With the passage of the JOBS Act in 2012, the Obama administration made it possible for every US citizen to invest in startups, regardless of wealth or status. On Break the Wheel, anyone can invest in private businesses and buy shares of stock, debt, revenue share, and more.
Entrepreneurs no longer needed traditional sources of capital, such as private equity or venture capital firms, to bring their ideas to life; they just needed other like-minded visionaries willing to take a chance on something novel.
Break the Wheel specializes in two regulations under the JOBS Act: Regulation Crowdfunding (Reg CF) and Regulation A+.
Under Reg CF, you can raise a maximum of $1.07M from both accredited and non accredited investors each year, every year.
If you raise $1.07M under Reg CF and are looking for more, you can use Reg A+ and raise up to $50M each year, every year.
We also allow companies to raise unlimited amounts of capital under Regulation D 506(c), raising capital exclusively from accredited investors.
The cost of launching a Regulation Crowdfunding campaign varies on a case-by-case basis, but generally speaking it costs between $4,000-$10,000 for the financial review and legal documentation required to launch a Reg CF campaign. These costs are covered by Break the Wheel.
However, it is possible to launch at no cost upfront if you meet a few criteria: 1) the company is incorporated as a Corporation and 2) the maximum raise limit is set to $107,000 to start, which allows you to self-certify the company’s financials and save on the financial review cost.
Regulation A+ costs a good deal more, ranging anywhere between $50,000-$100,000. It takes longer to launch as well. Per a report from the SEC, it takes an average of 110 days to be qualified. These costs are covered by Break the Wheel.
Given the cost and time of becoming qualified for a Regulation A+ offering, we recommend that companies begin with Regulation Crowdfunding if they are interested in raising capital through equity crowdfunding.
In terms of fees, Break the Wheel only makes money when you raise money. We charge 10%* of the total capital raised for any offerings and additional equity that is negotiated on a case by case basis.
In essence, the difference can be distilled down to the wealthy vs. everyone else. The real definition is that accredited investors are individuals with a networth greater than $1M (excluding their primary residence) or an annual income exceeding $200K per year for two years ($300K if combined with a spouse). With equity crowdfunding, both accredited and non-accredited investors can invest in your business.
Generally, companies finish onboarding in 4-6 weeks. We’re with you every step of the way and are on your timeline. Onboarding can be done more quickly if you’re on top of things and responsive to our team.
Story: Tell your story in your own words. Build and design your campaign page to attract investors. Our creative team can help you!
Set your own terms: What’s your valuation? What kind of security do you want to sell and how much of it? It’s all up to you.
Legal: We request corporate documents like Articles of Incorporation and Board Resolutions to approve your fundraise.
Financial: You have two options:
– Self-certify your financials to raise up to 107K.
– Use one of our preferred CPA vendors and get a 2-year independent financial review done in order to raise up to $1.07M from the start.
Our goal is to help you meet your campaign goal within 7 days. It can take longer and some campaigns, depending on the amount being raised and stage of the company, may need up to 60 days.
We require that companies set a minimum funding goal of $10,000 for their campaign. This way if a company raises less than their maximum funding goal, they can still collect the investments they raised as long as it is more than $10,000.
In order to collect capital on Break the Wheel as it comes in, you have to raise at least 120% of your minimum funding goal. Once you have raised $12,000 (120% of the $10,000 minimum funding goal) and the SEC-mandated 3 week cooling-period has expired, you can disburse funds raised as your campaign continues accepting new investments.
Companies must meet a basic set of criteria (such as being a US-based operating company, the founder is at least 18 years old, etc), and there is a list of prohibited types of companies that we do not work with at Break the Wheel.
We also analyze every company that comes to Break the Wheel’s platform in order to determine whether they are the right fit for our platform and audience as well as for equity crowdfunding in general.