Debunking the ONBOARDING PROCESS

At first glance, the onboarding process looks intimidating. It is the key element to a Small OPO and it is actually quite straightforward once you break it down and understand the purpose of the process. On that note, let's start from the beginning.

Once you complete the onboarding process, you will submit to due diligence so that our compliance team can ensure your campaign is complete and compliant. Please note, you will have the opportunity to go through 3 rounds of due diligence at not extra cost. After this point, you must pay a $1,000 fee to continue.

The Basics

• What is the Form C? The Form C is the document that details your Small OPO offering. Think of the Form C as a tool for potential investors to evaluate and study the potential investment. Investors need to understand the background of your company, the risks that come along with investing in your company, and how you plan to use the money you raise. The Form C is filed (by StartEngine) on the SEC website before your campaign can go live.
• How do I create the Form C? Fill out each tab in the on-boarding process and submit the campaign for due diligence. Once approved, our system will populate the Form C from the information you entered, and we will file it for you online with the SEC.
• What should I do first? We suggest that you read this guide. You should also review current campaigns on StartEngine to learn more about how to complete the required information. We also suggest that you seek advice, as needed, from an attorney and accountant.

Overview of Each Section of the campaign page

• The Terms tab
  • This should be straightforward, just remember to detail your perks!
• The Story tab
  • Think of this as a much simplified business plan. Investors want to understand what your company does, and what your plan for the future are. Check out the many existing campaigns on StartEngine to learn more.
  • If you work with a company like CrowdCheck and have an official due diligence report, you can link it within this section.
• The Team Section
  • We offer details of exactly what to include, but remember that these bios need not be essays. A concise paragraph should do the trick. Remember to account for the past 3 years. You can even utilize information from LinkedIn.
• The Legal tab
  • Risk Factors: This is one of the most important sections on the Form C. This section should be in depth enough so that potential investors fully understand the risks that come with investing in your company. Risks should be specific to your company and industry. Risks include:
    • Is your company operational yet? Is there a “going concern” paragraph in the audit opinion (if your financials are audited) or in your financial footnotes?
    • Do you only have one product?
    • Is the product or service new?
    • Do you have a very small team, or team members who have other responsibilities (like a full-time job)?
    • Is the company completely reliant on one person or a couple of people?
    • Is the company a “money pit”?
    • Competition
    • Are you dependent on another entity?
    • Who set the valuation of your company?
    • Rights of investors
    • Where is the money going?
    • Do you have unprotected intellectual property?
    • Everyone can be hacked
    • Projected financial data is frequently inaccurate.
  • Video transcript: if you have a video then write the entire transcript of what is said in the video.
• The Financial tab
  • Ownership and Capital Structure and Rights of the Securities: In this section you list all individuals that have voting power in your company. You need to briefly describe how these securities are different than those you are offering to potential investors. For example, the investors in your Small OPO may not have voting rights and there are restrictions on how the shares can be transferred.
  • Financial Statements, Financial Condition, Material Indebtedness: In this section you will provide a bit of context for your financial statements that are attached later in the Form C. You want to give investors an idea of how your company has performed in the past, how you might grow your company, or raise additional money in the future.
  • Recent Offering of Securities is the place to list any other securities offerings from the past 3 years. Examples include a previous Small OPO campaign or a Title II offering.
  • Valuation. If you have not established a formal valuation, you should say so! For example, “We have not undertaken any efforts to produce a valuation of the Company. The price of the shares merely reflects the opinion of the board as to what would be fair market value.” Learn more about valuations here.
  • Use of Proceeds: In this section you are simply listing how you will spend the money received from your Small OPO. You should list exact numbers or percentages as investors find this sort of breakdown helpful.
  • Why do we ask about Irregular Use of Proceeds? We think investors should know if the majority of your proceeds will go to the CEO’s salary. There is not prohibited with this but as you can imagine, investors will want to know about this.
• Regulatory Information
  • Investors need to know if you have been involved in any indiscretions associated with a previous Small OPO.

Common Mistakes

• Learn how to avoid common Form C mistakes here.

Still need help? Please email Hello@startengine.com.