Please read carefully before funding a Project
EQUITY, PHYSICAL REWARDS, MORAL REWARDS
There are three terms that all Funders need to keep in mind prior to financing any WinnersFund Crowdfunding Campaign. These are Equity, Physical Rewards and Moral Rewards.
Equity refers only to transferrable shares of the company that will execute the Project that the Crowdfunding Campaign promotes.
Physical Rewards are those of a certain monetary value excluding Equity; for example, end-products or services.
Moral Rewards are those of no monetary value, like a ‘Big Thank you’ or a complimentary dinner with the Project Owner.
CURRENCY (...WHY THE EURO?)
All monetary values and contractual obligations in WinnersFund are represented and undertaken in Euro (EUR). For ease of use, the Platform may convert or display any amount in GB Pounds Sterling (GBP or “Pounds”), US Dollars (USD or “Dollars”) or any other currency. However, the Euro remains the Platform’s single underlying currency. The Euro is used as the base currency for regualatory reasons, since all applicable European legislation (MiFID, Prospectus Directive etc) expresses all monetary values solely in Euro.
Whether you act as an individual (for your own sake) or as a representative of a legal entity (like a company), there is no upper funding limit as long as you use a Credit Card. However, in either case you should expect to be required to provide certain documentation before passing those funds to a crowdfunded Company, when you provide funds in return for Equity (please read more here).
As of now, the lower limit is as low as EUR 20 in all cases.
WHAT TO EXPECT IN RETURN
All WinnersFund Campaigns are hybrid in nature. This means that you may be offered any mixture of Returns, that being Equity, Physical or Moral Rewards, at the Project Owner's choice. Each offering is clearly displayed on the respective Project's Campaign page under title "What is offered in exchange".
...are the Campaigns that achieve not less than their Minimum funding target within the Campaign duration.
HOW TO FUND A PROJECT
WinnersFund Campaigns do not run using real money (please read below). There are two ways of funding a Project. The first is by using a Credit or Debit Card. The second is by posting a Letter of Credit (LoC) issued by a UK, Swiss or Eurosystem Bank to WinnersFund, for an amount no less than EUR 3,000 per LoC. In case you are interested in financing a Project using a LoC, please contact us prior to issuance.
WHAT HAPPENS TO YOUR MONEY
As already said, no WinnersFund Campaign runs with real money. From the day of "funding" (by pressing the "fund it!" button and entering the Credit or Debit Card details), all money remain reserved in the Funder's Credit or Debit Card and are not transferred to the Project Owner, WinnersFund or any third party. This holds for both successful and unsuccessful Campaigns. If the Project you are "funding" does not achieve its Minimum funding target during the Campaign duration, the money gets released (i.e. become again available for you to use anyway you like) without actually having ever left your account or Credit Card.
If the Campaign gets funded, the Preparation Period follows: a series of legal procedures, documentation and compliance checks have to be undertaken before the money is passed directly to the Bank Account of the Company you are - truly, now - funding.
The duration of the Preparation Period depends on a variety of factors, such as the complexity of the Project, the country of the Project Owner's residence, the country where the Company is or will be established etc. It is reasonable to expect that this period will last for a minimum of one (1) month to a maximum of six (6) months following the successful closure of the Campaign's 1st funding Round.
In the meantime, WinnersFund NEVER holds or controls Funders' or client money.
Money flows occur either directly from your Credit Card or account to the Company's Bank Account through our preferred Payment Processor, or remain for some time during the Preparation Period at the custody of a licensed third party (when required). The adopted way depends on the nature of the Project and the size of the invested amount.
WinnersFund, like most Crowdfunding platforms, does NOT perform Due Diligence on Projects from a business or a financial perspective (you can check the documentation that we ask from our clients in our Best Practices page). Therefore, you are strongly advised to perform a thorough background check (Due Diligence) prior to making significant funding decisions.
In case the Project Owner is an individual, a background check would include at least an extensive search through the social media, and the internet in general, not only about the Project Owner's working and academic background, skills, experience as an entrepreneur, personality and reputation, but also for the business Idea, mostly regarding its novelty, like similar Patents, past implementations, public discussions etc, as well as its business prospects.
On top of that, when the Project Owner is an established company, you are strongly advised to consult a lawyer or an experienced accountant before committing to the Project any amount that you would think considerable. When it comes to companies, a typical background check, from a financial or a business perspective, would include at least:
- Complete current financial statements, as well as those of 1-3 years before.
- Tax returns for the last 3-5 years.
- Capital structure.
- Controlling shareholders.
- Management team background and reputation.
- Company reputation and negative publicity.
- Debts (esp. debts to preferred creditors).
- Patent portfolio (w/a).
In both cases, you are strongly encouraged to ask the Project Owners, either publicly (through the WinnersFund community features) or privately, for any additional information and material you would think important, before making a substantial investment decision.
TO PREFER CORPORATE OR PERSONAL EQUITY-BASED PROJECTS?
There is always the question about the pros and cons of investing in Projects run by long-existing companies, compared to those run by individuals.
Investing in an established company usually means that one may have a much clearer picture about its overall standing and health as a business. However, it is almost inevitable for companies, even the most reputable ones, to carry debts, to suffer liabilities and to face all kinds of problems, whether big or small, that may directly and indirectly affect a shareholder's position. With regards to crowdfunding, the most important consideration is that the company's debts and other liabilities may affect the availability of the capital, collected through crowdfunding, in financing the Project it has been specifically collected for, especially when the company owns to preferred creditors (like its employees or the state). The compliance procedure with regards to crowdfunding may also prove to be a lengthy and difficult process. Therefore, every established company is strongly encouraged to promise, when initiating a crowdfunding Campaign, that it will execute the Project through a subsidiary to be formed in the event of Campaign success.
On the other hand, investing in Projects initiated by individuals obviously lacks the availability of background information one could find through public means. Also, it is not uncommon to be found difficult for an individual to prove their capability to successfully initiate and run the Project as a real business. However, compliance procedures are reasonably expected to last much shorter compared to those for established companies, while (personal) liabilities and debts may only hurt the individual's shareholding over the company (s)he will be required to form in the event of successful Campaign conclusion - which of course is not a good think to happen for the Project Owner or the crowdfunded company-to-be, however does not affect directly the other shareholders' position.
Like any other Crowdfunding Platform, WinnersFund DOES NOT GUARANTEE, MONITOR OR BY ANY MEANS ASSURE the Funders that Rewards will be delivered by the crowdfunded Company. Such assurance is only provided for Equity, as WinnersFund secures that the transfer of the invested money will not happen before the posting of the promised shares to the Funders. Funders are requested to report the Company's performance in delivering Rewards, which, in turn, is publicly listed on the WinnersFund Platform (together with the Project Owners' replies).
EQUITY-BASED CROWDFUNDING: FOR EXPERIENCED INVESTORS ONLY
Equity-Based Crowdfunding does not address non-experienced investors. Therefore, business and financial terminology that is common to experienced investors is not explained further. IF YOU ARE NOT EXPERIENCED INVESTORS OR IF YOU FEEL UNFAMILIAR WITH THE TERMINOLOGY, PLEASE DO SEEK FOR ADEQUATE PROFESSIONAL ADVICE PRIOR TO INVESTING THROUGH CROWDFUNDING.
WHAT TO READ FIRST