FAQ for Companies
Yes, there are investor limits. The JOBS Act increased the shareholder limit before public filing requirements kick in to 2,000 accredited investors or 500 unaccredited investors. Companies can effectively limit the number of investors by setting investment minimums and/or creating pooled investment vehicles.
There are a number of tools built into the TradeWinds platform that will allow you to connect and communicate with potential investors. However, you will not have access to investors on TradeWinds until your application has been reviewed and accepted. Once your company profile is published, a member of the TradeWinds team will conduct a one-on-one platform walk through so that you are aware of all platform features as well as best practices for a successful offering.
1. Companies featured on the ‘Browse Investments’ section have successfully completed our vetting process by LightPath Capital Inc., our partner broker-dealer, as further described below under the heading ‘What does ‘vetted’ mean?”
2. LightPath determines whether an offering should be accepted as a vetted investment opportunity. There is no guarantee that your offering will be accepted.
A company will typically join TradeWinds and launch a fundraising round with a valuation target in mind. Oftentimes, the company has pre-existing offline investor traction. The terms established with offline investors, who are often professional angels or venture capitalists, typically serve as the basis of the valuation and terms offered to online investors on TradeWinds. Neither TradeWinds, nor LightPath will provide valuation services for the Companies.
Under the Rule 506 exemption of Regulation D of the Securities Act of 1933, it is not required to create a private placement memorandum for a private securities offering. You should consult your own legal counsel, but at a minimum, key documents typically include an investor presentation, a term sheet, a form of securities to be offered, and a securities purchase or subscription agreement. These documents should be generated by the company and its legal counsel.
1. Regardless of the scope of your endeavor, our expectation is that you have dedicated the time and effort to researching, validating, and executing your idea. Investors on TradeWinds platform are typically not interested in financing ideas or projects, but in funding companies and businesses. Therefore, we recommend that companies meet the following minimum requirements:
• At least a minimum viable product or prototype
• Proof of concept (includes customer traction or partnerships)
• At least two full-time team members
• A business which has been incorporated in the United States
2. There is no typical company on TradeWinds platform, but companies which have been successful thus far generally share the following characteristics:
• Technology and consumer facing businesses
• Startups raising between $100,000 – $5,000,000 (including offline)
• Companies looking to raise Seed Rounds, Series A Rounds, and Bridge Rounds
• Companies which already have funding terms and have attracted a lead investor
In order to protect investors, Companies must reach a minimum funding target to have a successful fundraise. Therefore, investments are not finalized until the company raises enough money to meet its funding target and completes all other closing conditions. When investments are initiated through the TradeWinds platform, the subscription proceeds are held securely in an independent escrow account. Once the funding target has been met, the money is released to the company and investors will receive the applicable securities. If the minimum funding target is not met, subscription amounts are returned to investors by the escrow agent. Neither TradeWinds nor LightPath ever receives or takes custody of investor funds at any point during the investment process.
Information on your company overview pages is available to the public. By design, we encourage social and public consumption of your company’s public content. However, as former investors and entrepreneurs ourselves, we understand the importance of securing sensitive information, so we provide companies with a secure, permission-based, access-controlled system to securely share sensitive content with potential investors.