x8SFjvba.dpuf

Customer Service

Even with all of our due diligence, startup investing is very risky. We want to help you understand if an investment is suitable for you in any way we can. In fact, we love helping investors so much, our phone number is on the site. It actually works – call it and one of our licensed brokers will pick up and talk to you about anything you want. - See more at: https://microventures.com/international-investors#sthash.x8SFjvba.dpuf

Access

Equity crowdfunding platforms may begin to accept non-accredited investors when the SEC publishes The JOBS Act Title III rules. However, MicroVentures has experience allowing non-accredited investors under current SEC regulations since 2011 and has proven success by accepting non-accredited investors alongside Venture Capital investments for a portfolio company that was later acquired. - See more at: https://microventures.com/international-investors#sthash.x8SFjvba.dpuf

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Can the Issuer/company or MicroVentures cancel my investment?
Yes, your investment can be cancelled by the Issuer/company before the offering is officially closed. While we don’t expect it to occur very often the issuer has the same rights as you do. The guidelines regarding the cancellation rights for a specific investment will be included in the Form C. The most common reasons for cancellation would be if you were a competitor or a Bad actor.
Is an equity investment appropriate for me?
Investing in a private company is very risky. It can take longer than 7 years for an early stage company to see an exit and even at that point they might not return capital. If you cannot afford to lose 100% of your investment, then you should not make the investment.
Information rights and communication with the issuer
Since the offering may have hundreds of investors do not expect to have the opportunity to communicate directly with the founders. After the offering is completed, MicroVentures will continue to communicate with the issuer and will attempt to obtain quarterly updates on how the issuer is doing. The issuer is not obligated to send those updates so you should not have the expectation that you will be kept in the loop on how the company is performing on a quarterly basis.
Investors
500 Startups

Invest with MicroVentures in500 StartupsHighly diversified, early and seed stage-stage venture capital fund

Join investors in 500 Startups and diversify your portfolio by participating in a fund encompassing 500 Startups' Fund III - their latest fund, Fund I Annex - a follow-on round supporting 500 Startup's initial cohort, and 500 Luchadores - 500 Startups' Latin American fund.   Highly selective admission in the accelerator program means for you a curated and supported investment in diversified startups.
  • Equity crowdfunding managed by a registered FINRA broker/dealer
  • Invest alongside experienced Angel Investors and Venture Capitalists
  • Participate with as little as $10,000
 

Join investors in 500 Startups today

SIGN UP NOW  

Over $50 Million Raised on Our Platform

August 2011

April 2013

April 2013

September 2013

February 2015

December 2013

August 2013

January 2014

Featured In:

How We Add Value & Reduce Risk

Expertise

Equity crowdfunding is a new space, and we're one of the most experienced platforms. We've done the most online investments, processed the most money, we're one of the only platforms to have led an investment round, to have successful exits and to offer both early and late stage investment opportunities.

Security

We are a FINRA registered broker dealer specializing in equity. In fact, every single employee who deals with the customer investing – from the Founder, to our customer service reps— has their Series 7 license about equity crowdfunding, investing in startups and online investment opportunities.

Selectivity

Most equity crowdfunding platforms will take any start up they can get. We pick what we believe are the best, safest, most secure startup investment opportunities to present to investors. It's easier to get into Harvard than it is to get listed on MicroVentures (Harvard has a 7% acceptance rate, we have a 1% acceptance rate).

Due Diligence

Everyone knows that startup investing is risky. But it's currently much riskier than it needs to be since most equity crowdfunding platforms simply don't do any research or due diligence into the companies they list. MicroVentures completely rejects that idea. Every company we feature has been through multiple rounds of due diligence and professional analysis by our experienced financial team.

Customer Service

Even with all of our due diligence, startup investing is very risky. We want to help you understand if an investment is suitable for you in any way we can. In fact, we love helping investors so much, our phone number is on the site. It actually works – call it and one of our licensed brokers will pick up and talk to you about anything you want.

Access

Equity crowdfunding platforms may begin to accept non-accredited investors when the SEC publishes The JOBS Act Title III rules. However, MicroVentures has experience allowing non-accredited investors under current SEC regulations since 2011 and has proven success by accepting non-accredited investors alongside Venture Capital investments for a portfolio company that was later acquired. SIGN UP
Convertible Notes

Invest withConvertible Notes

Entrepreneurs today have two options when it comes to raising money to fund their company, debt or equity. Debt is a loan which must be paid back within an agreed upon amount of time, with interest. Equity, instead, is a portion of ownership of the company in exchange for an investment. A convertible note or “convertible debt” is a hybrid funding solution (hybrid between debt and equity). Convertible notes are short-term loans which convert to equity at an agreed upon milestone or maturity date—usually a Series A round led by a VC firm. Learn more about Convertible debt through our Education Center

Learn more about convertible notes & review our offerings

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Over $50 Million Raised on Our Platform

Feburary 2012

July 2011

November 2011

September 2013

April 2013

August 2013

August 2011

January 2014

Featured In:

How We Add Value & Reduce Risk

Expertise

Equity crowdfunding is a new space, and we're one of the most experienced platforms. We've done the most online investments, processed the most money, we're one of the only platforms to have led an investment round, to have successful exits and to offer both early and late stage investment opportunities.

Security

We are a FINRA registered broker dealer specializing in equity. In fact, every single employee who deals with the customer investing – from the Founder, to our customer service reps— has their Series 7 license about equity crowdfunding, investing in startups and online investment opportunities.

Selectivity

Most equity crowdfunding platforms will take any start up they can get. We pick what we believe are the best, safest, most secure startup investment opportunities to present to investors. It's easier to get into Harvard than it is to get listed on MicroVentures (Harvard has a 7% acceptance rate, we have a 1% acceptance rate).

Due Diligence

Everyone knows that startup investing is risky. But it's currently much riskier than it needs to be since most equity crowdfunding platforms simply don't do any research or due diligence into the companies they list. MicroVentures completely rejects that idea. Every company we feature has been through multiple rounds of due diligence and professional analysis by our experienced financial team.

Customer Service

Even with all of our due diligence, startup investing is very risky. We want to help you understand if an investment is suitable for you in any way we can. In fact, we love helping investors so much, our phone number is on the site. It actually works – call it and one of our licensed brokers will pick up and talk to you about anything you want.

Access

Equity crowdfunding platforms may begin to accept non-accredited investors when the SEC publishes The JOBS Act Title III rules. However, MicroVentures has experience allowing non-accredited investors under current SEC regulations since 2011 and has proven success by accepting non-accredited investors alongside Venture Capital investments for a portfolio company that was later acquired.

SIGN UP

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Over $50 Million Raised on Our Platform

Feburary 2012

July 2011

November 2011

September 2013

April 2013

August 2013

August 2011

January 2014

Featured In:

How We Add Value & Reduce Risk

Expertise

Equity crowdfunding is a new space, and we're one of the most experienced platforms. We've done the most online investments, processed the most money, we're one of the only platforms to have led an investment round, to have successful exits and to offer both early and late stage investment opportunities. - See more at: https://microventures.com/international-investors#sthash.x8SFjvba.dpuf

Security

We are a FINRA registered broker dealer specializing in equity. This means your money is safe with us. In fact, every single employee who deals with the customer investing – from the Founder, to our customer service reps— has their Series 7 license about equity crowdfunding, investing in startups and online investment opportunities. - See more at: https://microventures.com/international-investors#sthash.x8SFjvba.dpuf

Selectivity

Most equity crowdfunding platforms will take any start up they can get. We pick what we believe are the best, safest, most secure startup investment opportunities to present to investors. It's easier to get into Harvard than it is to get listed on MicroVentures (Harvard has a 7% acceptance rate, we have a 1% acceptance rate). - See more at: https://microventures.com/international-investors#sthash.x8SFjvba.dpuf

Due Diligence

Everyone knows that startup investing is risky. But it's currently much riskier than it needs to be since most equity crowdfunding platforms simply don't do any research or due diligence into the companies they list. MicroVentures completely rejects that idea. Every company we feature has been through multiple rounds of due diligence and professional analysis by our experienced financial team. - See more at: https://microventures.com/international-investors#sthash.x8SFjvba.dpuf

Customer Service

Even with all of our due diligence, startup investing is very risky. We want to help you understand if an investment is suitable for you in any way we can. In fact, we love helping investors so much, our phone number is on the site. It actually works – call it and one of our licensed brokers will pick up and talk to you about anything you want. - See more at: https://microventures.com/international-investors#sthash.x8SFjvba.dpuf

Access

Equity crowdfunding platforms may begin to accept non-accredited investors when the SEC publishes The JOBS Act Title III rules. However, MicroVentures has experience allowing non-accredited investors under current SEC regulations since 2011 and has proven success by accepting non-accredited investors alongside Venture Capital investments for a portfolio company that was later acquired. - See more at: https://microventures.com/international-investors#sthash.x8SFjvba.dpuf

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What is MicroVenture Marketplace
MicroVenture Marketplace is a FINRA registered funding portal offering opportunities under Regulation CF.
Risks of investing in "notes"
Investing in a private company is very risky. It can take longer than 7 years for an early stage company to see an exit and even at that point they might not return capital. There are many risks associated with a “note” investment. Below are a few, not an exhaustive list by any means, of the risks associated with “notes.” Promissory Notes: There is no assurance that a purchaser of a promissory note will realize a return on its investment or that it will not lose its entire investment. Additionally, the issuer may not be able to generate enough cash flow to meet their interest payment obligations and may at anytime default. Convertible Notes: There is no assurance that a purchaser of a convertible note will realize a return on its investment or that it will not lose its entire investment. Additionally, purchasers will not become equity holders until a future fundraising event, an IPO, or sale of the Company. Prior to conversion, convertible notes are susceptible to issuer default. Crowdsafe Notes: There is no assurance that a purchaser of a crowdsafe note will realize a return on its investment or that it will not lose its entire investment. Crowdsafe notes have a risk of defaulting. Additionally, purchasers will not become equity holders until the company decides to convert the Securities into Securities or until an IPO or sale of the Company. Additionally, a crowdsafe note is not a debt instrument and investors in crowdsafe notes do not have preference in a liquidation. Further, crowdsafe notes do not accrue interest.
Private Stock
Liquidity
500 Startups Mock

Invest with MicroVentures in500 StartupsHighly diversified, early and seed stage-stage venture capital fund

Join investors in 500 Startups and diversify your portfolio by participating in a fund encompassing 500 Startups' Fund III - their latest fund, Fund I Annex - a follow-on round supporting 500 Startup's initial cohort, and 500 Luchadores - 500 Startups' Latin American fund.   Highly selective admission in the accelerator program means for you a curated and supported investment in diversified startups.
  • Equity crowdfunding managed by a registered FINRA broker/dealer
  • Invest alongside experienced Angel Investors and Venture Capitalists
  • Participate with as little as $10,000
 

Join investors in 500 Startups today

SIGN UP NOW  

Over $50 Million Raised on Our Platform

August 2011

April 2013

April 2013

September 2013

February 2015

December 2013

August 2013

January 2014

Featured In:

How We Add Value & Reduce Risk

Expertise

Equity crowdfunding is a new space, and we're one of the most experienced platforms. We've done the most online investments, processed the most money, we're one of the only platforms to have led an investment round, to have successful exits and to offer both early and late stage investment opportunities.

Security

We are a FINRA registered broker dealer specializing in equity. This means your money is safe with us. In fact, every single employee who deals with the customer investing – from the Founder, to our customer service reps— has their Series 7 license about equity crowdfunding, investing in startups and online investment opportunities.

Selectivity

Most equity crowdfunding platforms will take any start up they can get. We pick what we believe are the best, safest, most secure startup investment opportunities to present to investors. It's easier to get into Harvard than it is to get listed on MicroVentures (Harvard has a 7% acceptance rate, we have a 1% acceptance rate).

Due Diligence

Everyone knows that startup investing is risky. But it's currently much riskier than it needs to be since most equity crowdfunding platforms simply don't do any research or due diligence into the companies they list. MicroVentures completely rejects that idea. Every company we feature has been through multiple rounds of due diligence and professional analysis by our experienced financial team.

Customer Service

Even with all of our due diligence, startup investing is very risky. We want to help you understand if an investment is suitable for you in any way we can. In fact, we love helping investors so much, our phone number is on the site. It actually works – call it and one of our licensed brokers will pick up and talk to you about anything you want.

Access

Equity crowdfunding platforms may begin to accept non-accredited investors when the SEC publishes The JOBS Act Title III rules. However, MicroVentures has experience allowing non-accredited investors under current SEC regulations since 2011 and has proven success by accepting non-accredited investors alongside Venture Capital investments for a portfolio company that was later acquired.

SIGN UP  
Pensco Trust Company

Invest with MicroVentures through aPENSCO Self-Directed IRA

MicroVentures is one of the only online equity crowdfunding platforms to offer individual investors access to Private Equity investment opportunities in stocks or shares. Some of our past offerings include: Facebook, Twitter, Yelp, Jawbone and Box. Our team conducts research and due diligence on Early Stage, Late Stage and Real Estate Investments to bring you high-growth private equity investment opportunities and access to shares from companies that are venture backed. No other platform has the team or resources to simultaneously offer these types of opportunities to you and help you diversify your investments including private company stock and alternative investments.  

Join today to review & invest in private equity opportunities

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Over $50 Million Raised on Our Platform

July 2011

February 2012

November 2011

September 2013

February 2015

April 2013

August 2013

January 2014

Featured In:

How We Add Value & Reduce Risk

Expertise

Equity crowdfunding is a new space, and we're one of the most experienced platforms. We've done the most online investments, processed the most money, we're one of the only platforms to have led an investment round, to have successful exits and to offer both early and late stage investment opportunities.

Security

We are a FINRA registered broker dealer specializing in equity. In fact, every single employee who deals with the customer investing – from the Founder, to our customer service reps— has their Series 7 license about equity crowdfunding, investing in startups and online investment opportunities.

Selectivity

Most equity crowdfunding platforms will take any start up they can get. We pick what we believe are the best, safest, most secure startup investment opportunities to present to investors. It's easier to get into Harvard than it is to get listed on MicroVentures (Harvard has a 7% acceptance rate, we have a 1% acceptance rate).

Due Diligence

Everyone knows that startup investing is risky. But it's currently much riskier than it needs to be since most equity crowdfunding platforms simply don't do any research or due diligence into the companies they list. MicroVentures completely rejects that idea. Every company we feature has been through multiple rounds of due diligence and professional analysis by our experienced financial team.

Customer Service

Even with all of our due diligence, startup investing is very risky. We want to help you understand if an investment is suitable for you in any way we can. In fact, we love helping investors so much, our phone number is on the site. It actually works – call it and one of our licensed brokers will pick up and talk to you about anything you want.

Access

Equity crowdfunding platforms may begin to accept non-accredited investors when the SEC publishes The JOBS Act Title III rules. However, MicroVentures has experience allowing non-accredited investors under current SEC regulations since 2011 and has proven success by accepting non-accredited investors alongside Venture Capital investments for a portfolio company that was later acquired. SIGN UP
Convertible Debt (aka Convertible Notes)
When sourcing capital for a new business venture, entrepreneurs utilize one of two basic structures: debt or equity. Debt is a capital source with a finite life and clearly defined return profile known at the initial investment. With debt financing, a company is required to pay interest throughout the term of the loan with principal repaid at maturity. Conversely, equity investors are issued shares representing ownership in an enterprise. While equity does not require repayment over a defined time period, an entrepreneur’s stake in his or her company is diluted through the issuance of equity to outside investors. Given the dynamics of early-stage companies, venture capital investors use a hybrid funding mechanism, convertible debt. Convertible debt, in the context of a venture capital financing, is a funding structure that combines the benefits of debt and equity into a single capital source. Convertible debt, usually in the form of a convertible note, is essentially a loan which converts into equity at a later date. right_rail_investA convertible note is a short-term loan with maturities ranging from 12 to 36 months. Instead of paying interest in the form of cash, which would deplete valuable resources of a young company, interest accrues until maturity or conversion. A conversion of the loan (plus accrued interest) into equity is triggered by a subsequent priced equity financing round, typically known as a Series A financing. To compensate convertible note holders for the additional risk assumed with investing at an early stage, most convertible notes feature a conversion price below that of the subsequent financing round through the use of a valuation cap or a discount on the purchase price. Importantly, a valuation cap and a discount are mutually exclusive conversion features thus cannot be applied simultaneously. The note holder will ultimately utilize the conversion feature resulting in the most advantageous purchase price. Below is a demonstration of how a convertible note functions in practice.

Convertible Note Mechanics

After conducting due diligence, an angel investor makes a $200,000 investment in NewCo, a promising young startup raising seed capital. NewCo issues the angel investor a $200,000 convertible note with a two-year maturity accruing interest at 5%. convertible note image 1The terms of the note dictate a mandatory conversion upon a subsequent Qualified Financing, defined as a financing in which NewCo raises $1 million or more. Additionally, the note includes a conversion feature that dictates a conversion price at a 20% discount to the offering price of the Qualified Financing. NewCo has experienced early user adoption and finalized its marketing strategy. In an effort to expand, NewCo is seeking $1 million in funding at a pre-money valuation of $2 million, or $1 per share, approximately one year after issuing the convertible note. The angel investor’s note, with accrued interest, is now worth $210,000, converts into equity at a price per share of $0.80. NewCo issues the angel investor 262,500 shares. Note Mechanics_2 The angel investor now has equity in the company worth $262,500 from an initial investment of $200,000, resulting in a 31.25% return. Suppose the angel investor’s note also included a pre-money valuation cap of $1.5 million in addition to a 20% discount. Upon the Qualified Financing, the note would convert at the lesser of the 20% discount or a valuation cap of $1.5 million. At an aggregate valuation of $2 million or $1 per share, applying the discount results in a $0.80 per share purchase price. However, with a valuation cap of $1.5 million, the note would convert at $0.75 per share ($1.5 million cap divided by $2 million pre-money valuation times the price per share of $1). The resulting conversion would equate to 280,000 shares, or a 40% return to the note holder. Note Mechanics_3 Invest in StartupsGet started reviewing MicroVentures investment opportunities by registering here. If you would like to learn more about Convertible Debt, read our related blog post or download our Convertible Note Whitepaper. What is Convertible Debt Equity Financing Vs. Debt Financing
Customer Relationship Summary
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Case Studies and Whitepapers

Twitter

Through MicroVentures, investors leveraged deep industry relationships and gained access to one of the most exclusive private companies, prior to its anticipated IPO. View Twitter Case Study

What is a Convertible Note?

Entrepreneurs have two options when it comes to raising money to fund their company, debt or equity. Debt is a loan which they must pay back within an agreed upon amount of time. View Convertible Note Whitepaper

MicroVentures Blog

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Frequently Asked Questions

How often will I get updates on the companies in which I invest in?

The companies that we invest in provide us with updates on a quarterly basis. We pass those updates along to our investors. These updates typically include company progress on: sales, partnerships, product changes, revenue and growth metrics, team expansion, follow-on funding, and recent press.

If I invest, for how long do I have to hold my shares for?

There is currently no market for selling your investment on the secondary market. You should plan on holding your investment until the company has an exit. If there is an emergency and you need to liquidate your investment please notify us and we will do everything we can to see if there is another buyer available but we can’t guarantee that you will be able to exit early.

How does the MicroVentures due diligence process work?

Investing in startups is risky. Therefore, we review startups with the same level of rigor as a traditional Venture Capital Firm. We screen all listing applicants using specific criteria – an evaluation of suitable risk, likelihood of profitability, willingness to give up an equity stake in exchange for capital, etc.—and select only the startups that fit a certain profile.

I am a seasoned angel investor. What now?

Please register on our platform to have access to our offerings. We perform institutional level due diligence on all the offerings listed on our site and take the first level of due diligence off investors’ plates. MicroVentures’ licensed brokers are here to provide you with excellent service and answer any questions you might have. Once you are an approved investor you can read our research, and invest at your leisure. Minimum investments are as low as $3,000 per offering and our deal flow is sourced from a variety of sectors.

What is the difference between a sophisticated & accredited investor?

The SEC defines a “sophisticated investor” as an individual who does not meet the accredited investor definition, who has investing experience, and who can make financial decisions without others’ input.

An “accredited investor” is defined by the SEC as:

  • a natural person who has individual net worth, or joint net worth with the person’s spouse, that exceeds $1 million at the time of the purchase, excluding the value of the primary residence of such person;
  • a natural person with income exceeding $200,000 in each of the two most recent years and a reasonable expectation of the same income level in the current year or joint income with a spouse exceeding $300,000 for those years and a reasonable expectation of the same income level in the current year; or
  • an entity (trust, LLC, corporation, etc.) with assets in excess of $5 million, not formed to acquire the securities offered, whose purchases a sophisticated person makes.

I’m a first time startup investor, where do I begin?

Investing in startups is risky. It is important for you to familiarize yourself with our process and become comfortable with risk prior to investing. We suggest reading the “Investors” section of our website to better understand our due diligence process and to get yourself registered with MicroVentures. Once approved, you will have access to all of our resources, the ability to review our current offerings, and the opportunity to invest in startups. From here we will continue to provide support and education to help you become an avid startup investor—so please explore and join us on LinkedIn for updates.

Convertible Notes B

Invest withConvertible Notes

Entrepreneurs today have two options when it comes to raising money to fund their company, debt or equity. Debt is a loan which must be paid back within an agreed upon amount of time, with interest. Equity, instead, is a portion of ownership of the company in exchange for an investment. A convertible note or “convertible debt” is a hybrid funding solution (hybrid between debt and equity). Convertible notes are short-term loans which convert to equity at an agreed upon milestone or maturity date—usually a Series A round led by a VC firm. Learn more about Convertible debt through our Education Center

Learn more about convertible notes & review our offerings

SIGN UP NOW

Over $50 Million Raised on Our Platform

Feburary 2012

July 2011

November 2011

September 2013

April 2013

August 2013

August 2011

January 2014

Featured In:

How We Add Value & Reduce Risk

Expertise

Equity crowdfunding is a new space, and we're one of the most experienced platforms. We've done the most online investments, processed the most money, we're one of the only platforms to have led an investment round, to have successful exits and to offer both early and late stage investment opportunities.

Security

We are a FINRA registered broker dealer specializing in equity. In fact, every single employee who deals with the customer investing – from the Founder, to our customer service reps— has their Series 7 license about equity crowdfunding, investing in startups and online investment opportunities.

Selectivity

Most equity crowdfunding platforms will take any start up they can get. We pick what we believe are the best, safest, most secure startup investment opportunities to present to investors. It's easier to get into Harvard than it is to get listed on MicroVentures (Harvard has a 7% acceptance rate, we have a 1% acceptance rate).

Due Diligence

Everyone knows that startup investing is risky. But it's currently much riskier than it needs to be since most equity crowdfunding platforms simply don't do any research or due diligence into the companies they list. MicroVentures completely rejects that idea. Every company we feature has been through multiple rounds of due diligence and professional analysis by our experienced financial team.

Customer Service

Even with all of our due diligence, startup investing is very risky. We want to help you understand if an investment is suitable for you in any way we can. In fact, we love helping investors so much, our phone number is on the site. It actually works – call it and one of our licensed brokers will pick up and talk to you about anything you want.

Access

Equity crowdfunding platforms may begin to accept non-accredited investors when the SEC publishes The JOBS Act Title III rules. However, MicroVentures has experience allowing non-accredited investors under current SEC regulations since 2011 and has proven success by accepting non-accredited investors alongside Venture Capital investments for a portfolio company that was later acquired.

SIGN UP

Convertible Notes C

Invest withConvertible Notes

Entrepreneurs today have two options when it comes to raising money to fund their company, debt or equity. Debt is a loan which must be paid back within an agreed upon amount of time, with interest. Equity, instead, is a portion of ownership of the company in exchange for an investment. A convertible note or “convertible debt” is a hybrid funding solution (hybrid between debt and equity). Convertible notes are short-term loans which convert to equity at an agreed upon milestone or maturity date—usually a Series A round led by a VC firm. Learn more about Convertible debt through our Education Center

Learn more about convertible notes & review our offerings

GET STARTED

Over $50 Million Raised on Our Platform

Feburary 2012

July 2011

November 2011

September 2013

April 2013

August 2013

August 2011

January 2014

Featured In:

How We Add Value & Reduce Risk

Expertise

Equity crowdfunding is a new space, and we're one of the most experienced platforms. We've done the most online investments, processed the most money, we're one of the only platforms to have led an investment round, to have successful exits and to offer both early and late stage investment opportunities.

Security

We are a FINRA registered broker dealer specializing in equity. In fact, every single employee who deals with the customer investing – from the Founder, to our customer service reps— has their Series 7 license about equity crowdfunding, investing in startups and online investment opportunities.

Selectivity

Most equity crowdfunding platforms will take any start up they can get. We pick what we believe are the best, safest, most secure startup investment opportunities to present to investors. It's easier to get into Harvard than it is to get listed on MicroVentures (Harvard has a 7% acceptance rate, we have a 1% acceptance rate).

Due Diligence

Everyone knows that startup investing is risky. But it's currently much riskier than it needs to be since most equity crowdfunding platforms simply don't do any research or due diligence into the companies they list. MicroVentures completely rejects that idea. Every company we feature has been through multiple rounds of due diligence and professional analysis by our experienced financial team.

Customer Service

Even with all of our due diligence, startup investing is very risky. We want to help you understand if an investment is suitable for you in any way we can. In fact, we love helping investors so much, our phone number is on the site. It actually works – call it and one of our licensed brokers will pick up and talk to you about anything you want.

Access

Equity crowdfunding platforms may begin to accept non-accredited investors when the SEC publishes The JOBS Act Title III rules. However, MicroVentures has experience allowing non-accredited investors under current SEC regulations since 2011 and has proven success by accepting non-accredited investors alongside Venture Capital investments for a portfolio company that was later acquired.

SIGN UP

Get Access to Late-Stage Private Companies
Convertible Notes D

Invest withConvertible Notes

Entrepreneurs today have two options when it comes to raising money to fund their company, debt or equity. Debt is a loan which must be paid back within an agreed upon amount of time, with interest. Equity, instead, is a portion of ownership of the company in exchange for an investment. A convertible note or “convertible debt” is a hybrid funding solution (hybrid between debt and equity). Convertible notes are short-term loans which convert to equity at an agreed upon milestone or maturity date—usually a Series A round led by a VC firm. Learn more about Convertible debt through our Education Center

Learn more about convertible notes & review our offerings

REGISTER AS AN INVESTOR

Over $50 Million Raised on Our Platform

Feburary 2012

July 2011

November 2011

September 2013

April 2013

August 2013

August 2011

January 2014

Featured In:

How We Add Value & Reduce Risk

Expertise

Equity crowdfunding is a new space, and we're one of the most experienced platforms. We've done the most online investments, processed the most money, we're one of the only platforms to have led an investment round, to have successful exits and to offer both early and late stage investment opportunities.

Security

We are a FINRA registered broker dealer specializing in equity. In fact, every single employee who deals with the customer investing – from the Founder, to our customer service reps— has their Series 7 license about equity crowdfunding, investing in startups and online investment opportunities.

Selectivity

Most equity crowdfunding platforms will take any start up they can get. We pick what we believe are the best, safest, most secure startup investment opportunities to present to investors. It's easier to get into Harvard than it is to get listed on MicroVentures (Harvard has a 7% acceptance rate, we have a 1% acceptance rate).

Due Diligence

Everyone knows that startup investing is risky. But it's currently much riskier than it needs to be since most equity crowdfunding platforms simply don't do any research or due diligence into the companies they list. MicroVentures completely rejects that idea. Every company we feature has been through multiple rounds of due diligence and professional analysis by our experienced financial team.

Customer Service

Even with all of our due diligence, startup investing is very risky. We want to help you understand if an investment is suitable for you in any way we can. In fact, we love helping investors so much, our phone number is on the site. It actually works – call it and one of our licensed brokers will pick up and talk to you about anything you want.

Access

Equity crowdfunding platforms may begin to accept non-accredited investors when the SEC publishes The JOBS Act Title III rules. However, MicroVentures has experience allowing non-accredited investors under current SEC regulations since 2011 and has proven success by accepting non-accredited investors alongside Venture Capital investments for a portfolio company that was later acquired.

SIGN UP

Offering Exclusive Investment Opportunities

MicroVentures has access to many late-stage secondary investment opportunities that are typically closed off to investors outside of institutional VCs. Our deal flow is sourced by our team and presented to our client base of new and experienced angel investors, high net-worth individuals, institutional investors, family offices, wealth managers, and Registered Investment Advisors.

Convertible Notes E

Invest withConvertible Notes

Entrepreneurs today have two options when it comes to raising money to fund their company, debt or equity. Debt is a loan which must be paid back within an agreed upon amount of time, with interest. Equity, instead, is a portion of ownership of the company in exchange for an investment. A convertible note or “convertible debt” is a hybrid funding solution (hybrid between debt and equity). Short-term loans which convert to equity at an agreed upon milestone or maturity date - usually a Series A round led by a VC firm. 

Learn more about convertible notes & review our offerings

SIGN UP NOW

Over $50 Million Raised on Our Platform

Feburary 2012

July 2011

November 2011

September 2013

April 2013

August 2013

August 2011

January 2014

Featured In:

How We Add Value & Reduce Risk

Expertise

Equity crowdfunding is a new space, and we're one of the most experienced platforms. We've done the most online investments, processed the most money, we're one of the only platforms to have led an investment round, to have successful exits and to offer both early and late stage investment opportunities.

Security

We are a FINRA registered broker dealer specializing in equity. In fact, every single employee who deals with the customer investing – from the Founder, to our customer service reps— has their Series 7 license about equity crowdfunding, investing in startups and online investment opportunities.

Selectivity

Most equity crowdfunding platforms will take any start up they can get. We pick what we believe are the best, safest, most secure startup investment opportunities to present to investors. It's easier to get into Harvard than it is to get listed on MicroVentures (Harvard has a 7% acceptance rate, we have a 1% acceptance rate).

Due Diligence

Everyone knows that startup investing is risky. But it's currently much riskier than it needs to be since most equity crowdfunding platforms simply don't do any research or due diligence into the companies they list. MicroVentures completely rejects that idea. Every company we feature has been through multiple rounds of due diligence and professional analysis by our experienced financial team.

Customer Service

Even with all of our due diligence, startup investing is very risky. We want to help you understand if an investment is suitable for you in any way we can. In fact, we love helping investors so much, our phone number is on the site. It actually works – call it and one of our licensed brokers will pick up and talk to you about anything you want.

Access

Equity crowdfunding platforms may begin to accept non-accredited investors when the SEC publishes The JOBS Act Title III rules. However, MicroVentures has experience allowing non-accredited investors under current SEC regulations since 2011 and has proven success by accepting non-accredited investors alongside Venture Capital investments for a portfolio company that was later acquired.

SIGN UP

An Experienced Broker-Dealer

MicroVenture Marketplace Inc. has the experience and platform to facilitate secondary transactions for our community of accredited investors. In the past, we have offered our investors the opportunity to purchase equity, either as direct investments or through special purpose vehicles, in late-stage companies such as Facebook, Twitter, Yelp, Pinterest, Dropbox, Nutanix, Meetup, Spotify, Palantir, Pinterest, DocuSign and The Honest Company. You can also view our full portfolio.

Convertible Notes F

Invest withConvertible Notes

Startups today have two options when it comes to raising money to fund their company: debt or equity. An equity based investment through MicroVentures secures an "ownership" of the company for your investment. A convertible note or “convertible debt” is a hybrid funding solution (hybrid between debt and equity) which convert to equity at an agreed upon milestone or maturity date. 

Learn more about convertible notes & review our offerings

SIGN UP NOW

Over $50 Million Raised on Our Platform

Feburary 2012

July 2011

November 2011

September 2013

April 2013

August 2013

August 2011

January 2014

Featured In:

How We Add Value & Reduce Risk

Expertise

Equity crowdfunding is a new space, and we're one of the most experienced platforms. We've done the most online investments, processed the most money, we're one of the only platforms to have led an investment round, to have successful exits and to offer both early and late stage investment opportunities.

Security

We are a FINRA registered broker dealer specializing in equity. In fact, every single employee who deals with the customer investing – from the Founder, to our customer service reps— has their Series 7 license about equity crowdfunding, investing in startups and online investment opportunities.

Selectivity

Most equity crowdfunding platforms will take any start up they can get. We pick what we believe are the best, safest, most secure startup investment opportunities to present to investors. It's easier to get into Harvard than it is to get listed on MicroVentures (Harvard has a 7% acceptance rate, we have a 1% acceptance rate).

Due Diligence

Everyone knows that startup investing is risky. But it's currently much riskier than it needs to be since most equity crowdfunding platforms simply don't do any research or due diligence into the companies they list. MicroVentures completely rejects that idea. Every company we feature has been through multiple rounds of due diligence and professional analysis by our experienced financial team.

Customer Service

Even with all of our due diligence, startup investing is very risky. We want to help you understand if an investment is suitable for you in any way we can. In fact, we love helping investors so much, our phone number is on the site. It actually works – call it and one of our licensed brokers will pick up and talk to you about anything you want.

Access

Equity crowdfunding platforms may begin to accept non-accredited investors when the SEC publishes The JOBS Act Title III rules. However, MicroVentures has experience allowing non-accredited investors under current SEC regulations since 2011 and has proven success by accepting non-accredited investors alongside Venture Capital investments for a portfolio company that was later acquired.

SIGN UP

Convertible Notes G

Invest withConvertible Notes

Entrepreneurs today have two options when it comes to raising money to fund their company, debt or equity. Debt is a loan which must be paid back within an agreed upon amount of time, with interest. Equity, instead, is a portion of ownership of the company in exchange for an investment. A convertible note or “convertible debt” is a hybrid funding solution (hybrid between debt and equity). Convertible notes are short-term loans which convert to equity at an agreed upon milestone or maturity date—usually a Series A round led by a VC firm. Learn more about Convertible debt through our Education Center

Considering Investing? Sign up to review our offerings

SIGN UP NOW

Over $50 Million Raised on Our Platform

Feburary 2012

July 2011

November 2011

September 2013

April 2013

August 2013

August 2011

January 2014

Featured In:

How We Add Value & Reduce Risk

Expertise

Equity crowdfunding is a new space, and we're one of the most experienced platforms. We've done the most online investments, processed the most money, we're one of the only platforms to have led an investment round, to have successful exits and to offer both early and late stage investment opportunities.

Security

We are a FINRA registered broker dealer specializing in equity. In fact, every single employee who deals with the customer investing – from the Founder, to our customer service reps— has their Series 7 license about equity crowdfunding, investing in startups and online investment opportunities.

Selectivity

Most equity crowdfunding platforms will take any start up they can get. We pick what we believe are the best, safest, most secure startup investment opportunities to present to investors. It's easier to get into Harvard than it is to get listed on MicroVentures (Harvard has a 7% acceptance rate, we have a 1% acceptance rate).

Due Diligence

Everyone knows that startup investing is risky. But it's currently much riskier than it needs to be since most equity crowdfunding platforms simply don't do any research or due diligence into the companies they list. MicroVentures completely rejects that idea. Every company we feature has been through multiple rounds of due diligence and professional analysis by our experienced financial team.

Customer Service

Even with all of our due diligence, startup investing is very risky. We want to help you understand if an investment is suitable for you in any way we can. In fact, we love helping investors so much, our phone number is on the site. It actually works – call it and one of our licensed brokers will pick up and talk to you about anything you want.

Access

Equity crowdfunding platforms may begin to accept non-accredited investors when the SEC publishes The JOBS Act Title III rules. However, MicroVentures has experience allowing non-accredited investors under current SEC regulations since 2011 and has proven success by accepting non-accredited investors alongside Venture Capital investments for a portfolio company that was later acquired.

SIGN UP

Convertible Notes H

Invest withConvertible Notes

Entrepreneurs today have two options when it comes to raising money to fund their company, debt or equity. Debt is a loan which must be paid back within an agreed upon amount of time, with interest. Equity, instead, is a portion of ownership of the company in exchange for an investment. A convertible note or “convertible debt” is a hybrid funding solution (hybrid between debt and equity). Convertible notes are short-term loans which convert to equity at an agreed upon milestone or maturity date—usually a Series A round led by a VC firm. Learn more about Convertible debt through our Education Center

Learn more about convertible notes & review our offerings

SIGN UP NOW

Over $50 Million Raised on Our Platform

Feburary 2012

July 2011

November 2011

September 2013

April 2013

August 2013

August 2011

January 2014

Featured In:

How We Add Value & Reduce Risk

Expertise

Equity crowdfunding is a new space, and we're one of the most experienced platforms. We've done the most online investments, processed the most money, we're one of the only platforms to have led an investment round, to have successful exits and to offer both early and late stage investment opportunities.

Security

We are a FINRA registered broker dealer specializing in equity. In fact, every single employee who deals with the customer investing – from the Founder, to our customer service reps— has their Series 7 license about equity crowdfunding, investing in startups and online investment opportunities.

Selectivity

Most equity crowdfunding platforms will take any start up they can get. We pick what we believe are the best, safest, most secure startup investment opportunities to present to investors. It's easier to get into Harvard than it is to get listed on MicroVentures (Harvard has a 7% acceptance rate, we have a 1% acceptance rate).

Due Diligence

Everyone knows that startup investing is risky. But it's currently much riskier than it needs to be since most equity crowdfunding platforms simply don't do any research or due diligence into the companies they list. MicroVentures completely rejects that idea. Every company we feature has been through multiple rounds of due diligence and professional analysis by our experienced financial team.

Customer Service

Even with all of our due diligence, startup investing is very risky. We want to help you understand if an investment is suitable for you in any way we can. In fact, we love helping investors so much, our phone number is on the site. It actually works – call it and one of our licensed brokers will pick up and talk to you about anything you want.

Access

Equity crowdfunding platforms may begin to accept non-accredited investors when the SEC publishes The JOBS Act Title III rules. However, MicroVentures has experience allowing non-accredited investors under current SEC regulations since 2011 and has proven success by accepting non-accredited investors alongside Venture Capital investments for a portfolio company that was later acquired.

SIGN UP

Portfolio
Accreditation
Based on the current U.S. Securities and Exchange Commission (SEC) regulations, most startup investment opportunities are available only to accredited investors. An accredited investor is defined under rules set by the SEC. You are an accredited investor if you meet one or more of the following criteria:
  1. Any bank as defined in section 3(a)(2) of the Act, or any savings and loan association or other institution as defined in section 3(a)(5)(A) of the Act whether acting in its individual or fiduciary capacity; any broker or dealer registered pursuant to section 15 of the Securities Exchange Act of 1934; any insurance company as defined in section 2(a)(13) of the Act; any investment company registered under the Investment Company Act of 1940 or a business development company as defined in section 2(a)(48) of that Act; any Small Business Investment Company licensed by the U.S. Small Business Administration under section 301(c) or (d) of the Small Business Investment Act of 1958; any plan established and maintained by a state, its political subdivisions, or any agency or instrumentality of a state or its political subdivisions, for the benefit of its employees, if such plan has total assets in excess of $5,000,000; any employee benefit plan within the meaning of the Employee Retirement Income Security Act of 1974 if the investment decision is made by a plan fiduciary, as defined in section 3(21) of such act, which is either a bank, savings and loan association, insurance company, or registered investment adviser, or if the employee benefit plan has total assets in excess of $5,000,000 or, if a self-directed plan, with investment decisions made solely by persons that are accredited investors;
  2. Any private business development company as defined in section 202(a)(22) of the Investment Advisers Act of 1940;
  3. Any organization described in section 501(c)(3) of the Internal Revenue Code, corporation, Massachusetts or similar business trust, or partnership, not formed for the specific purpose of acquiring the securities offered, with total assets in excess of $5,000,000;
  4. Any director, executive officer, or general partner of the issuer of the securities being offered or sold, or any director, executive officer, or general partner of a general partner of that issuer;
  5. Any natural person whose individual net worth, or joint net worth with that person's spouse, exceeds $1,000,000.
  6. Any natural person who had an individual income in excess of $200,000 in each of the two most recent years or joint income with that person's spouse in excess of $300,000 in each of those years and has a reasonable expectation of reaching the same income level in the current year;
  7. Any trust, with total assets in excess of $5,000,000, not formed for the specific purpose of acquiring the securities offered, whose purchase is directed by a sophisticated person as described in §230.506(b)(2)(ii); and
  8. Any entity in which all of the equity owners are accredited investors.
Invest in StartupsGet started reviewing MicroVentures investment opportunities by registering here.
About
Due Diligence
The information provided below is purely educational and is not a representation of any MicroVentures' processes. Broadly defined, due diligence is a comprehensive review or investigation of material facts in regards to an investment or transactions. Typically, buyers execute an extensive due diligence process prior to consummating the purchase of a business or investment to gain a full understanding of the both the assets being acquired as well as any liabilities or risks inherent in the business or transaction. In the context of startup investing, the goal of due diligence is to evaluate the economic viability of an idea or early stage business, and it typically occurs through multiple phases or steps. Despite investing at different points in a company’s life or specializing in investments within specific industries or markets, venture capitalists typically employ a comprehensive screening system to determine whether a company or investment is appropriate for the fund’s portfolio. A phased approach to due diligence provides investors with a structured process for evaluating each investment opportunity against standard criteria. As investors eliminate companies at various stages in the screening process, a group of over 100 prospective investments might result in one or two companies ultimately receiving an investment. Due DiligenceThe diagram here serves as an example of a due diligence process culminating in an investment decision for early and seed stage venture capital funds.

Phase I

A typical first screen involves a detailed look at the founding team, the company’s product or service, and the industry in which the company will be operating. These three criteria provide a solid foundation for the initial screening process and can help bring to light any red flags early in the review process. Founding Team: When evaluating a founding team, importance is placed on a team’s relevance to the product or market. For example, if founders have established a company to tackle problems related to DNA sequencing yet prior experience is in social media, a deeper look into the team’s motivations and understanding of its target market would be warranted. However, if the founding team is a group of scientists with experience in biomedical engineering and DNA research, a direct link can be made between the team and the product. In addition to product knowledge, background checks and interviews serve an important role in screening a founding team. Product or Service: In the initial screen, evaluation of the product or service is focused on its broad application and understanding why a certain product or service is necessary, what void is being filled by its existence, and when will broad adoption occur. Most investors conduct a product demo to confirm the product works as advertised and assess the user or customer experience. Industry: Industry analysis sets the stage for understanding a company’s target market, key demographics, existing competitors, barriers to entry, and voids the company is trying to alleviate. This analysis provides context for the remaining steps in the review process and helps investors prepare for a detailed review of the product.

Phase II

For companies that move beyond the first filter, Phase II involves a deeper evaluation of the product and the specific market the company is targeting. Product Detail: In Phase II, a company’s product is sent through an exhaustive review process with investors basically attempting to poke holes in the company’s product thesis from multiple angles. This process includes an analysis of the core technology, its scalability and adaptability, and the product roadmap and milestone timelines. A lot of attention is paid to the user experience and user interface. Questions are typically answered regarding the product’s usability, ease of adoption, any friction points, and specific use cases. In addition to experience, focus is placed on the user interface and design of the product. Investors determine whether the design is appropriate for the target market or unique relative to existing competitors. In addition to review and analysis of the core product, investors also conduct a review of the prospective business model and monetization channels. Target Market: When evaluating a company’s target market, sometimes referred to as the “total addressable market” or “TAM,” several key factors play a role. From the investor’s perspective, a target market analysis boils down to an understanding of the company’s prospective customers: demographics, propensity to spend, size of customer base, built-in network effects, employment and earnings power, and regional economic factors, among other considerations. This analysis varies between consumer and enterprise end-users as well as software or hardware products. It’s also important to review how a company measures its addressable market, which can serve as a barometer of a company’s understanding of its customers. If large variances exist between an investor’s independent analysis and a company’s depiction, further study should be done to either reconcile differences or confirm a company’s mischaracterization of its customer base.

Phase III

Phase III closes the loop on the analysis thus far, tying together the product and customer base to determine a company’s economic viability and revenue-generating capacity. Utilizing information discerned in the prior two filters, investors can properly evaluate the economic merit and commercialization of the company by combining what was learned from the product analysis, business model, and customer base. These three items, when taken together, can serve as the basis for understanding a company’s earnings power from both a single customer and aggregate market perspective. In addition to revenue generation, detailed attention is paid to a company’s cost structure to ensure appropriateness for the product. For example, a hardware company will have a higher cost structure due to expenses related to components and manufacturing relative to software companies where the bulk of expenses is typically found in salaries and wages. Ultimately, revenue generation driven by market adoption of a superior product is what will drive a given company’s success. Phase III of the due diligence process sets out to quantify this potential in an effort to initiate an investment decision.

Phase IV

The due diligence process culminates in an investment decision made after the investor has reviewed all material facts relating to a company, its product, and market. Several other investor-specific factors can influence an investment decision, including familiarity with the industry or strategic fit within a portfolio.

Why is Due Diligence Important?

Due diligence, when conducted properly, can be a time-consuming and painstaking process. However, the importance of due diligence cannot be overstated. With barriers to capital formation for startups being liberated through the JOBS Act, crowdfunding, and general growth and awareness of startup communities around the world, individual investors are overwhelmed with opportunities to put capital to work into a variety of new business ventures. Given risks inherent in startup investing, investors need to take the proper steps in evaluating investment opportunities. A rigorous due diligence process can help illuminate the risks of a given investment opportunity and assist investors in making an informed decision as to whether an investment is appropriate for his or her portfolio.   Invest in StartupsGet started reviewing MicroVentures investment opportunities by registering here.
EV1

Case Studies and Whitepapers

Twitter

Through MicroVentures, investors leveraged deep industry relationships and gained access to one of the most exclusive private companies, prior to its anticipated IPO.

View Twitter Case Study

What is a Convertible Note?

Entrepreneurs have two options when it comes to raising money to fund their company, debt or equity. Debt is a loan which they must pay back within an agreed upon amount of time.

View Convertible Note Whitepaper

MicroVentures Blog

Visit the blog

Frequently Asked Questions

How often will I get updates on the companies in which I invest in?

The companies that we invest in provide us with updates on a quarterly basis. We pass those updates along to our investors. These updates typically include company progress on: sales, partnerships, product changes, revenue and growth metrics, team expansion, follow-on funding, and recent press.

If I invest, for how long do I have to hold my shares for?

There is currently no market for selling your investment on the secondary market. You should plan on holding your investment until the company has an exit. If there is an emergency and you need to liquidate your investment please notify us and we will do everything we can to see if there is another buyer available but we can’t guarantee that you will be able to exit early.

How does the MicroVentures due diligence process work?

Investing in startups is risky. Therefore, we review startups with the same level of rigor as a traditional Venture Capital Firm. We screen all listing applicants using specific criteria – an evaluation of suitable risk, likelihood of profitability, willingness to give up an equity stake in exchange for capital, etc.—and select only the startups that fit a certain profile.

I am a seasoned angel investor. What now?

Please register on our platform to have access to our offerings. We perform institutional level due diligence on all the offerings listed on our site and take the first level of due diligence off investors’ plates. MicroVentures’ licensed brokers are here to provide you with excellent service and answer any questions you might have. Once you are an approved investor you can read our research, and invest at your leisure. Minimum investments are as low as $3,000 per offering and our deal flow is sourced from a variety of sectors.

What is the difference between a sophisticated & accredited investor?

The SEC defines a “sophisticated investor” as an individual who does not meet the accredited investor definition, who has investing experience, and who can make financial decisions without others’ input.

An “accredited investor” is defined by the SEC as:

  • a natural person who has individual net worth, or joint net worth with the person’s spouse, that exceeds $1 million at the time of the purchase, excluding the value of the primary residence of such person;
  • a natural person with income exceeding $200,000 in each of the two most recent years and a reasonable expectation of the same income level in the current year or joint income with a spouse exceeding $300,000 for those years and a reasonable expectation of the same income level in the current year; or
  • an entity (trust, LLC, corporation, etc.) with assets in excess of $5 million, not formed to acquire the securities offered, whose purchases a sophisticated person makes.

I’m a first time startup investor, where do I begin?

Investing in startups is risky. It is important for you to familiarize yourself with our process and become comfortable with risk prior to investing. We suggest reading the “Investors” section of our website to better understand our due diligence process and to get yourself registered with MicroVentures. Once approved, you will have access to all of our resources, the ability to review our current offerings, and the opportunity to invest in startups. From here we will continue to provide support and education to help you become an avid startup investor—so please explore and join us on LinkedIn for updates.

EV2

Case Studies and Whitepapers

Twitter

Through MicroVentures, investors leveraged deep industry relationships and gained access to one of the most exclusive private companies, prior to its anticipated IPO.

View Twitter Case Study

What is a Convertible Note?

Entrepreneurs have two options when it comes to raising money to fund their company, debt or equity. Debt is a loan which they must pay back within an agreed upon amount of time.

View Convertible Note Whitepaper

MicroVentures Blog

Visit the blog

Frequently Asked Questions

How often will I get updates on the companies in which I invest in?

The companies that we invest in provide us with updates on a quarterly basis. We pass those updates along to our investors. These updates typically include company progress on: sales, partnerships, product changes, revenue and growth metrics, team expansion, follow-on funding, and recent press.

If I invest, for how long do I have to hold my shares for?

There is currently no market for selling your investment on the secondary market. You should plan on holding your investment until the company has an exit. If there is an emergency and you need to liquidate your investment please notify us and we will do everything we can to see if there is another buyer available but we can’t guarantee that you will be able to exit early.

How does the MicroVentures due diligence process work?

Investing in startups is risky. Therefore, we review startups with the same level of rigor as a traditional Venture Capital Firm. We screen all listing applicants using specific criteria – an evaluation of suitable risk, likelihood of profitability, willingness to give up an equity stake in exchange for capital, etc.—and select only the startups that fit a certain profile.

I am a seasoned angel investor. What now?

Please register on our platform to have access to our offerings. We perform institutional level due diligence on all the offerings listed on our site and take the first level of due diligence off investors’ plates. MicroVentures’ licensed brokers are here to provide you with excellent service and answer any questions you might have. Once you are an approved investor you can read our research, and invest at your leisure. Minimum investments are as low as $3,000 per offering and our deal flow is sourced from a variety of sectors.

What is the difference between a sophisticated & accredited investor?

The SEC defines a “sophisticated investor” as an individual who does not meet the accredited investor definition, who has investing experience, and who can make financial decisions without others’ input.

An “accredited investor” is defined by the SEC as:

  • a natural person who has individual net worth, or joint net worth with the person’s spouse, that exceeds $1 million at the time of the purchase, excluding the value of the primary residence of such person;
  • a natural person with income exceeding $200,000 in each of the two most recent years and a reasonable expectation of the same income level in the current year or joint income with a spouse exceeding $300,000 for those years and a reasonable expectation of the same income level in the current year; or
  • an entity (trust, LLC, corporation, etc.) with assets in excess of $5 million, not formed to acquire the securities offered, whose purchases a sophisticated person makes.

I’m a first time startup investor, where do I begin?

Investing in startups is risky. It is important for you to familiarize yourself with our process and become comfortable with risk prior to investing. We suggest reading the “Investors” section of our website to better understand our due diligence process and to get yourself registered with MicroVentures. Once approved, you will have access to all of our resources, the ability to review our current offerings, and the opportunity to invest in startups. From here we will continue to provide support and education to help you become an avid startup investor—so please explore and join us on LinkedIn for updates.

EV3

Case Studies and Whitepapers

Twitter

Through MicroVentures, investors leveraged deep industry relationships and gained access to one of the most exclusive private companies, prior to its anticipated IPO.

View Twitter Case Study

What is a Convertible Note?

Entrepreneurs have two options when it comes to raising money to fund their company, debt or equity. Debt is a loan which they must pay back within an agreed upon amount of time.

View Convertible Note Whitepaper

MicroVentures Blog

Visit the blog

Frequently Asked Questions

How often will I get updates on the companies in which I invest in?

The companies that we invest in provide us with updates on a quarterly basis. We pass those updates along to our investors. These updates typically include company progress on: sales, partnerships, product changes, revenue and growth metrics, team expansion, follow-on funding, and recent press.

If I invest, for how long do I have to hold my shares for?

There is currently no market for selling your investment on the secondary market. You should plan on holding your investment until the company has an exit. If there is an emergency and you need to liquidate your investment please notify us and we will do everything we can to see if there is another buyer available but we can’t guarantee that you will be able to exit early.

How does the MicroVentures due diligence process work?

Investing in startups is risky. Therefore, we review startups with the same level of rigor as a traditional Venture Capital Firm. We screen all listing applicants using specific criteria – an evaluation of suitable risk, likelihood of profitability, willingness to give up an equity stake in exchange for capital, etc.—and select only the startups that fit a certain profile.

I am a seasoned angel investor. What now?

Please register on our platform to have access to our offerings. We perform institutional level due diligence on all the offerings listed on our site and take the first level of due diligence off investors’ plates. MicroVentures’ licensed brokers are here to provide you with excellent service and answer any questions you might have. Once you are an approved investor you can read our research, and invest at your leisure. Minimum investments are as low as $3,000 per offering and our deal flow is sourced from a variety of sectors.

What is the difference between a sophisticated & accredited investor?

The SEC defines a “sophisticated investor” as an individual who does not meet the accredited investor definition, who has investing experience, and who can make financial decisions without others’ input.

An “accredited investor” is defined by the SEC as:

  • a natural person who has individual net worth, or joint net worth with the person’s spouse, that exceeds $1 million at the time of the purchase, excluding the value of the primary residence of such person;
  • a natural person with income exceeding $200,000 in each of the two most recent years and a reasonable expectation of the same income level in the current year or joint income with a spouse exceeding $300,000 for those years and a reasonable expectation of the same income level in the current year; or
  • an entity (trust, LLC, corporation, etc.) with assets in excess of $5 million, not formed to acquire the securities offered, whose purchases a sophisticated person makes.

I’m a first time startup investor, where do I begin?

Investing in startups is risky. It is important for you to familiarize yourself with our process and become comfortable with risk prior to investing. We suggest reading the “Investors” section of our website to better understand our due diligence process and to get yourself registered with MicroVentures. Once approved, you will have access to all of our resources, the ability to review our current offerings, and the opportunity to invest in startups. From here we will continue to provide support and education to help you become an avid startup investor—so please explore and join us on LinkedIn for updates.

EV4

Case Studies and Whitepapers

Twitter

Through MicroVentures, investors leveraged deep industry relationships and gained access to one of the most exclusive private companies, prior to its anticipated IPO.

View Twitter Case Study

What is a Convertible Note?

Entrepreneurs have two options when it comes to raising money to fund their company, debt or equity. Debt is a loan which they must pay back within an agreed upon amount of time.

View Convertible Note Whitepaper

MicroVentures Blog

Visit the blog

Frequently Asked Questions

How often will I get updates on the companies in which I invest in?

The companies that we invest in provide us with updates on a quarterly basis. We pass those updates along to our investors. These updates typically include company progress on: sales, partnerships, product changes, revenue and growth metrics, team expansion, follow-on funding, and recent press.

If I invest, for how long do I have to hold my shares for?

There is currently no market for selling your investment on the secondary market. You should plan on holding your investment until the company has an exit. If there is an emergency and you need to liquidate your investment please notify us and we will do everything we can to see if there is another buyer available but we can’t guarantee that you will be able to exit early.

How does the MicroVentures due diligence process work?

Investing in startups is risky. Therefore, we review startups with the same level of rigor as a traditional Venture Capital Firm. We screen all listing applicants using specific criteria – an evaluation of suitable risk, likelihood of profitability, willingness to give up an equity stake in exchange for capital, etc.—and select only the startups that fit a certain profile.

I am a seasoned angel investor. What now?

Please register on our platform to have access to our offerings. We perform institutional level due diligence on all the offerings listed on our site and take the first level of due diligence off investors’ plates. MicroVentures’ licensed brokers are here to provide you with excellent service and answer any questions you might have. Once you are an approved investor you can read our research, and invest at your leisure. Minimum investments are as low as $3,000 per offering and our deal flow is sourced from a variety of sectors.

What is the difference between a sophisticated & accredited investor?

The SEC defines a “sophisticated investor” as an individual who does not meet the accredited investor definition, who has investing experience, and who can make financial decisions without others’ input.

An “accredited investor” is defined by the SEC as:

  • a natural person who has individual net worth, or joint net worth with the person’s spouse, that exceeds $1 million at the time of the purchase, excluding the value of the primary residence of such person;
  • a natural person with income exceeding $200,000 in each of the two most recent years and a reasonable expectation of the same income level in the current year or joint income with a spouse exceeding $300,000 for those years and a reasonable expectation of the same income level in the current year; or
  • an entity (trust, LLC, corporation, etc.) with assets in excess of $5 million, not formed to acquire the securities offered, whose purchases a sophisticated person makes.

I’m a first time startup investor, where do I begin?

Investing in startups is risky. It is important for you to familiarize yourself with our process and become comfortable with risk prior to investing. We suggest reading the “Investors” section of our website to better understand our due diligence process and to get yourself registered with MicroVentures. Once approved, you will have access to all of our resources, the ability to review our current offerings, and the opportunity to invest in startups. From here we will continue to provide support and education to help you become an avid startup investor—so please explore and join us on LinkedIn for updates.

EV5

Case Studies and Whitepapers

Twitter

Through MicroVentures, investors leveraged deep industry relationships and gained access to one of the most exclusive private companies, prior to its anticipated IPO.

View Twitter Case Study

What is a Convertible Note?

Entrepreneurs have two options when it comes to raising money to fund their company, debt or equity. Debt is a loan which they must pay back within an agreed upon amount of time.

View Convertible Note Whitepaper

MicroVentures Blog

Visit the blog

Frequently Asked Questions

How often will I get updates on the companies in which I invest in?

The companies that we invest in provide us with updates on a quarterly basis. We pass those updates along to our investors. These updates typically include company progress on: sales, partnerships, product changes, revenue and growth metrics, team expansion, follow-on funding, and recent press.

If I invest, for how long do I have to hold my shares for?

There is currently no market for selling your investment on the secondary market. You should plan on holding your investment until the company has an exit. If there is an emergency and you need to liquidate your investment please notify us and we will do everything we can to see if there is another buyer available but we can’t guarantee that you will be able to exit early.

How does the MicroVentures due diligence process work?

Investing in startups is risky. Therefore, we review startups with the same level of rigor as a traditional Venture Capital Firm. We screen all listing applicants using specific criteria – an evaluation of suitable risk, likelihood of profitability, willingness to give up an equity stake in exchange for capital, etc.—and select only the startups that fit a certain profile.

I am a seasoned angel investor. What now?

Please register on our platform to have access to our offerings. We perform institutional level due diligence on all the offerings listed on our site and take the first level of due diligence off investors’ plates. MicroVentures’ licensed brokers are here to provide you with excellent service and answer any questions you might have. Once you are an approved investor you can read our research, and invest at your leisure. Minimum investments are as low as $3,000 per offering and our deal flow is sourced from a variety of sectors.

What is the difference between a sophisticated & accredited investor?

The SEC defines a “sophisticated investor” as an individual who does not meet the accredited investor definition, who has investing experience, and who can make financial decisions without others’ input.

An “accredited investor” is defined by the SEC as:

  • a natural person who has individual net worth, or joint net worth with the person’s spouse, that exceeds $1 million at the time of the purchase, excluding the value of the primary residence of such person;
  • a natural person with income exceeding $200,000 in each of the two most recent years and a reasonable expectation of the same income level in the current year or joint income with a spouse exceeding $300,000 for those years and a reasonable expectation of the same income level in the current year; or
  • an entity (trust, LLC, corporation, etc.) with assets in excess of $5 million, not formed to acquire the securities offered, whose purchases a sophisticated person makes.

I’m a first time startup investor, where do I begin?

Investing in startups is risky. It is important for you to familiarize yourself with our process and become comfortable with risk prior to investing. We suggest reading the “Investors” section of our website to better understand our due diligence process and to get yourself registered with MicroVentures. Once approved, you will have access to all of our resources, the ability to review our current offerings, and the opportunity to invest in startups. From here we will continue to provide support and education to help you become an avid startup investor—so please explore and join us on LinkedIn for updates.

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CONSIDER NEW OPPORTUNITIES

Over $60 Million Raised on Our Platform

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How We Add Value & Reduce Risk

Expertise

Equity crowdfunding is a new space, and we're one of the most experienced platforms. We've done the most online investments, processed the most money, we're one of the only platforms to have led an investment round, to have successful exits and to offer both early and late stage investment opportunities.

Security

We are a FINRA registered broker dealer specializing in equity. This means your money is safe with us. In fact, every single employee who deals with the customer investing – from the Founder, to our customer service reps— has their Series 7 license about equity crowdfunding, investing in startups and online investment opportunities.

Selectivity

Most equity crowdfunding platforms will take any start up they can get. We pick what we believe are the best, safest, most secure startup investment opportunities to present to investors. It's easier to get into Harvard than it is to get listed on MicroVentures (Harvard has a 7% acceptance rate, we have a 1% acceptance rate).

Due Diligence

Everyone knows that startup investing is risky. But it's currently much riskier than it needs to be since most equity crowdfunding platforms simply don't do any research or due diligence into the companies they list. MicroVentures completely rejects that idea. Every company we feature has been through multiple rounds of due diligence and professional analysis by our experienced financial team.

Customer Service

Even with all of our due diligence, startup investing is very risky. We want to help you understand if an investment is suitable for you in any way we can. In fact, we love helping investors so much, our phone number is on the site. It actually works – call it and one of our licensed brokers will pick up and talk to you about anything you want.

Access

Equity crowdfunding platforms may begin to accept non-accredited investors when the SEC publishes The JOBS Act Title III rules. However, MicroVentures has experience allowing non-accredited investors under current SEC regulations since 2011 and has proven success by accepting non-accredited investors alongside Venture Capital investments for a portfolio company that was later acquired.

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Frequently Asked Questions

Investor Questions (7)

I’m a first time startup investor, where do I begin?

Investing in startups is risky. It is important for you to familiarize yourself with our process and become comfortable with risk prior to investing. We suggest reading the “Investors” section of our website to better understand our investment process and to get yourself registered with MicroVentures.  

Who is an accredited investor?

An accredited investor is defined under regulations set by the SEC. You can view the specific criteria here.  

If I invest, for how long do I have to hold my shares for?

The requirement is one year based on SEC regulations. If funding is not completed, we will return your investment. The private market is very illiquid so you should be prepared to hold your investment for a longer period of time. The average exit for a startup is 7 years from inception and can often be longer.  

When the minimum time requirement has passed, how do I sell my shares?

There is currently no market for selling your investment on the secondary market. You should plan on holding your investment until the company has an exit. If there is an emergency and you need to liquidate your investment please notify us and we will do everything we can to see if there is another buyer available but we can’t guarantee that you will be able to exit.  

What is the main difference between primary and secondary offerings

The main difference between a primary offering and a secondary offering is how the shares (stocks) are being acquired. In a primary offering, investors are purchasing shares (stocks) directly from the issuer. However, in a secondary offering, investors are purchasing shares (stocks) from sources other than the issuer (employees, former employees, or investors).  

How often will I get updates on the companies in which I invest in?

Each quarter, we ask the companies we have made primary investments in to provide us updates. If/when the company provides us with an update, we pass those along to our investors. For secondary investment opportunities, we do not have information rights and do not get quarterly updates. In an effort to keep investors up to date on current public events surrounding the company, we provide a quarterly news update.  

If I want to investment “more than the maximum” in a particular opportunity, may I?

If you want to invest a greater amount than the maximum listed on the MicroVentures platform, send your request via email to: help@microventures.com. We will make every effort to assist you.    
Equity Crowdfunding
How Equity Crowdfunding Works Crowdfunding is the process by which a large number of individuals make small monetary contributions into a single pool, ultimately funding a new venture or project. Early forms of crowdfunding can be traced back to the 17th century with popular application during the cooperative movement in the 19th and 20th centuries. Today, the Internet serves as the primary infrastructure for crowdfunding. While the basic mechanics are unchanged, crowdfunding campaigns are structured differently based on the venture or product seeking capital. The four most common crowdfunding structures include reward-based, philanthropic, debt, and equity.
  • Reward-based Crowdfunding: Individuals back tangible consumer products, various forms of art work, and other ideas in exchange for early access to products, discounts on purchases, or other incentives. Kickstarter is an example of a rewards-based crowdfunding platform.
  • Philanthropic Crowdfunding: Individuals back a charity or non-for-profit fundraiser, providing funds to further a cause or movement. Crowdrise is an example of a philanthropic crowdfunding platform.
  • Loan or Debt Crowdfunding: Also known as peer-to-peer lending, individuals provide capital to businesses or individuals in exchange for interest payments and return of principal over a defined time period, similar to a mortgage or a car loan. LendingClub is a popular loan crowdfunding platform.
  • Equity Crowdfunding: Individuals make an investment in a new business venture in exchange for common or preferred equity. MicroVentures is an equity crowdfunding platform.
  Invest in StartupsGet started reviewing MicroVentures investment opportunities by registering here.
Debt vs. Equity
Generally, capital raised for new businesses takes one of two structures: debt or equity. Debt capital is raised in the form of a loan or promissory note to be paid back at some point in the future usually with interest. Conversely, equity is issued as stock in a company, representing a form of ownership with no defined maturity date. While hybrid financial products exist, they are outside the scope of this writing.

Investing in Debt

right_rail_investIn a debt financing, there are two parties to the transaction, the debtor and the creditor. In exchange for capital, the company (debtor) will issue a loan or promissory note to the investor (creditor). The documents governing and representing the loan will outline the complete provisions of the transaction, however, there are a handful of key terms investors should understand before investing in a debt product. Principal: amount of capital originally invested in a debt product Interest rate: the percentage rate, usually quoted annually, at which interest is paid by the debtor to the creditor while the loan is outstanding Interest: the cash paid to the creditor by the debtor until loan maturity calculated as (interest rate ÷ payment frequency) * outstanding principal balance Amortization: the act of paying the principal balance over time between the issuance of the loan and loan maturity Maturity: the date at which the outstanding principal balance must be paid and returned to a creditor in full Default: failure to make timely payments of principal or interest An attractive aspect of debt financing is current income generated through interest payments over the life of the loan. Typically, interest is paid to creditors on a quarterly or monthly basis providing cash flow to investors while the principal is outstanding. Principal can be amortized, meaning paid in installments over the life of the loan, or paid in full at maturity, known as a bullet maturity. Figure 1 is a depiction of a typical amortizing cash flow stream for a three-year $500,000 loan with an interest rate of 5% and a quarterly payment frequency. Each total payment (interest plus principal) is equal while the principal balance is paid over time. This cash flow structure is similar to a mortgage or auto loan. amortizing CFFigure 2 illustrates a bullet maturity structure, showing interest only payments throughout the loan until maturity. This structure is commonly used by corporations as interest, a tax-deductible expense, is maximized. The transaction terms in Figure 1 are assumed for Figure 2. Amortizing Cash Flow Another advantage to debt from an investor’s vantage point is security. In most cases, debt sits at the very top of the capital structure and in scenarios of liquidation or bankruptcy is first to be repaid with the assets of the debtor. Debt transactions can also include security features tied to certain assets of a debtor providing an even greater level of security to creditors in the event of default or bankruptcy. Given the seniority of debt within the capital structure, the rate of return for debt investments is typically lower than its equity investment counterpart. Debt can be (and often is) a very complex financing structure. The discussion above barely scratches the surface of the mechanics of a debt investment. Other important facets of debt investments include any covenants required of the debtor, events of default, recourse, prepayment provisions, fraudulent conveyance, underlying security, and many others. Additionally, debt can take on multiple structures including but not limited to senior secured, mortgage, unsecured, convertible, zero-coupon, payment-in-kind, revolvers, floating-rate, and structured products among countless others. The most common debt product in a venture capital context is a convertible note, the properties of which we discuss extensively in our Convertible Note Whitepaper. In summary, debt investments can provide investors with current income and security not afforded to equity investors. Given the relative position in the capital structure and security surrounding debt investments, the rate of return for creditors of a given company is typically lower than the company’s equity holders. Moreover, debt investments have a finite life and an investor’s relationship with the company ends upon maturity and repayment of the debt capping the potential upside afforded to equity investments.

risk diagram

Risks of Investing in Debt

There are a number of risks involved in investing in debt instruments. The four primary risks are liquidity, inflation, interest rate, and default. Liquidity risk: is a financial risk that can occur when a given financial asset, security, or commodity cannot be traded quickly enough in the market to prevent or minimize a loss. Inflation risk: is the chance that cash flow from an investment won't be worth as much in the future because of changes in purchasing power due to inflation. Interest rate risk: is the risk that an investment's value will change due to a change in the absolute level of interest rates, in the spread between two rates, in the shape of the yield curve, or in any other interest rate relationship. Default risk: is the risk that a company may be unable to make the required payments of principal or interest and may result in the loss of some or all of the principal invested.

Investing in Equity

When an investor makes an equity investment, he or she is issued shares in exchange for capital and becomes a shareholder, or owner, of the company. There are two types of equity securities routinely used in financing new businesses: preferred and common. As owners of a company, both common and preferred shareholders have voting rights related to the board of directors, ultimately influencing control over the company’s activities and direction. While the equity portion of a publicly traded company’s capital structure will more heavily lean towards common, venture capital investors typically utilize a preferred equity structure due to certain rights and privileges afforded preferred shareholders, most notably a liquidation preference. Prior to making an investment in preferred equity it’s important to understand the additional features attached to preferred shares.

Dividends

Preferred shareholders are typically entitled to a dividend, if and when declared by the board of directors, before any dividends are paid to common shareholders. Dividends for preferred shareholders are established at a percent of the principal, similar to an interest paying debt product, usually between 4% and 10% annually.

Liquidation Preference

In the event of a liquidation or acquisition, preferred shareholders may receive back at least the original investment value and, often, a multiple thereof before any distributions are made to common shareholders. A liquidation preference of 1x is typical, although a preference of 3x is not uncommon. In addition to a multiple preference, some preferred equity structures include participating provisions whereby preferred shareholders will receive a multiple of the original purchase price and then participate ratably on an as-converted basis in the remaining proceeds of the liquidity event. As-converted simply refers to the preferred shareholders participation if each preferred share was converted into a common share.

Conversion Features

Most always, preferred shares are convertible into common shares at the option of the preferred shareholder at a 1:1 conversion ratio. There are several instances where conversion into common could be advantageous to a preferred shareholder including an acquisition of the company at a value well exceeding the liquidation preferences, where common shareholders receive a greater amount of the acquisition proceeds. Some preferred structures include automatic conversion provisions where if the company is executing a Qualified Initial Public Offering above a certain valuation threshold, preferred shares are converted into common to enable selling in the secondary market following a public offering.

Pay-to-Play

Pay-to-play provisions are used to incentivize early investors to participate in future financing rounds. Essentially, if an investor subject to a pay-to-play provision does not participate in a future financing round of the company, the investor could lose certain rights and privileges associated with preferred stock. In a stricter construct, if an investor does not participate in his or her pro rata participation in a future financing round, the preferred stock could be converted to common. Pay-to-play provisions can be helpful to both entrepreneurs and investors.

Board of Directors

In a preferred equity investment, investors will negotiate for the ability to join the board of directors in order to influence company direction and serve as a proxy for preferred shareholders. By taking a board seat, investors can actively monitor activities of the company, ensuring the company’s actions are in the best interest of investors and employees. While additional terms are found in a typical preferred equity financing, the few listed above serve as the primary reasoning behind venture capital investors pursuing a preferred stock structure when making an equity investment. As implied earlier, another advantage to preferred stock is its seniority to common stock. Common stock ranks as the lowest priority in a company’s capital structure, and consequently, is often the class of stock held by company founders and employees. While common stockholders are afforded certain voting rights, economic participation in the event of a liquidity event or declaration of dividends is subordinate to creditor and preferred shareholder cash distributions. Given its relative rank in the capital structure, common stockholders often assume the most risk of any investor class in a given company, while potentially reaping the greatest rewards.

Risks of Investing in Equity

The primary risk involved with investing in equity investments is the loss of part or all of investments and principal. There is no guarantee of dividends or return on investment. Furthermore, share prices are subject to fluctuation. While debt investments can provide a stable cash flow stream and security for investors, participation in value expansion, and return on investment, is capped at the interest and principal payments outlined in the financing documents. By taking on more risk as an equity investor, one can economically participate in a company’s value creation activities providing an enhanced return profile relative to a company’s debt offerings. Given this dynamic, several early stage venture capital investors utilize a convertible note structure, a financial product that begins as a debt instrument and converts into equity at a future date. To learn more about the convertible debt financing structure, download our Convertible Note White Paper.

Invest in StartupsGet started reviewing MicroVentures investment opportunities by registering here.
Diversification
When contemplating an investment in a new business venture, investors typically do not consider a private investment in a technology startup as a risk-minimizing activity. However, within a given portfolio, an investor can maximize return for a given level of risk by diversifying among several uncorrelated asset classes. Taken in this context, venture capital investing, while in isolation a risky investment style, can provide enhanced returns at a given level of risk. While a well-diversified portfolio can reduce risk, it does not ensure a profit nor does it guarantee against a loss. Illustrated graphically, Harry Markowitz, a pioneer of modern portfolio theory, introduced the efficient frontier in 1952 as the representation of the relationship between risk and return in the context of a portfolio of assets. Shown below, the efficient frontier is a set of optimal investment portfolios that offer the highest level of return for a given level of risk. Risk vs Return in Startup Investing The distinguishing feature of the efficient frontier is its non-linearity. The degree of curvature of the efficient frontier is due to the covariance, or lack thereof, of the assets within a portfolio. As long as the returns of the assets within the portfolio are not perfectly correlated, the standard deviation of the portfolio must be less than the average standard deviation of the assets. Meaning, as new assets whose returns are uncorrelated to that of the portfolio are added, the relative risk of the portfolio is minimized for a given level of desired return. right_rail_invest

Based on modern portfolio theory and the efficient frontier, return is maximized for a given level of risk through asset class diversification. Therefore, adding alternative investments, like private equity or hedge funds, to a traditional portfolio can provide enhanced returns for the same level of risk. The chart below illustrates how alternative investments can impact the efficient frontier. What results is an upward shift in the efficient frontier, providing an enhanced return for a given level of risk, or conversely, a similar return at a lower risk profile.

Implication of Diversification in Startup Investing The principles of modern portfolio theory are not unique to aggregate portfolio management. Diversification is equally important among assets within the same class and especially important when investing in technology startups. When contemplating a venture capital investment, it’s important to consider multiple investment opportunities in an effort to reduce risk across the portfolio. Ultimately, the goal for any investor is to maximize return at a desired level of risk. Diversification of and within asset classes, particularly alternative assets, can enhance portfolio returns while reducing portfolio concentration and risk.   Invest in StartupsGet started reviewing MicroVentures investment opportunities by registering here. To learn more about diversification read our related blog posts: Mitigating Risk Through Diversification Building Wealth Through Pre-IPO Investing 5 Guidelines for First-Time Startup Investors How to Use Your IRA to Invest in Startups
Early Stage Vs. Late Stage Companies
The startup lifecycle spans idea generation to an eventual exit through an acquisition, initial offering, liquidation, or failure with several inflection points throughout. Early vs. Late Stage Investing_1

Seed and Early Stage Investments

Seed and early stage companies are typically seeking capital to invest in product development, building a team of employees, and formalizing customer acquisition strategies. While seed stage companies are focused on product development, early stage companies typically have a handful of users testing a beta product while fine-tuning their go-to-market strategy and building out sales channels. Seed stage startup • Focused on product development and preparing for a broader market launch. • Product is usually in use by early beta customers for testing and feedback. • Typically cash-constrained and seeking its first outside investors through family, friends, and angel investors. right_rail_investInvestments within this stage typically take two forms: convertible notes and preferred equity. The form of investment is dependent on the company’s relative maturity with seed stage investments typically structured as convertible notes while early stage companies issue preferred equity in exchange for investor funds. In institutional venture capital terms these are known as Series Seed, Series A, and at times Series B. Early_stage_startup• Officially launched and focused on customer acquisition. • Implementing its sales channel strategy and attempting to reach breakeven cash flow. • Generating revenue but pursing additional capital from institutional investors to invest in customer acquisition and business development.  

Late-Stage Investments

Late stage companies have typically demonstrated viability as a going concern and generally have a well-known product with a strong market presence. Late stage companies have generally reached a point of positive cash flow generation and begin to experiment with expanding into tangential markets. Regardless, investments in both early-stage and late-stage companies involve a considerable amount of risk. Late stage startup• Well-known product which has successfully penetrated its initial market and learned where and how to move next. • May be cash flow positive and introducing its product into tangential markets. • Investors are seeking liquidity as the company begins to position itself for an acquisition or an initial public offering. Investments made early in a company’s lifecycle typically require a long holding period and can be riskier relative to a late stage companies. Understanding the lifecycle stage at which an investment will be made is paramount in accurately capturing the risks and return characteristics associated with that investment.

Risks Involved

Investments in early-stage and late-stage companies are highly speculative and involve significant risks due to, among other things, inconsistent cash flows, the competitive landscape, and short operating cycles. These investments are generally illiquid and highly speculative, and are not suitable for anyone without a high tolerance for risk and/or low liquidity needs. You should invest only if you are able to bear the risk of losing your entire investment. There can be no assurance that subscribers will receive any return of capital or profit. Invest in StartupsGet started reviewing MicroVentures investment opportunities by registering here.   If you would like to learn more about Early Stage and Late Stage Companies read our related blog posts: Investing in Pre-IPO Companies 5 Guidelines for First-Time Startup Investors Investing in Tech Startups
Glossary of Terms
Accelerator: entities focused on helping entrepreneurs grow new business concepts. Accelerators offer fixed-term, cohort-based programs, often including professional advice and guidance, that culminate in a public pitch event or demo day. Accredited Investor: an investor who meets specific SEC income and net worth criteria, allowing him or her to invest in startups and other high-risk private company securities. Acquisition: the process through which one company obtains ownership of another entity's stock, equity interests, or assets. Angel Investor: a single individual (as opposed to a firm) who provides his or her personal capital to fund a startup company. Bridge Loan: a loan which is designed to “bridge the gap” between institutional investment rounds. Buyout: when a purchaser gets controlling interest in a company after it buys the requisite number of shares. Cap: a valuation ceiling that exists in a convertible debt deal. Cap Table: a detailed spreadsheet that outlines all the stockowners of a company and the terms at which they have invested. Carry/Carried Interest: profits that a VC is entitled to after returning principal and interest to investors. This can range from 10-30%. Closing: the final event to complete an investment, at which time all the legal documents are signed and the funds are transferred. Common Stock: the type of stock generally issued to company employees. This class of stock (shares) generally has the least amount of rights and privileges. Common stock is a lesser class of stock than preferred stock. Convertible Debt (or Convertible Notes): a debt or loan that will be paid back in the future in the form of equity or company stock. Crowdfunding: the process by which a large number of individuals make small monetary contributions into a single pool, ultimately funding a new venture or project. Debt Financing: when a firm raises money for working capital or capital expenditures by selling bonds, bills, or notes to investors, promising to repay the debt with interest. Dilution: is the reduction in the investor's ownership percentage of a share of stock caused by the issuance of new dilutive securities. Due Diligence: comprehensive review or investigation of material facts in regards to an investment or transactions. Early Stage: a period of venture capital investment that falls between seed- and late-stage deals that includes Series A and Series B financings. These companies typically have a proven concept and little revenue. Equity Financing: when a company raises money by selling its shares, allowing shareholders to become partial owners of the company through the purchase of stock. Both debt and equity financing can happen independently or in conjunction with each other. Exit Strategy: also called a liquidity event, this the VC's way of seeing a return on an investment in a company. Common types of exit strategies include initial public offerings (IPOs), strategic acquisitions, and management buyouts. General Partner: an owner of a partnership who has unlimited liability and who is active in the day-to-day operations of the business. Incubator: entities that advise young companies in their earlier days, most commonly before they have received a significant investment. Aside from offering the companies a physical workspace, incubators provide an array of services – marketing help, guidance on product development, legal assistance, access to a network of investors, and pitch/presentation training – designed to ready companies for growth and success. Initial Public Offering (IPO): marks the first moment that shares of stock are offered to the public. When this happens, the company becomes publicly traded and is subject to an entirely new array of securities regulations (among other things). This also means the company will be listed on an exchange. Institutional Investors: investors represented by groups that invest and manage funds on the investors' behalf, including pension funds, investment funds, and mutual funds. Issuer: the legal entity that develops, registers, and sells securities (shares, bonds, notes, etc.) to finance its operations. JOBS Act: Jumpstart Our Business Startups Act, passed in April 2012. Late Stage: rounds Series C and later are typically categorized as late stage. Leveraged Buyout (LBO): when one company uses a significant amount of borrowed money to meet the cost of acquiring another company. Assets of the company being acquired are often used as collateral for the loans, along with the assets of the acquiring company. Limited Partner: a co-owner of a business organized as limited partnership who (unlike a general partner) does not participate in the management of the firm and has limited personal liability for the firm's debts. Lock-up Period: the length of time an investor must wait before selling or trading company shares after an exit. Portfolio Company: a company in which a venture capital firm has invested, thus, making that company part of the VC firm’s portfolio. Pre-money and Post-money Valuation: pre-money valuation refers to what a company is worth before it receives any sort of funding. Let’s say the initial agreed-upon valuation is $3 million. If a venture capital firm then invests another $1 million, the post-money valuation would be $4 million (the sum of the pre-money valuation and the additional funding). Preferred Stock: has a higher claim on assets and earnings than common stock. Preferred shares generally have a dividend that must be paid out before dividends to common shareholders, and the shares usually do not carry voting rights. Primary Investment Opportunity: an investment opportunity that allows investors to acquire equity in an issuer through a primary transaction. Primary Transaction: the acquisition of stock (shares) or debt instrument from the issuer directly. Pro-rata Rights: the right of investors to participate in later funding rounds so they can maintain the amount of equity they own in a company. Return on Investment (ROI): the money the investor would get back from his or her initial investment. Risk: the likelihood of seeing a lower return than expected, including the possibility of losing some or all of the original investment. Rounds of Financing: startups raise money from venture capital firms in different rounds, typically called Series Seed, A, B, C, D, etc. Series Seed is the first round and is typically for the company to figure out the product it is building, the market it is in, and the user base. Series A is intended to help the company scale distribution or develop a business model. Series B is typically scaling the business and continuing to build traction. Funding amounts in each round generally increase. SAFE (Simple Agreement for Future Equity): a warrant to purchase stock in a future priced round. Both SAFE and convertible notes allow for a conversion into equity, but while a convertible note can allow for the conversion into the current round of stock, or a future financing event, a SAFE only allows for a conversion into the next round of financing. Secondary Investment Opportunity: an investment opportunity that allows investors to acquire equity in an issuer through a secondary transaction. Secondary Transaction: the acquisition of stock (shares) from sources other than the issuer (employees, former employees, or investors). Seed Stage: the first official round of financing, which happens relatively early on in a business’s development. At this point, the startup is looking for funds to prove its concept, and that money can be helpful in building a prototype. Depending on a variety of metrics that measure a company’s growth and development – for example, how it is acquiring and retaining customers, its revenue streams, and the amount of money it spends each month – the seed round may be followed by others. Slide Deck: a presentation in which startup founders show their business concept and summarize financial projections for a VC. Sophisticated Investor: an investor who does not meet the qualifications of an accredited investor but who holds sufficient investing experience and knowledge to weigh the risks and merits of an investment opportunity. Syndicate: a group of investors who invest in a startup together. Term Sheet: a non-binding document that details the terms and conditions of the investment. This acts as quick introduction to the investment opportunity and highlights some of the more complex legal documents that will follow. Valuation: the value ascribed to a startup by an investor. Venture Capital (VC): financing that investors provide to startup companies that are believed to have long-term growth potential but also a substantial amount of risk.   Invest in StartupsGet started reviewing MicroVentures investment opportunities by signing up for free here.
Convertible Debt (aka Convertible Notes)
When sourcing capital for a new business venture, entrepreneurs utilize one of two basic structures: debt or equity. Debt is a capital source with a finite life and clearly defined return profile known at the initial investment. With debt financing, a company is required to pay interest throughout the term of the loan with principal repaid at maturity. Conversely, equity investors are issued shares representing ownership in an enterprise. While equity does not require repayment over a defined time period, an entrepreneur’s stake in his or her company is diluted through the issuance of equity to outside investors. Given the dynamics of early-stage companies, venture capital investors use a hybrid funding mechanism, convertible debt. Convertible debt, in the context of a venture capital financing, is a funding structure that combines the benefits of debt and equity into a single capital source. Convertible debt, usually in the form of a convertible note, is essentially a loan which converts into equity at a later date. A convertible note is a short-term loan with maturities ranging from 12 to 36 months. Instead of paying interest in the form of cash, which would deplete valuable resources of a young company, interest accrues until maturity or conversion. A conversion of the loan (plus accrued interest) into equity is triggered by a subsequent priced equity financing round, typically known as a Series A financing. To compensate convertible note holders for the additional risk assumed with investing at an early stage, most convertible notes feature a conversion price below that of the subsequent financing round through the use of a valuation cap or a discount on the purchase price. Importantly, a valuation cap and a discount are mutually exclusive conversion features thus cannot be applied simultaneously. The note holder will ultimately utilize the conversion feature resulting in the most advantageous purchase price. There is no assurance that a purchaser of a convertible note will realize a return on its investment or that it will not lose its entire investment. Additionally, purchasers will not become equity holders unless there is a future fundraising event, an IPO, or sale of the Company none of which can be guaranteed. How to Get Started…. In order to review MicroVentures investment opportunities please signup. Invest in Startups
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Risks Involved

Investments in late-stage companies are highly speculative and involve significant risks due to, among other things, inconsistent cash flows of the company, the nature of its proposed investments, and potential conflicts of interest. These investments are not suitable for anyone who does not have a high tolerance for risk and/or has high liquidity needs. You should invest only if you are able to bear the risk of losing your entire investment. There are no assurances that investors will receive any return of capital or profit.

Business Continuity Plan
Crowdfunding

Title III of the JOBS Act went into effect last May, opening more equity crowdfunding opportunities to non-accredited investors and loosening restrictions on startups looking to raise funds on equity crowdfunding platforms like MicroVentures. Thanks to Title III, ordinary investors aged 18 and older can now invest in startups. Although there are limits to the amount you can invest, you no longer have to be wealthy – or an “accredited investor” – to invest in private companies.

Federal law requires that you understand the risks of investing in early-stage companies before you invest on platforms like MicroVentures. You should also familiarize yourself with the investment process and regulations, including investment limits, cancellation policies, and sale restrictions. This FAQ provides basic information on these and other important topics, but you may need to refer to other resources for a complete understanding of Title III equity crowdfunding.

How does Title III crowdfunding work?

You can find startups that are raising funds under Title III on the Offerings page of the MicroVentures website. These are companies that MicroVentures has already performed due diligence on, a process that includes evaluating the company’s product or service offering, business model, intellectual property, product roadmap, leadership team, addressable market, competitive landscape, regulatory environment, user traction, historical and projected financials, and more.

Before you can make an investment using the MicroVentures platform, you must first create a MicroVentures investor account. Once you have done that and selected a company you would like to invest in, you will make your investment online through the MicroVentures funding portal. This portal is registered with the SEC and is a member of the Financial Industry Regulatory Authority (FINRA).

You must make your investment before the deadline stated in the offering documents. If the company reaches the target offering amount prior to the deadline, it may set a new deadline and close the offering early. In those cases, the company must give five business days’ notice about the new deadline.

After making your investment, you may cancel it up to 48 hours before the offering deadline. After that point, your investment will be final. Your investment will be made via ACH transfer to a specified escrow account held by MicroVentures on the startup’s behalf.

Once you have made an investment in a startup, you will hold private equity in that company. The value of your stake in the company may increase or decrease over time depending on how the company performs. You will receive cash or stock return on your investment if and when a positive liquidity event occurs – for example, as a result of the company going public or getting acquired by another company. Please bear in mind that startup investments are long-term investments that may take years to become liquid, if they do at all.

What are the risks?

Investing in startups involves considerable risk, including the possible loss of all or a significant portion of your investment. You should review all disclosed risk factors before making an investment decision. The following are some of the primary risks associated with investing in a startup under Title III:

  • The company may be unable to complete an initial public offering of its securities, a merger, a buyout, or other liquidity event
  • The company may be unable to expand and maintain market acceptance for its services or products
  • The company may be unable to adapt to rapidly changing consumer preferences, technological advances, or market trends
  • The company may be unable to achieve management’s projections for growth, to maintain or increase historical rates of growth, or to achieve growth based on past or current trends
  • The company may be unable to develop, maintain, and expand successful marketing relationships, affiliations, joint ventures, and partnerships that may be needed to continue and accelerate growth and market penetration
  • The company may be unable to manage rapid growth effectively
  • The company’s business operations may be disrupted or costs increased as a result of the company’s customers complaining or making assertions about its services or products
  • The company may experience technological problems, including potentially widespread outages and disruptions in Internet and mobile commerce
  • The company may experience performance issues arising from infrastructure changes, human or software errors, website or third-party hosting disruptions, network disruptions, or capacity constraints due to a number of potential causes including technical failures, cyber attacks, security vulnerabilities, natural disasters, or fraud
  • The company may be unable to adequately secure and protect intellectual property rights
  • The company may be the subject of claims or litigation for infringement of intellectual property rights and other alleged violations of law
  • Changes in laws and regulations may materially affect the company’s business
  • The company may be unable to comply with all applicable local, U.S., and international laws and regulations, including rules regarding data security and privacy, resulting in increased costs and/or business disruption if the company becomes subject to claims and litigation for legal non-compliance
  • Liability risks and labor costs and requirements may jeopardize the company’s business
  • The company may be unable to secure additional capital necessary to support operations, to finance expansion, and/or to maintain competitive position
  • The company may issue additional company equity securities that dilute the value of existing equity securities, and that dilute the voting power of existing investors
  • The company may be unable to hire or retain key members of management and a qualified workforce
  • The company may be unable to compete effectively against other businesses in its industry, some of which have longer operating histories, greater name recognition, and significantly greater financial, technical, marketing, distribution and other resources
  • Competing companies may develop new services, products, and marketing and distribution channels or may establish business models or technologies that are disruptive to the company’s business
  • Current and future competitors of the company may make strategic acquisitions or establish cooperative relationships among themselves or with others that may significantly increase their ability to meet the needs of existing and potential customers, putting the company at a disadvantage
  • The business of the company may be jeopardized by stagnant economic conditions and by political, geopolitical, regulatory, financial, or other developments in the U.S. and globally, including incidents of war and terrorism, outbreaks and pandemics of serious communicable diseases, and natural and man-made disasters that are beyond the company’s control
  • Because the valuation of a startup is subjective compared to the market-driven stock prices of public companies, you may overpay for the equity securities you purchase
  • The class of equity securities you purchase may have fewer rights than other equity classes issued by the company
  • The company may be able to provide only limited information on its operations and business plan due to the early stage of its development
  • You may be restricted from selling or transferring your securities for 12 months following your purchase, and beyond that 12-month period, there may be no market for your securities should you wish to sell them at that time
  • The company may not have relationships with established, professional early-stage investors such as angel investors, startup accelerators, and venture capital firms, or may not have these experienced individuals on their board of directors, leaving them without significant business mentorship, valuable resources and contacts, or general guidance
  • The value of the company’s equity securities may experience significant and unexpected decline, including prior to, during, or after an initial public offering

There may be other risks that are specific to the company, its industry, or its business model, and there may be other risks not generally disclosed or known, in part because the company is privately held and does not provide risk disclosure in publicly available reports. Investors must understand that they are voluntarily assuming all of the risks of the investment, including any and all risks relating to the company.

It is impossible for anyone to know with any certainty which companies will be more successful than others, and an investment is subject to all of the risks inherent in any investment in a nascent business or industry with a number of different competitors.

Risks specific to "notes": Promissory Notes: There is no assurance that a purchaser of a promissory note will realize a return on its investment or that it will not lose its entire investment. Additionally, the issuer may not be able to generate enough cash flow to meet their interest payment obligations and may at anytime default. Convertible Notes: There is no assurance that a purchaser of a convertible note will realize a return on its investment or that it will not lose its entire investment. Additionally, purchasers will not become equity holders until a future fundraising event, an IPO, or sale of the Company. Prior to conversion, convertible notes are susceptible to issuer default. Crowdsafe Notes: There is no assurance that a purchaser of a crowdsafe note will realize a return on its investment or that it will not lose its entire investment. Additionally, purchasers will not become equity holders until the company decides to convert the Securities into Securities or until an IPO or sale of the Company. Additionally, a crowdsafe note is not a debt instrument and investors in crowdsafe notes do not have preference in a liquidation. Further, crowdsafe notes do not accrue interest.
What types of investments can I choose from?
What information will the startups provide to potential investors?

Companies fundraising under Title III on the MicroVentures platform are required to provide the following information to potential investors:

  • General information about the company and a description of the business
  • The names of the company’s officers and directors
  • The “use of proceeds” – how the company plans to use the money raised from the offering
  • The target offering amount
  • The deadline for the offering
  • Risks that are specific to the company and its business
  • Financial information

The type and depth of the financial information the company is required to provide varies depending on the amount of the target offering and whether or not the company has raised money under Title III before:

  • Raising $107,000 or less: Companies must provide investors with financial statements and certain specific line items from income tax returns, both of which must be certified by the principal executive officer of the company.
  • Raising $107,000.01 to $535,000: Companies must have their financial statements reviewed by an independent public accountant. The accountant’s review report must be certified by the principal executive officer of the company and provided to investors.
  • Raising $535,000.01 to $1.07 million: Companies that are raising under Title III for the first time must have their financial statements reviewed by an independent public accountant, and any resulting review report must be provided to investors. Companies raising under Title III for a second or subsequent time must have their financial statements audited by an independent public accountant, and the accountant’s audit report must be provided to investors. An audit provides a higher level of financial scrutiny than a review.

If you would like more information about a company, each offering on the portal has a discussion forum where you should ask any questions you have and review the questions other investors have asked.

How much can I invest?

Because of the risks inherent to crowdfunding investments, federal law puts inflation-adjusted limits on the amount an investor can place into Title III offerings during any 12-month period. These limits are based on your annual income and net worth:

  • If either your annual income or net worth is less than $107,000, then during any 12-month period, you can invest up to the greater or either $2,200 or 5% of the lesser of your annual income or net worth.
  • If both your annual income and your net worth are equal to or more than $107,000, then during any 12-month period, you can invest up to 10% of annual income or net worth, whichever is lesser, but not to exceed $107,000.

Your net worth is the sum of all your assets minus all your liabilities. For the purposes of a Title III investment limit calculation, the value of your primary residence is not allowed to be included in your assets, and any mortgage or other loan on your primary residence should not be included in your liabilities, assuming it is equal to or less than the fair market value of your home.

The table below provided by the SEC shows specific examples of investment limits:

According to the SEC, you can calculate your annual income or net worth jointly with your spouse, whether or not property is held jointly. However, if you calculate income or net worth jointly, the total of each person’s Title III investments cannot exceed the limits that apply to an individual at that level of income or net worth.

If you are unsure how much you can invest under Title III, feel free to contact us or ask your accountant or financial advisor.

Can I cancel my investment?

You can cancel an investment up to 48 hours before the end of an offering deadline. After that point, your investment will be final and you won't be able to cancel.

If, prior to closing the funding, the company you’re investing in makes a material change to the offering terms or other information that was disclosed to you, you will be given five business days to confirm that you still want to make your investment. If you do not confirm your investment within five business days of that notification, your investment will be cancelled.

Will I receive updates on my investment?

After the offering is closed and your investment has been finalized, you can expect an annual report from the company once per year. This report will be available on the company’s website – not on the MicroVentures platform.

Among other items, the report is required to include the following information:

  • The company’s name, legal status, physical address, and website
  • The names of all company officers and directors, along with descriptions of each position, including the period of time each position was held
  • The names of all investors owning 20% or more of the voting equity securities in the company
  • A description of the company’s business and anticipated business plan
  • The current number of employees at the company
  • Financial statements, including balance sheets, statements of comprehensive income, statements of cash flows, statements of changes in stockholders’ equity, and other notes
  • A description of any debts incurred by the company, including the amount, interest rate, and maturity date
  • A description of all transactions whose amounts exceed 5% of the aggregate amount of capital raised under Title III in the last 12 months, and any such transactions currently proposed

The annual report must be filed within 120 days of the end of the fiscal year covered by the report.

There are a handful of circumstances under which a company is not obligated to provide an annual report, which would prevent investors from having access to current financial information about the company. For example, the company if not obligated to provide an annual report if, at any time:

  • The company is required to file a report under provisions of the Securities Exchange Act
  • The company has filed at least one annual report and has fewer than 300 investors
  • The company has filed at least three annual reports and has total assets that do not exceed $10 million
  • The company or another party purchases or repurchases all of its securities
  • The company liquidates or dissolves in accordance with state law
Can I sell my investments?

Unlike shares of public companies, securities purchased under Title III may not be transferred or sold during the first year of ownership unless they are transferred or sold:

  • Back to the issuing company
  • To an accredited investor, as defined by the SEC
  • As part of an offering registered by the SEC
  • To a member of your family, as defined by the SEC
  • To a trust you control or to a trust created for the benefit of a member of your family
  • As a result of your death or divorce

For the purposes of Title III, the SEC defines a “family member” as a child, stepchild, grandchild, parent, stepparent, grandparent, spouse or spousal equivalent, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law, including adoptive relationships.

Beyond the initial 12-month period of restriction, there may be no market for the securities should you wish to sell them. Please bear in mind that startup investments are long-term investments that may take years to become liquid, if they do at all.

Is a crowdfunding investment right for me?

It is up to you, the individual investor, to consider and ultimately determine whether investing in private securities offered and sold under Title III is appropriate for you. Research your investment target carefully on MicroVentures and using other sources. Pay particular attention to the terms of the offering. Also thoroughly review the risks of crowdfunding investments and the risks specifically associated with the target company before deciding whether the investment fits your risk profile. It is important that you invest only capital that you can afford to tie up for an indefinite period of time, and capital that you can afford to lose completely.

MicroVentures is not responsible for any losses you incur as a result of crowdfunding investments made under Title III. Please also note that, once an offering is complete, MicroVentures may or may not have an ongoing relationship with the startup.

How does the JOBS Act impact crowdfunding?
On April 5, 2012, President Obama signed into law the Jumpstart Our Business Startups (JOBS) Act. The JOBS Act has facilitated a substantial reduction in the regulatory burden surrounding financing activities for small companies in public and private capital raising transactions. The JOBS Act consists of seven sections, or Titles, all detailing certain provisions of the law.
  • Title I: Reopening American Capital Markets to Emerging Growth Companies
  • Title II: Access to Capital for Job Creators
  • Title III: Crowdfunding
  • Title IV: Small Company Capital Formation
  • Title V: Private Company Flexibility and Growth
  • Title VI: Capital Expansion
  • Title VII: Outreach on Changes to the Law
While each provision influences capital formation for small business in some capacity, Title II and Title III have a disproportionate impact on crowdfunding. Title II of the JOBS Act is related to private placement transactions executed under Rule 506 of Regulation D. Title II charges the SEC with eliminating the general solicitation and advertising bans in connection with Rule 506 offerings. Prior to Title II, entrepreneurs seeking capital had to have a “substantial and pre-existing relationship” before including an investor in a private placement securities transaction. On September 23, 2013, Title II was implemented by the SEC allowing companies to advertise their offerings to potential accredited investors under the newly implemented regulation 506(c). By allowing issuers to solicit or advertise their offerings more publicly, the investor pool for startup capital has greatly expanded. The most impactful provision to crowdfunding is found in Title III of the JOBS Act. Title III, once implemented, will effectively allow non-accredited investors to invest in startups. As it stands, equity crowdfunding is limited to accredited investors. While Title III was passed with the JOBS Act, the SEC has yet to publish final rules, meaning market participants cannot take advantage of Title III. As a result, several states have sidestepped the SEC and introduced laws, each with different nuances, allowing intrastate crowdfunding for residents not meeting the federal accredited investor definition. Title III, once implemented, will dramatically increase the pool of available capital and increase capital formation for small business in the United States. Get started reviewing MicroVentures investment opportunities by registering hereInvest in Startups