Tag: investor relations

How Do I Build a Community for My Company?

Posted on by Oscar Jofre

What is a community? The word can be defined as “a body of persons of common and especially professional interests scattered through a larger society” or “a group of people with a common characteristic or interest living together within a larger society.” Putting this into a bit more context, picture a beaver in the forest, building a dam. This seemingly simple, instinctual event has a profound effect on the surrounding area. The dam forms a pond, which creates the perfect habitat for a diverse range of animals, insects, and other organisms, while also improving the water conditions. 

 

This beaver is much like an entrepreneur building a business. As the business grows, it provides employment opportunities, creates a network of suppliers and partners, develops relationships with customers, and is supported by shareholders. They all play a crucial role in the success of your business. 

 

By nurturing these relationships, especially in today’s highly competitive business environment, this community can help increase engagement, loyalty, and interest in your company, which can translate into more investment and business opportunities down the road.

 

Recognizing the Benefits of a Strong Community

 

From customers to employees and suppliers, building a community around your company can bring numerous benefits. A thriving and engaging community can create:

 

  • Increased customer or employee loyalty: When customers and employees feel a sense of belonging and loyalty to your brand, they are more likely to remain loyal for longer. This can result in higher rates of retention, as well as increased referrals and advocacy.
  • Improved engagement with stakeholders: A thriving community can help you engage with key stakeholders such as investors, partners, and suppliers. This can help to foster stronger relationships over time, leading to better deals and collaborations.
  • Increased brand reputation: A community of loyal customers or employees can promote your brand integrity and trustworthiness, which is essential for building a successful business.
  • More growth opportunities: With a strong network of loyal loyal customers and employees, you’ll have a larger pool of potential buyers or investors when you are looking to grow.
  • A foundation for investors: Ultimately, when you’re looking to raise capital or attract investors, having a strong community of engaged stakeholders around your company can be an invaluable asset by providing evidence of your brand’s trustworthiness and potential. These stakeholders can also become valuable investors that share in your vision for the future.

 

Ultimately, cultivating this community requires transparency and compliance to build trust and instill confidence. But how do you go about building a community for your company? 

 

6 Tips for Building a Community

 

1. Understand Your Audience

 

The first step in building a community is to understand your audience. Who are the people you want to attract and engage with? What are their needs, wants, and interests? What motivates them to invest in your company? By creating customer personas and conducting market research, you can get a better understanding of your target audience. This can help you tailor your messaging, content, and engagement strategies to better resonate with your community.

 

2. Focus on Transparency and Communication

 

Transparency and open communication are essential ingredients for building a strong community. Shareholders, employees, and customers all want to feel like they have a voice and that their concerns are being heard. This is especially important when it comes to managing shareholder relationships. To build trust and transparency, consider implementing regular communication channels like newsletters, social media updates, and webinars. Make a point of responding to customer and shareholder feedback promptly and thoroughly.

 

3. Leverage Technology

 

Technology can be a powerful tool in building and managing your community. Consider investing in a customer relationship management (CRM) system to track and manage your customer interactions. This can help you identify patterns and trends in customer behavior, enabling you to tailor your messaging and engagement strategies to better resonate with your community.

Social media platforms like LinkedIn, Facebook, and Twitter can also be powerful tools for building and engaging with your community. Regularly update your social media channels with relevant content, respond to customer feedback and comments, and use social media analytics to track engagement and identify opportunities to better connect with your community.

 

4. Create Meaningful Content

 

Creating high-quality, engaging content is another key element in building a community. Content can come in many different forms, including blog posts, videos, webinars, eBooks, and more. The key is to create content that is tailored specifically to your target audience and resonates with them on an emotional level. This will help you build relationships and foster loyalty among your customers, employees, and shareholders.

 

5. Foster and Incentivize Engagement

 

Engaging your community is an important part of building relationships and developing loyalty. Consider running contests, giveaways, or other promotional activities to incentivize engagement. You can also create loyalty programs or rewards systems to further reward customer engagement.

 

6. Gather Around a Cause

 

When building a strong community creates a sense of purpose around your company. Find something that your customers, employees, and shareholders can all rally behind. This should be something bigger than just making money – it could be related to sustainability, philanthropy, or another cause the community can get behind. By giving people something to believe in, you can create a sense of shared identity that will bring your community together. 

 

When it comes to raising capital, you should also focus on creating experiences that make investors feel appreciated and valued. For example, you could offer exclusive investor-only events or create a private investment platform where invited investors can access exclusive content about your company and its opportunities. 

 

Regardless of how you approach it, building a thriving community around your business is essential to growing and scaling effectively. This will lead to increased loyalty, greater investment opportunities, and higher long-term returns. By taking these key steps to develop a strong community around your business, you’ll be well on your way to achieving your capital-raising goals.

 

What is Affinity Marketing?

Posted on by Oscar Jofre

Affinity marketing is an effective way to increase brand recognition and reach a larger target audience, especially when it comes to raising capital. By leveraging existing connections with customers, companies can improve their visibility and attract more investors. With the right strategy and tools, affinity marketing can be a powerful tool for businesses looking to expand their customer base and create trust between parties. 

 

Affinity marketing is a type of marketing strategy that focuses on creating relationships between a company and its customer base. This connection could be due to things like shared values, such as environmental sustainability or ethical labor practices. The main goal of this approach is to create loyalty and increase brand recognition. The idea behind affinity marketing is that a brand can appeal to an audience that is connected by brand loyalty, shared values, or other aspects that would make them like to make a purchase, return as a customer, or even become investors. 

 

Using the JOBS Act and Affinity Marketing

 

With Regulations A+ and CF, affinity marketing is an effective way to raise capital. By leveraging existing connections with customers, companies can reach a larger target audience and increase their chances of success. When beginning new capital-raising efforts, affinity marketing promotes a sense of trust and credibility.

 

Whether you have had several raises in the past or this is your first capital raise, affinity marketing is an effective way to reach a larger target audience. Leveraging your existing connections can help you gain exposure and attract more investors because people trust the brands they already know. By leveraging this group of investors, you can improve the visibility of your company and reach a larger pool by utilizing these people as a type of brand ambassador for your marketing.

 

Tips For Implementing Affinity Marketing Effectively

 

When implementing an affinity marketing strategy, there are certain steps you should take to ensure success. Here are some tips for using this type of marketing effectively:

 

Identify your target audience: Identify a customer base that shares similar values or had displayed brand loyalty. This will help you create a more tailored marketing plan that is specific to the target audience.

 

Set clear objectives and goals: Setting clear, measurable objectives and goals will help ensure that your affinity marketing strategy is successful. It will also allow you to track progress and make necessary adjustments as needed.

 

Communicate with your partner: Establishing a strong relationship with your affinity marketing partner, like an investor acquisition firm, is essential for success. Communicating regularly and discussing expectations, challenges, and successes will help foster collaboration and ensure successful outcomes.

 

Measure results: Tracking metrics such as customer acquisition rate, customer engagement rate, or return on investment (ROI) is important to determine the success of your affinity marketing strategy.

 

Affinity marketing is an effective way to increase brand recognition and reach a larger target audience. Especially when raising capital. By leveraging existing connections with customers, companies can reach more potential investors and create trust between parties. Additionally, tracking specific metrics can help measure success and ensure that you are meeting your goals. With the right strategy and tools, affinity marketing can be an effective way to increase brand visibility and reach a larger pool of investors.

 

Best Practices for Shareholder Management

Posted on by Oscar Jofre

Shareholder management is a critical part of any company, but it can be especially daunting for those who have recently completed a RegA+ or RegCF offering. When you welcome so many new shareholders on board, it’s important to have a plan in place for how you will manage them to ensure a positive relationship. Thankfully, shareholder management can be streamlined with the right tools and communication strategy.

 

Shareholders have a vested interest in how your company performs. They will want to know about the company’s progress, financial information, or future plans, and they have a right to be kept in the loop. Unhappy shareholders may spread negative word-of-mouth about your company, which could hamper your ability to raise additional funds in the future. Additionally, if shareholders feel like they are in the dark about what’s going on with your company, they may choose to sell their shares, which could hurt your stock price. Thus, it is important to have a shareholder management plan in place to ensure that you are maintaining strong relationships with your shareholders. So, what does this look like in practice?

 

Continuous Improvement

 

A company’s first step should be to accurately evaluate its investor relations performance, with the analysis serving as a benchmark. While share price, analyst ratings, and price-to-earnings ratios provide some measure of a company’s ability to meet shareholder needs, they don’t provide much information about other dimensions of the investor relations function, such as the cost of operating the investor relations department or the quality of investor relations communication channels. It is important to establish an objective assessment of such things because ongoing monitoring of these metrics and the overall investor relations strategy can help to identify areas for improvement

 

Regular Communication

 

One of the most important things you can do to manage shareholders is to maintain regular communication with them. This can be done in many ways, such as through email, webinars, podcasts, or blogs. No matter what method you choose, it’s important to keep shareholders updated on your progress and answer any questions they might have. This will show them that you value their investment and are committed to keeping them informed.

 

Use Shareholder Management Tools

 

Another important tip for shareholder management is to use shareholder management tools, such as the shareholder management solution from KoreConX. This platform provides many features and benefits, such as the ability to keep shareholder documents like earnings reports secure and engage shareholders with portfolio management tools that allow them to see detailed information about their investments. Such tools eliminate the hassle of traditional mail and increase the ease of access for shareholders

 

Establish Expectations

 

When welcoming new shareholders on board, it’s important to set expectations from the start. Shareholders should know what kind of communication they can expect from the company and how often they will receive updates. It’s also important to let shareholders know what information will be shared with them and what will remain confidential. By setting clear expectations from the beginning, you can avoid misunderstandings and build trust with shareholders.

 

Seek Feedback

 

Another important tip for shareholder management is to seek feedback from shareholders regularly. This can be done through surveys, focus groups, or one-on-one interviews. Shareholders will appreciate being asked for their opinions and it can help you identify any areas where you need to improve your communication or management strategy. Feedback from shareholders may also be a great source of ideas for marketing, new or improved products, or other recommendations that will positively affect your business.

 

Be Transparent

 

Finally, it’s important to be transparent with shareholders about the company’s progress, financial information, and future plans. It’s easy to communicate good news, but a transparent company will ensure even the bad news is accurately conveyed to investors in a timely manner. Shareholders need to have confidence in your company–you don’t get that by denying the existence of problems, but by showing that you are proactive in (ideally) preventing them, identifying them, and solving or mitigating them. In some cases, it might make some sense to put on a rosy public face to the public but shareholders aren’t outsiders; they’re owners. This will show them that you’re committed to keeping them informed and help build trust between the company and its shareholders.

 

By following these tips, you can streamline shareholder management and build strong relationships with shareholders. With the right tools and communication strategy in place, you can ensure that shareholders are kept up-to-date on your progress and that their expectations are managed effectively. As a result, everyone remains on the same page, which can lead to a more efficient and cohesive shareholder management strategy, improve shareholder relations, and lead to a more successful enterprise.

 

Digital Securities That Help You Navigate the Web Safely

Posted on by Oscar Jofre

The internet is often difficult to navigate. On one hand, many wonderful resources can be found for educational purposes, you can connect and communicate with anyone anywhere in the world, and new ways to manage financial investments are accessible at the tip of our fingers. But on the other hand, it can sometimes be difficult to determine the legitimacy of a website or investment opportunity. Fortunately, digital securities are changing the way these transactions are carried out, introducing new levels of transparency and trust when implemented correctly

 

Navigating the Web Safely

 

Some features that help people navigate the web safely include things like two-factor authentication (2FA) or blockchain-based identity management systems. 2FA is a critical security measure requiring users to provide two forms of identification to log into their accounts. This can be something like a password and a fingerprint or a one-time code that is sent to your phone. Blockchain-based identity management systems work similarly, but instead of using passwords, they use cryptographic keys that are stored on a blockchain. This makes it impossible for hackers to access your account unless they have your private key. Both solutions are important for ensuring that only the account holder can access the account. These tools also make it more difficult for hackers to steal your identity by masquerading as you online. By using 2FA or a blockchain-based identity management system, you can help navigate the web safely and protect your online information.

 

Digital securities are an essential part of the digital economy, and KoreConX is committed to making them more accessible and easy to use. Our KoreID feature is just one example of how we are innovating in the realm of digital securities. With KoreID, investors can easily and safely provide their information to regulated platforms. As a result, the need for investors to fill out the same information, again and again, is eliminated, saving them time and hassle. With this digital security innovation, when investors are making investments through JOBS Act exemptions, they are less susceptible to fraud. And for issuers, the KoreID gives them peace of mind knowing that they can easily prove that they are in good standing with FINRA and registered funding portals. Digital securities are an essential part of the digital economy, and KoreConX is committed to making them more accessible, safe, and easy to use.

 

Benefiting from the Innovation of KoreID

 

KoreID is a digital securities innovation that allows investors to navigate the web safely. The feature is an all-in-one platform that reduces the friction of investors spending time filling forms with the same data repeatedly. Users are allowed to provide certified information with one single click, facilitating a smoother investment or reinvestment. This also reduces the known issues in compliance that broker-dealers face when users “fat finger” their information, accidentally misentering their information. 

 

The KoreID is a blockchain-based digital identity that is stored on the user’s device and can be used to log in to any site that accepts KoreID. The user’s data is kept secure and only shared with sites that the user has authorized. KoreID is convenient, safe, and easy to use, making it the ideal solution for investors who want to navigate the web safely. Only verified, regulated participants can be allowed to add the KoreID, giving investors peace of mind and allowing companies to easily maintain compliance efforts.

 

What is the Estimated Budget for RegA+ Issuance?

Posted on by Jason Futko

Navigating the fundraising process and understanding how much to budget from a financial standpoint is one of the most frequent questions we receive. In the process of conducting a RegA+ offering ourselves, KoreConX has researched the estimated budget for a RegA+ offering.

 

While the budget varies based on several factors, you need to keep in mind the size of your raise and sector. As a general rule of thumb, it is a good idea to be ready to spend at least $250,000 on a successful RegA+ offering, $50,000 of which should be dedicated to getting your investor acquisition started. Most of your budget will be spent on Investor Acquisition. Now, this will not apply to every company but should serve as a general guide as to what you should expect a RegA+ offering to cost depending on the amount raised. 

 

Estimated Costs for USA-Based Companies:

What Why/ Work to be done When How much
USA Lawyer To file your SEC Form 1A and state filings First step in moving forward $35-$75k 
Auditors Are required to be filed with your Form 1A   First step requirement $3,500 +
SEC/State Filings Required regulatory Filings    $5k 
FINRA Broker-Dealer 8 States require you to have a Broker-Dealer to sell securities to investors  Begin engagement when you start with lawyer  1-3% fees 
Investor Acquisition

  • PR Firm
  • IR Firm
  • Video
  • Social media
  • Media Firm
  • Advertising
  • Webinar
  • Newsletter
  • Publishers
 These firms prefer to be engaged right after you file, as the clock begins and gives them only 45-60 days when you go live.  Depending on size of offering you will spend up to $200k-$400k. Before you file your Form 1A  $25-50k at the beginning to start
Investor Relations Director Hire an internal resource to manage incoming inquiries from potential investors.  Handle outbound calls from investor leads. $4,500/month
KoreConX All-In-One platform End-to-end solution $4,500/month
Investment Platform Requires 45-60 days to set up After you retain your lawyer  Included with your KoreConX All-in-one platform 
Live Offering During the live offering you will have to pay for ID, AML fees required   Ranges from $0.58/person, these fees are provided at cost
Live Offering During the live offering you will have to pay for your Payment processors ( Credit Card, ACH, EFT,  Crypto, WireTransfer, IRA)   These fees are provided at cost
SEC-Transfer Agent Required as part of your Form 1A filings  After you sign up with lawyer  Included with your KoreConX All-in-one platform 
Secondary Market Ability for Shareholders to trade private company shares. Included with your KoreConX All-in-one platform 
TradeCheck Report Ability to trade in all 50 states, include Blue Sky registration, and listing National Securities Manual Included with your KoreConX All-in-one platform 

 

 

Estimated Costs for Canada-Based Companies:

What Why/ Work to be done When How much
USA Lawyer To file your SEC Form 1A and state filings First step in moving forward $35-$75k 
Canada Lawyer $5k-$10k
Auditors Are required to be filed with your Form 1A   First step requirement $3,500 +
SEC/State Filings Required regulatory Filings    $5k 
FINRA Broker-Dealer 8 States require you to have a Broker-Dealer to sell securities to investors  Begin engagement when you start with lawyer  1-3% fees 
Investor Acquisition These firms prefer to be engaged right after you file, as the clock begins and gives them only 45-60 days when you go live.  Depending on size of offering you will spend up to $200k-$400k Before you file your Form 1A  $25-50k at the beginning to start
Investor Relations Director Hire an internal resource to manage incoming inquiries from potential investors.  Handle outbound calls from investor leads. $4,500/month 
KoreConX All-in-one platform $4,500/month 
Investment Platform Requires 45-60 days to set up After you retain your lawyer  Included with your KoreConX All-in-one platform  
Live Offering During the live offering you will have to pay for ID, AML fees required   Ranges from $0.58/person these fees are provided at cost
Live Offering During the live offering you will have to pay for your Payment processors ( Credit Card, ACH, EFT,  Crypto, WireTransfer, IRA)   These fees are provided at cost
Transfer Agent Required as part of your Form 1A filings  After you sign up with lawyer  Included with your KoreConX All-in-one platform 
Secondary Market Included with your KoreConX All-in-one platform 
KoreTrade Report Ability to trade in all 50 states, published in the Securities Manual Included with your KoreConX All-in-one platform 

Accredited Vs. Non-Accredited Investors: What’s the difference?

Posted on by Oscar Jofre

There is a big difference between accredited and non-accredited investors. Understanding the difference is key to knowing which type of investor you are or understanding the type of investor your offering is targeting. Let’s look at each type of investor and find out more about their specific benefits and limitations.

 

Accredited Investors

 

An accredited investor is an individual or institution that has been approved by the Securities and Exchange Commission (SEC) to invest in certain types of securities. These investments are typically unavailable to the retail investor, as they are considered high-risk and high-return. Historically, accredited investors have been able to:

 

  • Access to exclusive investment opportunities: Traditionally, many startups and early-stage companies will only accept investments from accredited investors, as they were considered to be more sophisticated and able to handle the higher risk.
  • Invest in private companies: Many accredited investors choose to invest in private companies, as they can offer higher returns than public companies. Before the JOBS Act, only accredited were able to invest in these companies.

 

To become an accredited investor, an individual must meet certain criteria set forth by the SEC. These include:

  • Entities that have assets of $5 million.
  • Earning an annual income of $200,000 (or $300,000 for couples) for the past two years.
  • Having a net worth of $1 million (excluding their primary residence).

 

Investing in private companies is often considered a high-risk investment, as there is often less information available about these companies than public companies. However, accredited investors are typically seen as more sophisticated and able to handle the higher risk.

 

Non-accredited Investors

 

A non-accredited investor is an individual who does not have the financial qualifications to be deemed an accredited investor. This can be due to a low net worth or a lack of investment experience. Historically, many non-accredited investors may have missed out on beneficial investment opportunities, especially in the private market. However, with the rise of JOBS Act exemptions, we are seeing more companies looking toward nonaccredited investors. The benefits of being a nonaccredited investor include:

 

  • No SEC qualification: Anyone with the desire to invest can be a non-accredited investor. There are no criteria set by the SEC that must be met. 
  • Access to new and exciting companies: Companies can tap into a new pool of potential investors by marketing toward non-accredited investors. These investors can also tap into a broader range of investment opportunities that may have been unavailable before the JOBS Act was passed into law.
  • The ability to invest smaller amounts of money: For non-accredited investors, the minimum investment amount is often lower than it is for accredited investors. This can be helpful for those who want to get started in investing but don’t have a large sum of money to put towards it.

 

As the private market continues to grow, both non-accredited and accredited investors alike can take advantage of exciting opportunities to invest in growing companies. The JOBS Act has also done an incredible job leveling the playing field for investors, which will only incentive more companies to tap into the growing pool of potential investors.

Can I Use My IRA for Private Company Investments?

Posted on by Oscar Jofre

Individual retirement accounts (commonly shortened to IRAs) allow flexibility and diversity when making investments. Whether investing in stocks, bonds, real estate, private companies, or other types of investments, IRAs can be useful tools when saving for retirement. While traditional IRAs limit investments to more standard options, such as stocks and bonds, a self-directed IRA allows for investments in things less standard, such as private companies and real estate. 

 

Like a traditional IRA, to open a self-directed IRA you must find a custodian to hold the account. Banks and brokerage firms can often act as custodians, but careful research must be done to ensure that they will handle the types of investments you’re planning on making. Since custodians simply hold the account for you, and often cannot advise you on investments, finding a financial advisor that specializes in IRA investments can help ensure due diligence. 

 

With IRA investments, investors need to be extremely careful that it follows regulations enforced by the SEC. If regulations are not adhered to, the IRA owner can face severe tax penalties. For example, you cannot use your IRA to invest in companies that either pay you a salary or that you’ve lent money to, as it is viewed by the SEC as a prohibited transaction. Additionally, you cannot use your IRA to invest in a company belonging to either yourself or a direct family member. If the IRA’s funds are used in these ways, there could be an early withdrawal penalty of 10% plus regular income tax on the funds if the owner is younger than 59.5 years old. 

 

Since the IRA’s custodian cannot validate the legitimacy of a potential investment, investors need to be responsible for proper due diligence. However, since some investors are not aware of this, it is a common tactic for those looking to commit fraud to say that the investment opportunity has been approved by the custodian. The SEC warns that high-reward investments are typically high-risk, so the investor should be sure they fully understand the investment and are in the position to take a potential loss. The SEC also recommends that investors ask questions to see if the issuer or investment has been registered. Either the SEC itself or state securities regulators should be considered trusted, unbiased sources for investors.

 

If all requirements are met, the investor can freely invest in private companies using their IRAs. However, once investments have been made, the investor will need to keep track of them, since it is not up to their custodian. To keep all records of investments in a central location, investors can use KoreConX’s Portfolio Management, as part of its all-in-one platform. The portfolio management tool allows investors to utilize a single dashboard for all of their investments, easily accessing all resources provided by their companies. Information including key reports, news, and other documents are readily available to help investors make smarter, more informed investments. 

 

Once investors have done their due diligence and have been careful to avoid instances that could result in penalties and taxes, investments with IRAs can be beneficial. Since it allows for a diverse investment portfolio, those who choose to invest in multiple different ways are, in general, safer. Additionally, IRAs are tax-deferred, and contributions can be deducted from the owner’s taxable income. 

Why are Data and Research Key in the Private Capital Markets?

Posted on by Oscar Jofre

Data and research are essential pieces of the puzzle regarding the private capital markets. Investors can make informed decisions about where to put their money, and private markets can attract the best investors by having access to accurate and timely data. By conducting thorough research on potential investments, investors can mitigate risk and maximize return potential.

 

Importance of Data & Research

Private market data provides understanding and predictions of trends, allowing investors to look for companies on a trajectory towards growth and success. Data helps identify these trends and enables investors to make more informed decisions. For example, if a company has the data to demonstrate an upward trend in annual revenue and gross profit, it can be compelling to any potential investor. Investors stay informed of private markets and make informed decisions by private companies providing up-to-date data.

 

Research is necessary to understand the risks and opportunities of any investment. Research helps investors see that a product or service works as intended and solves a real problem or need. Even if the revenue and gross profit look good on paper, investors won’t go for a product that isn’t solving a real problem or helping people. This is because investors need to be aware of any investment’s potential dangers and benefits before putting their money into a private offering. To make an informed decision, private capital investors need to know all they can about the company they are investing in.

 

Conducting Market Research

Private capital investors conduct due diligence on potential investments by reviewing various data sets and conducting company research. This information allows investors to understand the risks and opportunities associated with each asset. Research that demonstrates the viability of a product or service helps investors understand the potential return on investment.

 

There are multiple methods for investors to conduct market research based on private company data. One way is a SWOT analysis, allowing investors to take an in-depth look at a business and its needs to succeed by comparing its strengths, weaknesses, opportunities, and threats. In a rapidly changing market, companies that can demonstrate a trend of growth and success with minimal weaknesses are more likely to attract investment. 

 

Benefiting from Private Capital Research

Investors need to make quick decisions, so having access to up-to-date data is critical. Data is essential for understanding how a company’s market performance affects private company growth. The current market performance also influences an investor’s decision on due diligence on potential investments.

 

Private market data helps paint a more accurate picture of the company and its operations, which can be helpful for both investors and company employees alike. With accurate data, investors can make better decisions regarding where to invest based on their ROI expectations, company performance, and management effectiveness. Presenting data and research provides private companies with feedback from the market, including information about how potential customers feel, what they think about a product, or how successful a product may be compared to the rest of the market.

 

The private capital markets are a haven for risk-averse, long-term investors. With the correct data and research, investors can make more informed decisions and reduce the risk of investing in a company that may not be a good fit for their portfolio. Private capital markets increase transparency by showcasing company data, drawing in potential investors, and allowing more investment opportunities. Whether looking for funding or an investment, it is vital to understand how data and research can help private capital markets grow.

 

What is a Company’s Duty to its Shareholders?

Posted on by Oscar Jofre

For many companies, raising capital often marks a major milestone. With increased sources of capital, the company can grow, hire new employees, and develop new products that can leave a lasting impact on the world. With the continuing developments of exemptions like Regulation A+ and Regulation CF, companies have a powerful mechanism to raise this needed capital without the costly expense of going public through an IPO.

 

However, this increased access to capital does not come without great responsibilities. Any company taking investments from shareholders are obligated to carry out their duties to their shareholders.

 

By definition, shareholders own a portion of the company depending on how much they have invested. With that ownership, shareholders are granted rights such as voting, access information, and participate in meetings. As a company that has taken investments from these individuals, the company must ensure that these rights are maintained.

 

First, companies are required to hold an annual general meeting, sometimes called an annual shareholder meeting. During these meetings, companies must present information on the company and allow shareholders to vote on company matters. It is the company’s duty to shareholders to conduct this meeting within 150 days of the end of their fiscal year, notifying shareholders no less than 20 days before and no more than 50 days before the meeting is scheduled to be held. If a shareholder is not able to attend, they should be able to cast their vote by proxy.

 

Additionally, companies must allow shareholders to access the information they are permitted to view. Such information includes the company’s articles of incorporation, bylaws, financial statements, meeting minutes, and corporate stock ledgers. The company must provide this information to its shareholders when requested.

 

Beyond these duties, it is also the duty of the company, its directors, and leadership to make business decisions with good judgment. In transactions, the directors should not personally benefit from any decision at the company’s expense. Officers should also conduct themselves the same way, decisions should be made so that they are in the best interest of the company.

 

Any company with shareholders is responsible for conducting business in the best interest of the shareholders and the company itself. Shareholders must be required to vote on significant decisions, while the company must provide shareholders with important company information they are permitted to have access to. Maintaining these duties is essential to good and legal business practices.

How often do I need to hold an AGM?

Posted on by Oscar Jofre

Every year, Warren Buffet hosts the Berkshire Hathaway Annual Shareholders Meeting. This meeting is an Annual General Meeting (AGM), widely viewed with many people in attendance. The reason for this is that it is often more than the typical AGM, which we will detail below, as Buffet often talks about more than just Berkshire Hathaway. This year, on Saturday, May 1st in Los Angeles, Buffet was joined by, as Yahoo Finance reported, “Vice Chairman Charlie Munger and both shared their unscripted views on Berkshire Hathaway, the markets, the economy, corporate governance, and a lot more.”

 

This example is only one of what an AGM can be. First, these meetings are required by regulations imposed by the Securities and Exchange Commission (SEC). An AGM, as the name suggests, is a meeting held every year for shareholders. This is the time for a company’s board of directors to present information to the shareholders and a chance for shareholders to exercise their right to vote, given to them by owning a share, after hearing the vision and direction of the company.

 

Some specific requirements are defined by each state in which a public or private company is incorporated, however, they follow a general set of what should happen at each. This variance comes from the company’s articles of incorporation, bylaws, and state requirements. The typical AGM breaks down as follows: 

 

  • Reading and approval of the minutes of the previous meeting 
  • Financial statements
  • Ratification of the director’s actions
  • Election of the board of directors
  • Concerns and questions from Shareholders

 

While shareholders are the focus of this meeting, they are not always available for the meeting. For this reason, they can vote by proxy via an online avenue or by mail. In addition, the SEC requires public companies to make meeting information available online for shareholders, so that they can be informed of their votes. Meeting information is also submitted to the SEC for regulatory compliance and sets the specific date and time for the meeting. These reporting requirements are a means to provide transparency for shareholders and the accountability of company management. 

 

The question of how often to hold an annual general meeting is every year. More specifically, from Cornell Law:

 

“An annual meeting of the shareholders of the subsidiary holding company for the election of directors and for the transaction of any other business of the subsidiary holding company shall be held annually within 150 days after the end of the subsidiary holding company’s fiscal year.”

 

Shareholders will also need to be notified a minimum of 20 days and a maximum of 50 days before the event. Outside of this yearly meeting for shareholders, if there is an action that the company needs shareholder votes for and cannot wait for the next annual meeting, they can call an Extraordinary General Meeting. EGMs are meant for urgent matters that cannot wait.

The Role of Investor Acquisition in Capital Raising Activities

Posted on by Oscar Jofre

The goal of any capital raising activity is to secure capital for the growth and development of the business. Without needed capital, it can often be challenging to expand; whether that means hiring more employees to keep up with demand, improving production facilities to manufacture a product, or funding research and development to bring more products or services to the market. However, in order to actually raise the capital required, potential investors need to be made aware of the offering and the opportunities becoming a shareholder entails. This requires marketing.

 

When it comes to RegA+ and RegCF offerings, the potential to sell securities to the everyday investor is powerful, opening up the market to a vast pool of potential investors not available to private companies before the 2012 JOBS Act. However, this also creates the need for companies to find the best way to reach their target audience and make them aware of the investment opportunity. Through marketing, you are able to inform prospective investors of the opportunity to invest in your company. 

 

More than ever before, social media has become an integral part of marketing activities across all business sectors. It allows you to reach your audience where they’re at, and as nearly seven in ten Americans are on social media, that place is online. Through social media, businesses can tell their story and use that to drive investors (and even new customers) to support their brand. Beyond social media, marketing becomes a key component of investor acquisition. Through investor acquisition, a company is able to target investors based on demographics; whether that is people who exhibit similar behaviors to shareholders, by age, by location, or by any other meaningful factor that allows you to identify the right investor for your company. The methods to target these prospects are just as diverse. While we’ve already mentioned social media, email marketing is still an effective media channel, along with online advertising, and many more channels of marketing. The importance is to use whichever channels allow you to best reach your target audience. 

 

The key to marketing is that it helps publicize your offering and find the best investors for your company. Successfully marketing an offering, as long as advertisements are truthful and not misleading, can make a significant difference in the raise’s success. Similarly, finding the right investor acquisition partner with experience in marketing capital raising activities can help ensure you meet compliance and use the most effective strategies for reaching the right audience. 

What is the Role of a Corporate Secretary?

Posted on by Oscar Jofre

A Corporate Secretary is a required position set forth by state corporation laws and is part of the ‘check and balance’ on board members and offers the board advice and support. While providing the company with advice on the state laws, they are also tasked with ensuring that board members maintain their fiduciary duties to shareholders. 

 

One way they do this is by accurately recording and maintaining the minutes for the board meetings they usually set up. Corporate secretaries are responsible for ensuring that an adequate number of board meetings are held and that scheduling coincides with the availability of board members. They are required to comply with meeting notices and often are responsible for other logistical arrangements. This is just one of the basic tenets of the position and typically remains a constant between companies. 

 

Corporate secretaries are essentially a compliance officer for board members, serving as a liaison between the board, officers, and shareholders while maintaining documents that are required to keep the board and company in compliance with regulations. They also direct the activities related to the annual meeting of shareholders and share transfers. As a note, while the corporate secretary does not need to be a lawyer, they need to have sufficient knowledge of corporate and securities law to ensure compliance, so a background in law can be helpful. They should also be as well-versed in the company’s business, understanding it thoroughly to be an effective corporate secretary.

 

Even though the role of the corporate secretary is dynamic and complex, varying slightly between companies, the basic function of the position can be boiled down to being responsible for providing support to the board, officers, and shareholders on business matters and the laws that apply to them. Whether it is setting up, facilitating, or creating the agenda of a board or annual shareholders meeting, a corporate secretary is an essential and mandatory part of a company’s structure in the modern world of business. 

What is Portfolio Management?

Posted on by Oscar Jofre

Portfolio management, at its most basic level, is the way that an investment portfolio is designed to align with the wants and needs of the investor. Portfolio management focuses on creating an investment strategy that factors in the goals set by the investor, the timeframe involved in the investment, and the risk tolerance of the investor.

 

This is done by picking a variety of kinds of investments like stocks, bonds, and other funds and monitoring and adjusting them as needed. There are two ways that portfolios are managed: actively and passively. Often, this will be decided by the risk tolerance that a specific investor has. With Regulation A+ and Regulation CF, the everyday investor can choose to invest in private companies as well, which significantly expand opportunities to be a part of new and exciting investments.

Active portfolio management is a hands-on approach that involves hiring portfolio managers who buy and sell stocks intending to outperform investment benchmarks. To try and outperform these benchmarks, portfolio managers have to take some risks in the investments they make. Some of these risks lead to big rewards, but as with all risks, they can also lead to large losses to the investor. Portfolio managers have a fiduciary responsibility to act in good faith regarding the investment, and also have fees attached to them based on the size of the portfolio and the return on investment of the portfolio. 

 

Passive portfolio management is a mostly hands-off approach where the investor is trying to match investment benchmarks rather than trying to outperform them. Portfolios that are managed passively are frequently managed by the investor, so no fees are going to a portfolio manager. Instead of buying and selling specific stocks, passive portfolios are usually invested in exchange-traded funds, index funds, or mutual funds. This is a very low-risk approach that values slow and consistent growth over time, making it a great long-term investment strategy.

 

There are four pillars in portfolio management: asset allocation, diversification, rebalancing, and tax minimization. Asset allocation is the practice of spreading your investment into a variety of different assets like stocks, bonds, and mutual funds. Good asset allocation means that an investor takes on a smaller amount of risk because investments are protected due to the various places that assets are allocated. Diversification is about making sure that investors don’t put all of their eggs in one basket, because if that investment fails, there is a lot of money to be lost.

 

Rebalancing is done every so often as a way to hit the reset button on asset allocation. Over time, some investments might be doing very well, while others might be doing very poorly. To maintain a low-risk nature, it is important to sell both assets that are doing well and ones that are not. Over time, market fluctuations might cause a portfolio to get off course from the goals that were originally set, so rebalancing keeps the train going down the right track. Tax minimization focuses on trying to keep as much of the money that your investment made as possible. Capital gains get taxed differently depending on what investments they came from and where. Investments in exchange-traded funds or mutual funds, for example, get taxed at a much lower rate than investments in stocks. The goal is to keep as much money as possible!

 

Whether you’re saving for your first house or saving for your dream house, good portfolio management will result in investors being able to set, meet, and surpass their financial goals. The right portfolio management strategies will help to build a worthwhile return.

 

What is Due Diligence?

Posted on by Oscar Jofre

When it comes to investments of any kind, due diligence is essential for both issuers and investors alike. Do so what exactly is due diligence?

 

Due diligence is ensuring that a potential investment comes with the accurate disclosure of all offering details. The Securities Act of 1933, a result of the stock market crash years earlier, introduced due diligence as a common practice. The purpose of the act was to create transparency into the financial statements of companies and protect investors from fraud. While the SEC requires the information provided to be accurate, it does not make any guarantees to its accuracy. However, the Securities Act of 1933 for the first time allowed investors to make informed decisions regarding their investments. 

 

In the process of investing, investors should review all information available to them. Investors should ask questions such as:

 

  • Company Business Plans: What are the issuer’s current and future plans? Do their projections seem reasonable given their current financial reports?
  • Company Management: Who are the company’s officers, founders, and board members? What is their previous experience in business and have they had success? Does the management team pass a Bad Actors check?
  • Products/Services: What does the company offer? Is it something that you would use or does there seem to be a wide appeal for the product or service in the market? 
  • Documentation: Is the company’s bylines, articles of incorporation, meeting minutes, and other related documents available to review?
  • Revenue: What does the company’s revenue look like? Does it make sense considering the demand for their products? What do revenue projections look like?
  • Debt: Does the company have debt? Is it comparable to other companies in the industry?
  • Competition: What does the company’s competition look like and how do they plan to deal with it? Has the company properly protected intellectual property through trademarks, patents, copyrights, etc.?
  • Funding: Why is the company raising funding and what are the plans for the money raised?

 

While these are important questions to ask, there are other factors that investors should think about. Investors should consider whether they are financially able to take on the risk of investment. While investing in private companies can lead to a huge return, success is not guaranteed. Investors should ask themselves if they would be able to afford to lose their investment or not immediately being able to make a profit. They should also ensure that they are qualified to invest. If they are a non-accredited investor, have they already made investments that could alter the amount they can invest?

 

Issuers should make sure that all information investors need to make an educated decision to invest is adequately provided. They do not want to risk potential lawsuits down the road for failing to disclose certain information. Issuers can ensure that they are meeting all due diligence requirements by using a broker-dealer as an intermediary for their investment.

Why Does My Company Need a 409(a)?

Posted on by Oscar Jofre

Whether your company is a new startup or an established private company, understanding and proper use of a 409(a) is essential to your company’s success. Thinking about it early will help you avoid potential setbacks and challenges later on, giving you more time to focus on growing your company, rather than tackling penalties. If that doesn’t convince you that a 409(a) is something that your company needs, a better understanding of what it is will convince you.

 

To start with the basics, what is a 409(a)? First added to the Internal Revenue Code (IRC) in 2005, 409(a) outlines the taxation on “non-qualified deferred compensation,” which includes common stock options for employees. For companies to be able to offer their employees the ability to purchase stock in the company, they must complete a 409(a) valuation to determine the “strike price,” or the predetermined price at which employees can purchase the stocks. 

 

Undergoing a 409(a) valuation ensures that the strike price is at or above the fair market value and that the company remains compliant with the IRC. For companies who the IRS find to be noncompliant with the code, some penalties include an additional 20% tax penalty and penalty interest. 

 

So, how do you ensure that your company accurately determines the fair market value of your common stock? This can be done a couple of ways, either by someone within the company or by a third-party valuation firm. Whether you’re planning on completing 409(a) valuation in-house or hiring a firm, there are a few key things to keep in mind. 

 

For valuations done in-house, whoever is chosen must have at least five years of experience related to valuation. Since this can be subjective, the IRS could rule that the individual did not meet the requirements and that the valuation is inaccurate. Additionally, only private companies that are less than 10 years old can choose to complete their valuation in-house. It is also important to remember that if the IRS were to investigate, it would be the company’s responsibility to prove their valuation was correct. 

 

Hiring an outside firm, while often the more costly option, is usually more reliable. As long as the firm maintains a consistent approach to valuations and is independent, meaning that the firm is only providing the company with valuation, the company is given “safe harbor” protection. A safe harbor protects both the company and its employees, as it would be the IRS’s responsibility to prove that the valuation was inaccurate. 

 

Once your company has received its 409(a) valuation, how long does that last? It is considered to be valid for one year after the valuation. After that, it must be redone to ensure compliance. If your company closes a round of funding or undergoes any material changes before that period is up, a new 409(a) valuation would be required. 

 

Armed with the knowledge of what exactly a 409(a) is, you can help your company achieve success and maintain IRC compliance. Even early on, being compliant with tax codes ensures you avoid severe penalties and expensive delays should the IRS decide to audit your company as it begins generating revenue. 

What is Secondary Market Trading?

Posted on by Oscar Jofre

Even if you’re unfamiliar with the term secondary market, you’re likely familiar with the concept. Companies sell securities to investors, who in exchange own a piece of the company. The investor can then decide they would rather not own that security any longer, so they sell it to someone else who does. For public companies, this typically happens on the NASDAQ and the New York Stock Exchange, where people freely sell and purchase stock in publicly traded companies. 

 

The exchange is considered secondary because the transaction is not done with the original company that offered the security. An example of a primary market transaction would be an initial public offering, or IPO, during which a company is offering securities directly to investors for the first time. For any security sold through a secondary market, the funds go to the investor selling, and not the company that originally offered the security.  This is one of the major distinctions between the primary and secondary markets. 

 

Securities in private companies can also be sold through a secondary market, similar to stocks in public companies traded on the stock market. The investor, with the help of their broker, can offer their securities for saler. Once the offer has been accepted, the company that originally offered the securities must be contacted to approve the deal. Once approved, both the buyer and the seller complete the paperwork for the transaction and complete the deal. 

 

Without the secondary market, investors would be unable to trade the securities they have purchased, leaving them without any options for their investments. Importantly, access to a secondary market allows employees of the issuer to sell their securities that they may have been awarded. Without a secondary market, these investors and employees would not have any option to sell their shares unless the company was to go public during an IPO. 

 

Despite the straightforward logic behind the process, secondary market trading has been relatively fragmented, with not all processes occurring in the same place. This increases the potential for errors and any increases in transaction time that they may cause. To combat this, platforms on which securities can be traded through the secondary market have been developed as secondary market trading has become commonplace in the world of investing. 

 

KoreConX has developed an all-in-one platform, which includes a secondary market as one of its features. On the platform, every important authorization that is deemed necessary for the transaction to occur is kept in one place, allowing for information to be easily tracked and recorded. Buyers, sellers, brokers, and the transaction itself are brought together in one place to prevent errors that may have occurred otherwise. Additionally, the KoreConX Secondary Market eliminates central clearinghouses from the process, allowing for real-time confirmation and availability of funds once the transaction is complete. 

 

Secondary market trading allows investors to sell securities they’ve purchased from private companies to other interested investors, similar to trading public stocks. Even though their sale is decentralized, platforms such as KoreConX allow for people to easily and securely sell their securities, creating a more efficient and streamlined process. 

Can I Use My IRA for Private Company Investments?

Posted on by Oscar Jofre

Individual retirement accounts (commonly shortened to IRAs) allow flexibility and diversity when making investments. Whether investing in stocks, bonds, real estate, private companies, or other types of investments, IRAs can be useful tools when saving for retirement. While traditional IRAs limit investments to more standard options, such as stocks and bonds, a self-directed IRA allows for investments in things less standard, such as private companies and real estate. 

 

Like a traditional IRA, to open a self-directed IRA you must find a custodian to hold the account. Banks and brokerage firms can often act as custodians, but careful research must be done to ensure that they will handle the types of investments you’re planning on making. Since custodians simply hold the account for you, and often cannot advise you on investments, finding a financial advisor that specializes in IRA investments can help ensure due diligence. 

 

With IRA investments, investors need to be extremely careful that it follows regulations enforced by the SEC. If regulations are not adhered to, the IRA owner can face severe tax penalties. For example, you cannot use your IRA to invest in companies that either pay you a salary or that you’ve lent money to, as it is viewed by the SEC as a prohibited transaction. Additionally, you cannot use your IRA to invest in a company belonging to either yourself or a direct family member. If the IRA’s funds are used in these ways, there could be an early withdrawal penalty of 10% plus regular income tax on the funds if the owner is younger than 59.5 years old. 

 

Since the IRA’s custodian cannot validate the legitimacy of a potential investment, investors need to be responsible for proper due diligence. However, since some investors are not aware of this, it is a common tactic for those looking to commit fraud to say that the investment opportunity has been approved by the custodian. The SEC warns that high-reward investments are typically high-risk, so the investor should be sure they fully understand the investment and are in the position to take a potential loss. The SEC also recommends that investors ask questions to see if the issuer or investment has been registered. Either the SEC itself or state securities regulators should be considered trusted, unbiased sources for investors.

 

If all requirements are met, the investor can freely invest in private companies using their IRAs. However, once investments have been made, the investor will need to keep track of them, since it is not up to their custodian. To keep all records of investments in a central location, investors can use KoreConX’s Portfolio Management, as part of its all-in-one platform. The portfolio management tool allows investors to utilize a single dashboard for all of their investments, easily accessing all resources provided by their companies. Information including key reports, news, and other documents are readily available to help investors make smarter, more informed investments. 

 

Once investors have done their due diligence and have been careful to avoid instances that could result in penalties and taxes, investments with IRAs can be beneficial. Since it allows for a diverse investment portfolio, those who choose to invest in multiple different ways are, in general, safer. Additionally, IRAs are tax-deferred, and contributions can be deducted from the owner’s taxable income. 

How to Manage Investments in Private Companies

Posted on by Oscar Jofre

For investors, investing in private companies can be a beneficial way to diversify their investment portfolios. Whether the investment was made through private equity or RegA+, proper management can contribute to long-term success. However, once the investment is made, investors need to ensure that they are correctly managing their shares. With this in mind, how should investors manage their investments once they have been made?

 

Investments made in private companies can often come with voting rights. Being a part of company decisions is an important aspect of being an investor and helps to elect company directors and resolve issues. Investors exercising their voting rights can be a major aspect of managing their portfolio. 

 

Whether information is provided directly to the investors by the company or through a transfer agent, as companies release reports and other key information, shareholders should maintain current knowledge of the information. Understanding the company’s direction and changes that are occurring can give investors a picture of the future so they can determine how their shares will affect their portfolio. The investor should also know where the data can be found so that they are easily able to access and assess it. 

 

Additionally, investors should monitor the liquidity of the shares. Since some private company shares can be traded in a secondary market, understanding the value and the option to trade is important for investors. If they know how much their shares are worth, and they have the ability to sell them, investors can freely trade their shares. This is key if they decide that they no longer want to be a shareholder in a particular private company. 

 

However, for investors who own shares in multiple different companies, managing this information can become a burdensome task. With an all-in-one platform that incorporates portfolio management for investors, KoreConX streamlines and simplifies the process. KoreConX Portfolio Management allows investors to manage their investments from a centralized dashboard. Investors are easily able to see the shares that they own in each private company they’ve invested in. Through the platform, investors can access critical company information and performance data in one place, eliminating the need to remember where each piece of information is kept. Investors are also notified of upcoming shareholder meetings and can exercise their voting rights through the KoreConX platform. When companies and investors utilize the KoreConX platform, they can achieve higher success rates by maintaining compliance with necessary regulations. Utilizing KoreConX Portfolio Management is a powerful tool for investors to make informed decisions regarding their investments. 

 

When dealing with private company investments, it is incredibly important that investors properly manage their portfolios. Remaining up-to-date on company decisions and performance can help them plan for the future of their shares while allowing them to make decisions to increase the success of their investments. When investors understand their voting rights, company developments, and the liquidity of their shares, they can be an active participant in their financial success. 

What is Investor Relations?

Posted on by Oscar Jofre

No matter the size of the company, investor relations (IR) should be a key component of conducting business. It’s never too early to implement a solid investor relations approach, but if your company has never tackled this issue, the term may seem confusing. Understanding what investor relations entail will allow your company to begin implementing strategies that will help your company succeed. 

 

Simply put, investor relations provide all investors with accurate information about the company. IR plays a key role in communication between investors and company executives. Rather than shareholders contacting the company’s CEO or other executives directly, the IR department acts as an intermediary, determining when it is important to involve the CEO.  If company executives were continually contacted by investors with requests, they would have to devote their already limited time to manage these requests. However, it is also up to IR teams to still ensure that company executives are still available for shareholders, so they must find a balance that works best. 

 

IR departments also have a responsibility to ensure that the company is compliant when reporting to investors. For public companies, the Public Company Accounting Reform and Investor Protection Act, passed by the US government in 2002, increased reporting requirements and set standards for companies to follow. With the bill in place, IR departments are required to distribute financial information to investors accurately. For private companies, ensuring they are meeting compliance early will save them time if they were to go public. The transparency increases confidence in the company for investors and ensures that the business is being run the right way. 

 

As a key line of communication between the company and investors, investor relations departments are typically responsible for communicating any changes or initiatives that the company will be undergoing. Being included in discussions with the executive team will help the IR team understand why decisions are being made so that they can communicate the reasoning effectively with investors. 

 

For private companies, software such as KoreConX’s all-in-one platform can help easily manage relationships with their shareholders. The KoreConX IR feature allows companies to work seamlessly with investors by providing them online opportunities to vote and access company financial information and news releases. By giving investors a secure platform on which they can both nominate and vote on company matters, they can feel confident in the way voting is held. Additionally, the investor relations feature allows the company to easily organize meetings with its investors. 

 

By maintaining transparent investor relations, private companies can prepare themselves for success. Keeping investors up to date on important company information allows them to have confidence in the company’s leadership and their investment. Having a track record of good relationships and transparency with current investors may also be beneficial when it comes to raising future capital, as it could help to attract potential ones. 

How does Investor Acquisition Help Find the Right Investors?

Posted on by Oscar Jofre

If you’re a company that is in the process of raising funds for your business, you’re likely looking to do so with the help of investors. By trading a piece of your company in exchange for some much-needed capital, you can fund your ideas and the growth of your business. With Regulation A+ opening up the investor pool to include those who would not be regularly included in a traditional IPO, it is essential to choose the right investors with whom you are going to grow your business. As investors become shareholders that often have some kind of say in the company, it will be important to choose investors that will aid you on your journey to grow your company. But how exactly do you find the right investor for you and your company’s vision?

 

Investor acquisition is targeting the best investors for the offering based on their demographics. Are you trying to raise money from your customers or people with similar behaviors? Are you targeting investors based on location, age, or other demographics? With investor acquisition, it allows companies to find and target the investors that will be best suited for the offering. If companies are targeting the investors that are most likely to invest, less time is wasted and more money is raised by eliminating the need to interact with those who aren’t going to invest. 

 

Additionally, through investor acquisition, you can turn current customers into investors and investors into customers. With the addition of RegA+ to issuers’ toolbox, the ability to raise money from customers is now easier than ever. The customers who already know and support you can turn into important advocates for your company, which in turn can entice either more investors or customers to support your company.  Through RegA+, investors are not required to be accredited, so everyday people now have the opportunity to invest in companies that they believe in and support. 

 

Once you’ve found investors to invest in your offering, keeping proper records of them will be essential to long-term success. Issuers need to manage their cap table, maintain investor relations, perform securities transfers in a compliant way, transfer agent, and more. With the KoreConX all-in-one platform, companies can securely manage who their investors are, issue shareholder certificates, and maintain their cap table in real-time, as changes occur. For investors, they can securely manage their portfolio of investments, receive important company information, and vote on company matters. With the platform, companies can maintain compliance and manage their information seamlessly. 

 

Once you’ve decided to raise capital for your company, the next most important should be who you are going to raise the money from. With the help of investor acquisition, you can analyze information about your target so that you can best understand their behavior and what will get them to invest. Making smarter decisions about who you want investment from will help your company grow in the direction that you see best. 

 

Wefunder Interviews Oscar Jofre co-founder KoreConX

Posted on by Oscar Jofre

WeFunder the #1 Equity Crowdfunding platform in the USA interviews Oscar Jofre co-founder of KoreConX.

(1) What is a Transfer Agent? 

This a great question. As each entrepreneur enters the world of raising capital, new responsibilities are brought on.  In many instances, the company will need to engage with a registered transfer agent to manage the corporate records of the company.   This can seem like a disconnect since as entrepreneurs know their business best. However, in order to bring confidence to investors, you appoint a third party Transfer Agent, to ensure your book of records are up to date and accurate. 

So what is a Transfer Agent?  

A stock transfer agent or share registry is a third party company, which records all entries and manages all transactions of the company’s equities.  We are holding the book of records for the company and to make sure all trades, transfers and corporate actions are undertaken properly.

(2) What are the requirements for companies that run Regulation Crowdfunding campaigns, with respect to Transfer Agents. 

Once you decide to do a Regulation Crowdfunding (RegCF) or RegA+ you will need to undertake a number of regulatory activities before you can get started first, you will need to apply and receive regulatory approval from the SEC.  Wefunder provides you all the guidance you need to make sure it’s done correctly and timely.

As you prepare for your offering, you need to start planning for how you will manage and report to all your new shareholders post your capital raise.  This can seem overwhelming but we are here to provide you the platform that will help you with all that.

Since you need to appoint a transfer agent, here is what really sets us apart from a traditional transfer agent. We not only provide you the services as mandated, but we also provide a whole platform where you can manage your shareholders, communicate with them, report to them, send them updates, hold your annual shareholders meeting including an included evoting feature and has a free portfolio management feature for your equity and debt holders to always see their investment information and updates. So you can pick a traditional transfer agent that will operate in a silo with none of the above features, or you can select KoreConX that not only meets your regulatory obligations, but also provides you access to an all-in-one platform to help you manage your business. 

(3) What are the other services provided by KoreConX? 

When we launched KoreConX to serve the JobsAct. It was designed by founders to help founders of a business and to bring everyone together, thus giving companies more control while spending less time doing redundant paperwork.

KoreConX provides the world’s first all-in-one platform providing companies: cap table management, document management, boardroom tools, investor relations, AGM planner, eVoting for shareholders, dealroom, reporting, valuations, and for their shareholders’ a free portfolio management to manage the investments in the company.  

The KoreConX all-in-one platform is for by entrepreneurs, CEO, President, CFO, COO, CCO, board of directors, corporate secretary, investor relations, legal counsel, auditors, and shareholders. 

One platform to serve the entire company.

(4) What are some of the biggest mistakes you have seen companies make with respect to Transfer Agents?

Having spent over 20 years in the public listed company world, it was not a surprise for us to see some of the issues private companies are facing.  For private companies today adding the role of Transfer Agent can be very difficult. 

The biggest mistake we see is not disclosing the full captable of the company.  This is often because of the way securities have been issued to other shareholders, founders, etc.   As the Transfer Agents, the only way to provide proper records is to have all the securities that the company has issued: shares, options, warrants, debentures, SAFE, Digital Assets, Loans, Promissory Notes, etc.

The second biggest mistake we see is that there is no documentation for the securities that have been issued prior to the RegCF offering.  

(5) What advice would you have for founders using Transfer Agents?

Like any relationship your company needs to have in the growth of your company, a Transfer Agent is very important.

Find a Transfer Agent firm that not only serves your needs but the needs of your shareholders, and provides you a way to be connected to them in a very effective and efficient manner so you don’t have to keep duplicating your efforts.

A Transfer Agent of the 21st Century needs to grow with you and understand the private company, and how you are going to use regulations to raise your capital.

(6) Why is KoreConx better than Carta? 

The major difference with KoreConX and companies like Carta, we design and built KoreConX from the ground up from the founders and the company’s perspective. Most people in the finance industry build products from a transactional and/or a dealermaker perspective.   

KoreConX emerged from the creation of the JobsAct and we knew the demands for Transfer Agents would be very difficult to undertake, given the size of the new shareholder bases and that capital raises would be too small to support the added cost of compliance. 

We created a platform to help a company who is just getting started through to full maturity.

The KoreConX all-in-one platform is there to help companies of all sizes and providing a journey for an entrepreneur to grow on the platform.

(7) How much does KoreConX cost?

Understanding the Regulation Crowdfunding (RegCF) and RegA+ we knew that pricing for this service would need to be aligned with the company. The service of transfer agent should not be based on the metrics of the past but rather what the companies of today need to operate and meet their regulatory obligations

Our pricing model is there to help companies not punish them.

For RegCF we have a 3 tier pricing model, and this is not based on how many shareholders they will have but rather how much capital they raised:

  • $0-$250k $25.00/month
  • $250-$500k $50.00/month
  • $500k- $1M $75.00/month

All our programs include all the same features:

  • Dedicated Agent
  • No onboarding fees
  • Unlimited transactions
  • Investor Relations
    • Ability to send reports to shareholders
    • Ability to send news releases to shareholders
    • Manage your Annual Shareholders Meeting
    • Give your shareholders the opportunity to vote online for company Annual Shareholders Meeting
  • Free Training for you and your shareholders

Top Questions a Securities Lawyer will Ask an STO Issuer (in USA or Canada)

Posted on by Oscar Jofre

Security Token Offering is a serious business. The days of the ICO are over. These are clear messages not only from the SEC and other regulatory bodies but also from thoughtful and experienced professionals. The SEC, in particular, is delivering this message mainly through regulatory actions and the position of SEC Chairman Jay Clayton. Most recently, a federal judge ruled that the U.S. securities laws may cover ICOs, giving the Feds a much-needed victory in their battle against fraud and money laundering.

Regardless of the nuances and the debate, what should be clear to issuers who have legitimate businesses or startup plans is that investors, as well as issuers, require protection. If anything, legitimate issuers should welcome such scrutiny and regulation which ensures the market is kept free of bad actors and questionable affiliations.

However, companies considering a security token offering need to be prepared to respond to questions that their securities lawyers will ask. To this end, we reached out to top lawyers to learn which information is crucial to them when a client reaches out for advice on their Security Token.

The professionals that contributed to this list are Sara Hanks (CrowdCheck Law, LLP – USA); Ross McKee (Blake, Cassels & Graydon, LLP – Canada), Lewis Cohen (DLX Law, LLP – USA); Rajeev Dewan and Kosta Kostic (McMillan, LLP – Canada); Alessandro Lerra (Lerro & Partners – Italy), and Alan Goodman (Goodmans, LLP – Canada).

Below is the list of items on which lawyers and other advisors will be focusing. There is no particular order, but you should be ready when contacting your securities lawyer or advisors to make sure you are prepared. This list is subject to change as the market develops.

  1. What jurisdiction is your company incorporated in and in what jurisdictions is your company doing or will do business?
  2. In which countries are you planning to offer your security token?
  3. Is the company already a public reporting issuer anywhere or are any of its other classes of securities already listed on an exchange?
  4. Will you be conducting a Direct Offering or a Broker-Dealer Offering?
    1. If a Direct Offering, how will you manage all of the regulatory requirements (including “Know Your Client” requirements)
    2. If you aren’t using a Broker-Dealer and you are selling to retail investors, how will you comply with the requirements of states that require you to register yourself as an issuer-dealer?
  5. Will this be for accredited investors only or will it also be made available to non-accredited investors?
  6. How do you plan to confirm or verify accredited investor status?
  7. How do you plan to confirm or verify investors are not on prescribed lists?
  8. Do you have a method to establish the suitability of the investment for an investor?
  9. What securities law exemptions do you intend to rely on for each jurisdiction you want to sell your security token?
  10. What documentation or certification will investors be required to sign?
  11. What is your investor record-keeping system and how do you plan to handle regulatory reporting of the distribution of securities tokens?
  12. What are the tax implications of the sale of the token for both the issuer and the investor?
  13. If ongoing tax reporting (e.g., FATCA) is required, how will that be handled?
  14. Which blockchain is the token going to be created on?
  15. Does the client understand the differences between public blockchains and closed or permission blockchains?
  16. Does the platform already exist?
  17. Do you know which Security Token Protocol you would like to use?
  18. Does the Security Token Protocol manage the lifecycle, custodianship requirements, and corporate actions of the security token?
  19. Does the Security Token Protocol have the capabilities to be managed by a regulated Transfer Agent?
  20. Has the smart contract code for the token been audited by a code audit firm?
  21. What level of assurance does the code audit firm give in terms of their work?
  22. Is the Security Token Protocol implemented on robust, highly-secure, and enterprise-class technology platform?
  23. Does the blockchain for the STO prevent cryptocurrency fraud, unauthorized mining, and forking?
  24. Does the blockchain for the STO provide guaranteed legal finality for securities transactions?
  25. Does the blockchain for the STO provide for recourse with forking or technical intervention in case of errors, losses, or fraud?
  26. Is there a utility element in the token?
  27. Is the security token coupled with a cryptocurrency?
  28. Does the blockchain have a well-defined and published governance model, and are you confident that the governance processes and governing entities are credible?
  29. Does the blockchain have adoption and recognition from financial institutions?
  30. Will the tokens be immediately delivered to the purchasers?
  31. What is the stated purpose of the offering and what is the business of the issuer?
  32. Is the number of tokens fixed or unlimited? Is there a release schedule for future tokens?
  33. How many tokens, if any, are being retained by management?
  34. Will the tokens have a fixed value?
  35. How many security token holders do you expect?
  36. Are you aware of the requirements for a Transfer Agent?
  37. What are the rights of security token holders?
    1.  Voting?
    2. Dividends?
    3. Share of revenue/profits?
    4. Wind up the business?Will the purchasers be seeking a return on their investment or are they buying the token for other purposes?
  38. Will the purchasers be seeking a return on their investment or are they buying the token for other purposes?
  39. What is the exit strategy for the company?
  40. Does your company currently have a Shareholders Agreement?
  41. Does the company have a board of directors?
  42. Do you have financial auditors?
  43. Do you intend to list the tokens on any secondary markets and are those markets in compliance with regulatory requirements that apply to securities exchanges?
  44. Following issuance of the tokens, are any lock-up periods required or advisable with respect to the token?
  45. Are there any requirements that the tokens may only be traded with persons in (or outside) certain jurisdictions?
  46. Once any lock-up period has concluded, where will the tokens be able to trade?
  47. How will any applicable resale restrictions be implemented and complied with? How will subsequent sellers and purchasers of tokens be made aware of these resale restrictions?
  48. How are any requirements for the tokens to trade on a given market or alternative trading system being handled?
  49. Does the company intend to provide ongoing reporting to investors and if so, how will that be handled?
  50. Will the blockchain be used to facilitate any additional levels of transparency?
  51. What social media platforms are you using?
    1. Telegram
    2. Twitter
    3. Facebook
    4. Medium
    5. LinkedIn
  52. Do you know what limitations on communication or other requirements (such as legending or delivery of an offering document) apply to social media communications?
  53. Are you planning set up a “bounty” or similar program that offers free tokens?
  54. Will you be using airdrops?
    1. How are recipients selected and what do recipients need to do in order to receive airdrops?
    2. Have you made sure the airdrops comply with applicable securities law?
  55. Do you have a white paper?
    1. Has the whitepaper been released?
    2. Does the whitepaper include a clear business plan?
    3. What statements, representations, or comments have been made by management in the whitepaper, any other publication, or orally, about the future value or investment merits of tokens?
    4. Should the whitepaper be characterized as an offering memorandum and if so, does it have the prescribed disclosures and notices?

We hope this can assist you in preparing for your security token offering (STO). Obviously, for those who have already raised their money, tokenizing their securities will require some of the same questions.

What is Investor Relations for Private Companies?

Posted on by Oscar Jofre

While Investor Relations may seem like an all-encompassing term referring to the relationship between investors and the company that they invest in, in practice the definition is more precise.

Investor Relations professionals are tasked with providing investors with up-to-date information on company affairs, so that private and institutional investors stay informed on the goings of companies.

Considered to be a sub department of Public Relations, Investor Relations works to create holistic and financially beneficial communication between investors, shareholders, and the general financial community.

Investor Relations professionals’ are always aware of the key corporate information including in depth knowledge of the product and services offerings, the latest updates on the company’s operational and financial performance, as well as its key performance indicators.

This information is then compiled and presented in a coherent manner so that investors understand how well the company is performing. A description of the company’s financial statements, financial statistics, and an overview of the company’s internal organization is made available to investors. This helps to paint an accurate picture of the company’s private internal workings.

Two-way communication, as opposed to a one-way flow, is essential to investor relations in the modern economic climate that is characterized by periods of high volatility.

Investor Relations has been equated with full disclosure – where only important or relevant information is shared with shareholders. But that is no longer the case.

With the rise in popularity of Alternative Finance Platforms like regulated equity crowdfunding, investors now want, need, and expect so much more: consistent and honest communication between companies and their shareholders. In other words, they want to see full transparency.

It is the responsibility of Investor Relations professionals to integrate finance, communication, marketing, and securities law compliance to enable effective communication between the company and relevant parties.

Why is communication so important? Through transparency, investors are able to get a grasp of the true value of a company’s business. Therefore, the primary goal of Investor Relations is to help investors understand true value of the company and its key performance indicators.

For Investor Relations professionals to be efficient and effective today, they must employ a number of tools to accomplish the above goals and achieving effective two-way communications with investors.

  • Excel sheet to manage shareholders/investors
  • Sales automation tool
  • eMarketing tool
  • Meeting Planner

Time is wasted in trying to combine the data from each of these fragmented tools. KoreConX solves this problem by providing Investor Relations professionals one tool to do what normally takes more than 4. Register today https://bit.ly/2izdVf7

Overview of the features the IR Module will include:

  • Manage Current Shareholders
  • Manage Potential Investors
  • Provide free Portfolio Management tool for investors
  • Meetings (AGM, Shareholders Meeting, One-on-One)
  • Reports (Monthly, Quarterly, Annual, Information Circular, Proxy)
  • Media Releases
  • Social Media
  • eVote (ability for your shareholders to vote online)

and much more

Here is what IR professionals are saying:

“I have been providing investor relations services to private and public companies for 2 decades, and for the first time I’m seeing a tool, KoreConX IR Module, that provides me everything I need to manage shareholders, meetings, reporting and media releases through a single dashboard. This is the tool for every person working in an IR position today.” Kai Blache Investor Relations Professional, Digitz, Cray Pay, TicketSocket, Slyde

Register to pre-launch program. https://bit.ly/2izdVf7

How should I manage my shareholders?

Posted on by Jason Futko

Just raised money via crowdfunding? Have you raised money traditionally several times and have lots of shareholders to manage? So, what is the best way to manage all your shareholders?

Managing one’s shareholders via equity crowdfunding is something that gets raised a lot. It is a hot topic because now companies are finding they have shareholder bases of well over 50 shareholders and find this burdensome. This can also be the case if you have raised money outside of crowdfunding also. Are your shareholders a burden? If you answered yes, then there is a problem. Shareholders are and should be your biggest advocates. They believe so much in what you are doing they invested their money in your business. There are fewer bigger advocates then those willing to stick their necks out with the founders and help your business grow. See Oscar Jofre’s article on making shareholders your business champions….

The quickest way to turn a shareholder into a burden is by avoiding them. Keeping them in the dark, failing to communicate, and waiting for them to harass you for an update turns them from champion to burden. Remember that the customer that has a bad experience is 10 times more vocal than the happy customer, well the same applies to shareholders. We believe that frequent updates and transparency on how your business is doing is the best approach to keep the engine running smoothly and the engage your shareholders.

But my business isn’t going as well as I had planned and I’m afraid to tell my shareholders. If this is your concern, it is a common one. However, by not telling them you are failing to give them a chance to help you. Your shareholders bought into your business because they like it. Some of them may have run businesses themselves and may have valuable input or advice for you. Proper engagement will bring you advice and the possibility of more financing if the well has run dry. In my experiences, shareholders can be understanding and helpful even if you give them the opportunity.

To manage the shareholders in an optimal manner requires firstly that the entrepreneur knows his investors. Knowing the investors or shareholders goes far beyond just sending them updates or asking for more money. It involves building a professional relationship where the worries and struggles of the company are shared by all and not by one.

The entrepreneur also needs to regularly e-mail about the progress of the company so that trust, transparency and openness within the boundaries of the company are norms that are expected of everyone. Having a proactive attitude and taking the initiative to sharing new updates regarding internal accounting and auditing, financial information, product and manufacturing, research and development, marketing strategies and sales forecasts should happen regularly.

The entrepreneur should also reach out to collect shareholder feedback via polls and personal communication in a way that makes shareholders feel as though their views are really being taken into consideration. Obtaining feedback and keeping abreast of shareholders in a personal way can significantly affect their willingness to support you when the going gets tough, and makes for a better experience for everyone!

Hopefully you now agree that keeping your shareholders engaged is important. Now, what is the best way of doing that? There are many tools to help and I bet many people started with an excel list and outlook, maybe even progressing to mailchimp or some other mail program. While this is a common approach it is rot with inefficiencies and risk. What if a shareholder moves or changes their contact details? Did you know email is NOT secure and that once you send it from your server it becomes in the public domain? Are you comfortable with your private information being publicly available? How are you tracking their engagement?

There is one tool that can help you do all of this and much more. At KoreConX all-in-one free platform have been building tools to help small and medium sized businesses operate more efficiently and save money in the process. For instance, did you know that our free version allows you to: Manage your boardroom activities, manage your Cap Table, manage your due diligence processes using our deal room, provide portfolio management to your shareholders, and much much more. Check out www.koreconx.com to learn more.

By providing portfolio management to your shareholders for free in KoreConX you are allowing them to stay connected with you at all times within a secure environment. When they move or change any of their contact details in the system that information automatically updates your records so you are always up to date. Our Investor Relations module allows you to communicate and engage directly through the platform and track the results. It offers a variety of other features to manage meetings, perform and tally evotes for shareholder meetings, perform outreach to potential investors, etc. This is the true way of optimizing your shareholder value.

All Hands On Deck

Posted on by Oscar Jofre

All too often, the responsibility of a company raising capital is left in the hands of a few people…and that weighs on them, affecting everyone. The majority of the team is left out of the process, carrying on day to day operations without input into where the company is going, and how it’ll get there.

Prior to the advent and adoption of equity crowdfunding, some companies going through capital raises would hire a professional to do it for them as they are busy running the company. But what if you are not a Fortune 500 company, but one of the remaining 130 million private companies that may not have the means to hire a professional?

With the emergence of regulated (equity, debt, flow through, royalty) crowdfunding, it’s not possible to use the same methods as before. Every member of your team needs to be involved, informed, and ready to go to bat for the company, and they need to do so actively, with humor and grace.

This means that every member of the team need to be informed on what is happening and actively engaged, while also supporting the company through their own social media presence. Potential investors want to hear directly from the company and the team, not a stranger. They want to feel connected.

Regulated crowdfunding has transformed an entire industry. Other traditional models of raising funds no longer work for 99% of companies around the world. Now you must apply the principle of “all hands on deck,” which means you are not alone. You CAN’T go through the process alone, you need to have a crowd – yes, your “inner crowd”.

Accessing your Inner Crowd

The inner crowd is everyone in your company management, board of directors, advisors, employees, advisors, partners, customers, lawyers, auditors, vendors: notice how large your inner crowd is and how many people and companies your capital raise affects? Does it make sense that they get involved? YES!

The new era of capital raising is called crowdfunding (not solofunding), and transparency means visibility.

Everyone must get involved right from the beginning, and if they are not ready to support, find those that will, and move forward…because the traditional way of capital raising is gone. Your team needs to know what you’re planning to do, and how you’re planning to do it…and they need to be empowered with the skills to create and maintain an active online presence.

Every CEO has the ability to sell their vision and goal to others, inspiring others to follow. This is no different. It’s now transparent so everyone can see that YES, they support you.

Dentons is a great example of a company being involved in every aspect while standing by their word to help companies. They not only supply legal services, but also reach out to their clients to bring introductions via social media.

This is the new paradigm that we are a part of. We all stand to benefit one way or another from a company successfully raising money. People can ‘vote with their money,’ and companies can leverage the power of the crowd to attract their best customers and biggest advocates: their shareholders.

Now get your inner crowd ready for regulated crowdfunding.

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