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Investing Overview

Silicon Prairie Online offers a variety of investment opportunities including both debt and equity issues. Our portal serves businesses looking to raise capital and investors who are looking for investment opportunities. We support:

  • Debt based offerings including fixed interest rates as well as a "Dutch Auction" style that can drive the cost of capital down
  • Equity
  • Convertibles including Simple Agreements for Future Equity (SAFE)

Welcome to the Silicon Prairie! Where Good Ideas Grow

Crowdfunding: Risks & Rewards

Investing: How, Where & When

Cancellation & Close

Investor Relations: Before, During & After

'You've Got Stock! Now what?'

Disclosures, Policies and Procedures

How to Invest: From Interest to Investor

  • Browse listings
  • Create an account
  • Confirm your account
  • Fill out your Investor Profile
  • Acknowledge risks
  • Pledge an Investment Commitment
  • Fund your Pledge by connecting your bank account
  • Sign a subscription agreement
  • Receive your shares

Why Invest in Startups?

People invest for a variety of reasons. In crowdfunding an issuer is converting their "social" capital into "financial" capital. In fact it is likely that you know the entrepreneur or team looking to raise money. It is almost always the case that the "early money" in startups comes from friends, family and fans. Making an investment in a friends business can put stress on the relationship but can also strengthen the connection individually as well as build your community. Many crowdfunding campaigns are for local businesses with brick and mortar operations; real places you can visit and feel a sense of pride in ownership. Often times an issuer will offer compelling "perks" for your investment. Who doesn't like the idea of free beer for life by investing in that local brewery?

Is a Crowdfunding Investment Right for Me?

If you can't afford to lose every dollar you invest in a crowdfunding campaign, the short answer is "no." If you can't afford to wait indefinitely for a return, the answer is also "no."

The reality is that this portal's offerings are generally illiquid, which means it will be hard or even impossible to get out of an investment. There is no guarantee that a secondary market will ever materialize.

Entrepreneurs and small business owners are by their very nature "optimists" and their business plans are going to reflect that. As an investor you need to think of your own needs first!

Since every investor has a desired Return on Investment target, you need to consider the underlying security being offered. Are you comfortable with holding "common stock" or do you prefer lending money through a debt instrument?

Some offerings, namely a "Simple Agreement for Future Equity" or "SAFE" do not typically offer the investor any voting rights until it converts into common stock, if ever.

We strongly encourage all investors to talk about the risks and rewards of this asset class with a qualified investment advisor professional

Types of Crowdfunding: Equity, Debt, and Everything in Between

Crowdfunding campaigns come in all flavors and depend on the issuer's need for capital. Let's take look at the most common types of campaigns you will encounter on our portal:

EQUITY In an equity offering the issuing company is offering the investor some form of stock or membership unit, depending on the corporate formation. Your investment buys you some percentage of ownership in the company. There are also different types of equity depending on what stage the company is in development. There are PREFERRED and COMMON shares, as well as potentially different classes of stock such as "Series A", "Series B" that may have different rights and liquidation preferences that can make an investment more or less attractive.

DEBT A debt based offering are most commonly term loans. They can pay any amount of interest (including none!) and have different repayment schedules. From monthly interest only payments to simple balloon repayment at the term, DEBT based offerings may be more appropriate for investors who desire cash flow potential from their investments. As with any debt based crowdfunding offering, interest payments and loan repayments are not guaranteed, however DEBT based deals typically will include a liquidation preference that obligates the debtor to repay note holders first before equity holders.

CONVERTIBLE NOTES As the name implies, a CONVERTIBLE NOTE is a hybrid that typically beings life as a DEBT based instrument and then converts into an equity position at some future date or event. CONVERTIBLE NOTES will often offer the investor the right but not the obligation to become equity investors. Many Simple Agreements for Future Equity aka SAFEs will automatically convert into common stock during a future qualifying funding round.

Just How Risky are Startups?

When it comes to launching a new business, the statistics are not favorable. Common wisdom points to nearly 90% of all new business failing in their first year and another 90% of those that make into year two failing.

Put another way, that means for every 100 businesses launched today, only about 2-3 will survive to see their third birthday.

The leading success factors center on the team and their experience in this area. There is a huge difference between someone who has years of experience in the same or related industry and someone who just has a good idea.

An investor is encouraged to check references and ask the issuer questions through the portal. "Do you have a plan b?" is a telling question and any entrepreneur should not be afraid to answer it. Having a company "pivot" in the first year is not unheard of and can often indicate that the management has a maturity and presence of mind to listen to what their customers are actually asking for.


By avoiding making single large "all in" investments you have a better opportunity to weather failures in a single company or industry. We encourage all investors to carefully read through the "Risk Factors" section of any offering document in addition to the business plan.

Does the business have a supply chain? Does it depend on the availability of high quality agricultural inputs that could become scarce or subject to competition? Is the business in a regulated area where the potential for additional government oversight could render an otherwise profitable product or service less attractive? If a company is losing a little money on each sale but thinks it can make it up in volume they might just be bad at math.

Savvy investors primarily invest in things they know and understand. If you do not readily grasp why and how a company is going to generate income in excess of costs its likely not right for you. There is nothing wrong with trusting your instincts. Better a little loss of opportunity than a great loss of wealth.

However, a well diversified portfolio in now way assures a profit or any guarantee against investment loss.

How Many Investments Should I Make and When?

We recommend making a bunch of small investments throughout the year, rather than one large one. For instance, if you decide you can safely invest $5,000 per year in crowdfunding campaigns, it will be less risky to make ten $500 investments instead of a single $5,000 one. You should never invest more than you can afford to lose.

When you have a windfall such as when you earn a bonus at work, we strongly encourage all investors to consider first paying down any debt they are carrying. Start with small debts first and let it snowball. If you have a mortgage or car payment consider increasing your monthly payment even just a little. The best wealth is built by being debt free.

Can I easily re-sell my investment? If so how?

It is safest to assume you cannot resell your investment to another investor.

First, you will generally be required to hold your investment for an indefinite period of time depending on which regulation the investment was made under. For example under Regulation Crowdfunding (REG-CF) the laws specifically prohibits resale of securities for one year, except to the issuer, an accredited investor, a family member or their trust

Second, there is not yet a liquid secondary market like the New York Stock Exchange for private companies.

Third many issuers will prohibit the resell or require a "right of first refusal" to buy the interest back, as private companies carefully guard the number of shareholders on their "cap table".

Will my Percentage of Ownership be Diluted?

Very likely "yes". An equity investment will almost certainly be diluted over time and should be anticipated.

Successful startups host multiple rounds of financings, all the way to IPO. For each financing, the startup issues additional stock to the new investors. As long as the value of the company increases with each funding round, this is normal and should be expected.

For example, the first investor in Facebook, Peter Thiel, originally purchased about 10% of the company for $500,000. By 2011, that stake had been diluted down to under 3% due to additional rounds of investment to fuel the companies growth. That 3% was estimated to be worth nearly $2 billion.

Sometimes, when things are not going well, the startup is given the option of going bankrupt or raising more money in a "down round", which means the value of the company decreased since the last financing. This is very bad for the founders and past investors alike; the dilution happens much more rapidly. But it's preferable to the startup going bankrupt and the investors losing everything.

Will my Investment have Voting Rights?

It's rare for an investment in an equity crowdfunding campaign to offer voting rights directly to smaller investors because founders fear it can make raising money in the future challenging, due to the hassle of collecting thousands of signatures.

Debt based crowdfunding campaigns almost never offer voting rights.

You should assume your investment does not include voting rights unless specified otherwise. Your stake will almost certainly be diluted when companies raise follow-on funding.

What is a Crowdfunding Portal and How do I Access it?

Regulated Crowdfunding requires an issuer prepare an offering document that is reviewed for completeness. Once it has been deemed complete it is made "effective" and the crowdfunding company is then permitted to begin soliciting investments from both accredited and non-accredited investors.

The documents and all investor activity including communication MUST be conducted through a web-site known as a "portal."

Which Crowdfunding Campaigns Should I Invest in?

Our portal is designed to be a platform connecting investors with startup founders. We do not recommend you invest in any particular startup.

In an effort to reduce fraud, we apply standards when deciding which companies can raise funds on our portal, but you should conduct your own due diligence to decide which campaigns, if any, are right for you.

The information regarding companies on our portal is provided by the companies themselves. We may assist a company in presenting this information, but we don't verify its accuracy or endorse the company in any way.

How Should I Perform Due Diligence?

You are responsible for conducting your own due diligence. Crowdfunding attracts a group of prospective investors who can work together to discover issues with a campaign. Often called the "wisdom of the crowd" our portal acts like a "prediction market" for investible campaigns. Investors "vote" with their money.

When companies are fundraising, investors are highly encouraged to review the business plans, risk factors and financial statement provided. Investors are also encouraged to ask detailed questions. If a founder or representative of the company does not give you a simple direct answer to your question or comes off as arrogant or aggressive, then you should not invest!

Our portal offers both Frequently Asked/Answered Questions curated by the issuers as well as an Open Investor Forum where any registered user can post questions or responses to other investors.

How much can I Invest?

For Regulation Crowdfunding Offerings, our portal calculates your annual investment limit based on the net worth and income provided upon account opening from values that you supply. Investment limits are calculated on a rolling 12 month interval and every investment in a Regulation Crowdfunding offering on any portal counts towards the annual limit. The portal will not let you invest greater than this amount.

The current SEC rules are based on a "min/max" of your annual income -vs- your net worth, subject to a percentage depending on how much you earn:

  • Everyone can invest at least $2,200
  • If either your net worth or income are below $107k, you may legally invest a maximum of 5% of the lesser number.
  • If both your net worth and income are above $107k, you may legally invest a maximum of 10% of the lesser number.
No one may invest more than $107,000. Accredited investors are subject to the same investment limitations as everyone else.

Can a Non-U.S. Citizen Invest?

Yes, unless the laws of your country prevent you from investing.

Do my Funds go in an Escrow Account?

Yes. Your investment is placed in an escrow account hosted at Sunrise Bank. For Regulation Crowdfunding (REG-CF) offerings, funds are transferred to the campaign company only after fundraising minimum raise has been met in escrow and as individual investors sign subscription agreements.

What Happens When a Campaign Has More Investors Than Needed?

Sometimes, more money is committed than an issuer can accept. In this case, priority for who becomes an investor is generally ordered by largest investment to smallest investment in order to minimize the size of a "cap table".

Often times issuers will be "strategic" about their approving investment pledges, preferring individuals who can help further the mission of the enterprise.

How are Securities Delivered to Me?

After an investment is successfuly executed by pledging support, funding your investment and ultimately e-signing a subscription agreement, you will be able to login to your investor profile to find your executed agreements.

How Is Your Portal Compensated?

For Regulation Crowdfunding, we charge the issuer company up to 7% of the total funding volume.

Can I Cancel my Investment Pledge and Get a Refund?

You can cancel a pledge prior to funding it at anytime.

Investors may cancel an investment commitment until 48 hours prior to the deadline identified in the issuer's offering materials. If investors do not cancel your investment commitment before the 48-hour period prior to the offering deadline, your funds will be released to to the issuer upon closing of the offering and you will receive securities in exchange for your investment.

Once a campaign has reached it's stated minimum raise you will be invited to sign subscription agreements. Once signed, your investment funds are released from the escrow account to the issuer and no cancellation is permitted by the portal. If you find yourself in this situation, you are encouraged to contact the issuing company to see if something can be worked out.

If an issuer experiences a "Material Event" namely something that significantly impacts the business or investor, an addendum to the offering will be filed and every investor must positively affirm their acceptance of the addendum otherwise it will have been deemed "rejected" by the investor and funds must be returned.

Can the Company Reject or Cancel my Investment?

The short answer is "yes".

Your investment pledge may be rejected or canceled for a variety of reasons. Issuing companies will establish minimum investment amounts but will always favor larger investors for the simple reason of managing their shareholder registry known as a "cap table."

Once a campaign has reached it's stated minimum goal and an investor has signed a subscription agreement and the funds have been released from escrow neither party may unilaterally cancel unless there is some "material event" or information that comes to light. It's rare but a company may discover that an investor works for a competitor and could refund the investment.

What Happens if a Company Changes the Terms of their Offering?

Any material changes to a offering by an issuer must be filed with a regulator as an addendum. Investors with investment commitments that have not signed subscription agreements will be notified of the change and will be required to positively accept the changes within five business days or their investment commitment will be cancelled and any funds in escrow will be returned.

When will the Fundraising Round Close?

A fundraising round will close at its published deadline which may be up to a year after the offering was made effective.

However, an issuer may close its round earlier after its funding target has been met. In this case, you will receive notice of the new offering deadline at least 5 business days prior to the new deadline.

Under Regulated Crowdfunding (REG-CF) there is a minimum 21 day period that a campaign MUST be open.

What Happens if the Fundraising Fails?

The reality is that many crowdfunding campaigns will fail to reach their stated minimum goals. It should be expected as not all great ideas make for great investments.

If a campaign has failed to reach its minimum goal within 90-100 days we encourage the issuing company to withdraw and regroup.

You'll be notified via e-mail and receive a full refund of your investment if it was funded by ACH or check. If you funded your investment via wire-transfer you will receive a refund minus any bank fees.

How Long Will it Take to Receive my Refund?

It depends on the method by which you used to fund your pledge. We'll initiate a refund as fast as possible but it can take up to 14 days.

What Updates Should I Expect After Investing?

We encourage all of our issuing campaign companies to make regular announcements. Many have social media pages and email lists that you should discover and monitor.

Our portal also contains both curated Frequently Asked/Answered Questions from investors and we maintain an open forum with threads for each of our campaign companies where investors and issuers can get together for dialogue.

All employees or individuals who have been hired by issuing companies must disclose their relationship in any posts made on our forum.

We will monitor our communication channels for abuse, but do not generally moderate the content.

Can I Contact the Founder(s) Directly?

The short answer is "no" but there are exceptions. We will not disclose any email or phone numbers we obtain as part of our issuer on-boarding, however most business plans contain contact information for investor relations.

Our portal provides a way for investors to submit questions for any offering curated by the founders in their "Frequently Asked/Answered Questions" as well as engage founders via our forum. In fact for Regulated Crowdfunding ("REG-CF") ALL communication must be mediated through the portal during the raise.

Do not expect founders to accept social media requests on FaceBook or LinkedIN.

How Can I Help the Companies I Invest in?

Campaign companies are first and foremost looking for "brand champions" ! YOU are their best source of fandom.

Follow them on social media, share news about your investment with your network and evangelize their product or service. Enthusiasm is infectious! If you're really excited about what your campaign company is doing let your friends know.

"Pride in Ownership" is still alive and well and you have every right to benefit from the upside of your investments.

Will I Receive an Annual Report?

If you are an investor in a Regulation Crowdfunding offering, the company must post its annual report on their websites including providing information similar to that required in the offering statement, including disclosure about its financial condition that meets the highest financial statement requirements that were applicable to its offering statement.

Companies are not obligated to file annual reports if it:

  • files for an IPO
  • is acquired by a purchaser
  • repurchases your investment
  • has fewer than 300 shareholders after one year
  • if it goes bankrupt, or
  • after three years if it has less than $10 million in assets
Some founders and companies who can easily raise funding from venture capitalists may decide not to file annual reports, as the only penalty is they may not use Regulation Crowdfunding again until they do so. If a company stops reporting, you may not have current financial information about its condition or prospects.

Will the Issuing Company Always Use Your Portal in the Future?

After fundraising, our portal remains available to our issuing companies to continue handling their Investor Relations as a Service. We can provide tax document preparation such as Schedule K-1 creation and disbursement.

However, there is no guarantee the issuing company will continue to use our services. They may also decide to raise their next round of financing on a different funding portal.

How Do I Earn a Return?

People invest for a variety of reasons usually with an expectation of a return on investment ("ROI").

Most startups will need to re-invest any profits back into the company. Investors holding shares of stock in startups should realize that dividend payments are not assured. Shareholders may hope that the company gets acquired or goes public, but these events may never happen.

Some companies are offering Convertible Notes including the Simple Agreement for Future Equity ("SAFE") . The note or SAFE can convert to stock if the company raises a "priced round" from professional investors. If the company is successful, the value of the stock may increase with any subsequent round of financing, until the company is acquired or goes public.

In a Debt based offering, often connected to real estate, the investor is primarily investing to earn interest on their principle invested. Payments can made monthly, quarterly or semi-annually and can be interest only payments or principle plus interest. Repayment of interest and principal is NOT guaranteed even though liquidation preferences in place.

Of course, when investing in something as risky as a startup, there may be no return at all.

How is the Valuation Determined?

There's an old adage that goes:

"The worth of a thing is the price it will bring."

Market demand often determines the valuation of an asset. Typically, before a company raises fund, at least one professional investor has invested in the company. Professional investors are much more likely to understand the current market value of startups. This valuation shifts with time, depending on the amount of capital chasing companies in that market segment.

How Long Until I See a Return?

It could be a very long time and possibly never in terms of an equity investment! The mortality rate for new ventures can be quite high depending on the industry and the founders previous experience.

For example, it took the early investors in Harmonix (creators of Guitar Hero) over 10 years to earn a return.

You are hoping that the company goes public or is acquired through a merger or acquisition, but these events may never happen

Having a balanced portfolio of both equity and debt based investments can help mitigate loss.