No! It's illegal for us to endorse or recommend a particular company for investment.

No company on Launchparty is endorsed by us. We do our best to protect you from fraudulent campaigns via our internal due diligence, such as by researching the founders and making sure they are legally verified to raise a campaign.

What you invest in is for you to decide!

The SEC and FINRA monitors all of Launchparty's operations to ensure compliance in all securities, funding portal, and Regulation CF-related activities.

Launchparty LLC is a funding portal (CRD #322055) that is registered with the SEC and is a member of FINRA. Launchparty operates sections of www.launchparty.vc where certain Regulation Crowdfunding offerings are available.

All startup investments are highly speculative and involve risks, including illiquidity, little to no voting rights, and possible loss of capital. Startup investments may not convert into liquid cash or equity, so you may receive little to no voting rights. Expect to hold these investments for several years.

Even the best founders fail, so only invest if you can afford to lose your entire investment. Never invest more than you can afford to lose.

A SAFE (simple agreement for future equity) is a convertible security that allows the investor to buy shares in a future priced round. Essentially, a SAFE is an illiquid, private investment into a company. SAFE notes allow startups to structure their early investments without interest rates or maturity dates.

Note that SAFEs are simple agreements for future equity. Thus, investing via a SAFE grants an investor the right to receive a certain amount of shares during a priced round. This is compensation for investing earlier than other investors, as early investors take on more risk of losing their investment when the company is young.

SAFE notes include the following two terms, which are explained below:

1. Discount Rate

Think of the discount like a coupon. A 25 percent discount allows SAFE investors to receive shares at 25 percent off of the price per share in a priced round. For example, when a startup begins a priced fundraising round (say, Series A), the investors in the priced round would pay $1.00 per share, while SAFE investors would pay $0.75 per share. Note that a SAFE agreement lists a discount rate, not a discount. The discount rate is simply 100% minus the discount. Thus, a 25 percent discount is the same as a 75 percent discount rate.

2. Valuation Cap

The valuation cap identifies an upper limit on the price per share that a SAFE investor will pay for stock during a priced round. Often, this cap ranges from $2M to $10M.

A convertible note is a debt security that startups without a valuation can use to raise early funding. Simply, a convertible note starts as an investor loaning money to a startup, and once the startup reaches a specific milestone, the investor is repaid as the debt is converted into equity in the issuing company.

Convertible notes incude loan and repayment options, as well as: (1) an interest rate; (2) a conversion discount rate; (3) a maturity date; and, (4) a valuation cap.

Preferred stock (or preference shared) is a type of company stock in which preferred stockholders have a higher claim on dividends than common stock holders. These dividends are issued before dividends on common stock are paid out.

Although preferred stock generally yields higher dividends than common stock, preferred stockholders often have limited rights within the operations of a company, including the lack of voting rights.

Restricted stock refers to "unregistered shares of ownership in a corporation that is issued to corporate affiliates, such as executives and directors."

A valuation is a quantitative process of determining the fair value of an asset or company. Startup valuations provide insight into internal company operations, such as its ability to grow, meet both customer and investor expectations, and reach their next milestones.

Most very early-stage startups do not have a set valuation, and some early-stage startups with a customer base and early revenue have valuations in the millions of dollars.

There are many ways in which a startup receives a valuation. Some valuations are based on actual revenues within a startup, while other valuations are more subjective, taking into account what startup founders and their investors believe the startup is worth, as well as other metrics including the founding team's expertise, product, assets, business model, market opportunity, and competitors.

Dilution refers to when a company issues new shares that result in a decrease of the ownership percentages of existing stakeholders in a company.

Dilution often occurs when a company decides to raise additional capital in exchange for equity. In order to do so, a company often issues new shares. As a result, the early stakeholders (via their early investments) now have a smaller percentage of ownership stake in the company than when they originally received their shares, even though the number of shares remains the same.

A cap table (short for capitalization table) is a table of every security that a startup has issued and who owns those securities. These securities include stock, convertible notes, warrants, and equity grants.

Cap tables include a list of names of people (founders, angel investors, etc.) or organizations (angel networks, venture capital firms) on one axis and the details of the company security they own, including what type of security, how many they own, and what percentage of the company they own.

A startup's cap table can be a simple spreadsheet, but many startups use cap table software to organize and track their securities.

A pitch deck is a brief presentation that provides potential investors a overview of a startup's product, business plan, finances, traction, and growth potential. Pitch decks are often created in Powerpoint, Google Slides, etc., and founders "pitch" their startup to investors using these slides.

Most pitch decks include individual slides that detail a current problem, a solution (e.g. their startup), and a brief overview of their product, as well as market opportunity, current traction, team members, competition, and internal finances. Lastly, pitch decks often end with “the ask” - how much a startup is looking to raise for investors and how the startup plans to use those funds.

A family and friends round refers to an early - and often times, the first - round of fundraising that a startup initiates. In this fundraising round, founders typically pitch and obtain early funds from their networks of family and friends. Hence, the name "family and friends round."

A pre-seed round is an early fundraising stage in which a private company or startup seeks to solicit the first investments into their company. A pre-seed round often entails a friends and family round as well.

A pre-revenue startup is an early-stage startup that has yet to generate revenue stemming directly from its business operations.

An angel investor is an individual with a high net worth who provides financial backing of an early-stage startup, typically in exchange for ownership equity in the company. Angel investors may arise from a friends and family network connection and often invest in a company at its pre-seed stage of fundraising.

How investors make money depends on the type of security that they acquired via their investment.

On Launchparty, investors often receive convertibles, such as convertible notes or SAFEs, in exchange for their investment. These convert your investment into stock at a later date once the startup reaches a specific milestone, most notably when launching a “priced round” of fundraising. Once the startup initiates this priced round, early investors' money is then converted into stock.

By owning stock in the startup, a stakeholder's return grows as the value of that stock increases over time.

A **liquidity event** is a transaction that enables stakeholders in a company to liquidate their securities into cash. Typical liquidity events include an initial public offering (IPO) and direct acquisition by another company.

A special purpose vehicle (or SPV) is a type of business arrangement - to be specific, a subsidiary company - that operates independently of the parent company. An SPV allows companies to gather all investors who pool their investments (capital) into a startup's SPV, and then the SPV separately invests into the company as one entity.

SPVs are different from a Custodian, which is an entity that holds securities on behalf of the investors. Thus, investors do not come to possess the shares, SAFEs, or convertible notes; instead, the Custodian holds and manages your assets, votes for these securities, and signs any documents relating to the securities on your behalf.

Startups often use an SPV to fundraise to ensure future growth. For one, later-stage venture capitalists may be skeptical of a startup having too many individual investors on its cap table.

However, with an SPV, founders have a large amount of investors who pooled their money into one entity that invested into the company on their behalf. Thus, an SPV takes up only one line on a startup's cap table, and voting rights are delegated only to the lead investor.

When a startup decides to fundraise on Launchparty, we set up a limited liability company (LLC) whose sole purpose is to pool money from investors into the startup.

The lead investor is an individual or organization who leads a funding round and acts on behalf of the other investors. This is often the individual who is most familiar with the startup and/or contributes the most amount of capital into a startup's offering.

The responsibilities of a lead investor vary. In the case of a startup fundraising with an SPV, the lead investor directs all of the voting power of the investors who pooled their investments into that SPV. Additionally, the lead investor decides whether they want to invest on the same terms as being offered on Launchparty and directs the signing of any necessary legal documents on behalf of the Launchparty investors.

All securities sold on Launchparty have voting rights unless specifically stated otherwise. If the offering has a lead investor, then the lead investor will direct the voting rights.

If circumstances arise that make either Launchparty or the group of Launchparty investors question the ability of the lead investor, such as acting against the best interest of the company or revealing a potentially damaging conflict of interest, Launchparty can intervene.

Launchparty holds the right to either remove the lead investor ourselves, organize a vote of all investors regarding the removal of the lead investor, or organize a vote of all investors to decide on a particular voting decision of which the lead investor has a conflict of interest.

Diversification is a financial strategy that involves mixing a wide variety of assets and investment vehicles within a portfolio. A diversified portfolio can mean across different asset classes or within them, as well as geographic, meaning investments in both domestic and foreign assets.

Startup investing is risky, and you should expect to potentially lose all of your money when investing.

Launchparty instigates a four-step due diligence process.

When a startup wants to raise on Launchparty, their legal documents are vetted by an outside partner to confirm that they meet all FINRA and SEC requirements before fundraising. Additionally, we conduct our own internal due diligence process to determine whether they are ready to raise their funding round on Launchparty.

However, our own checks should not deter you from conducting your own due diligence!

Asking Questions

As a potential investor in a startup you're interested in, you may have tons of questions before clicking "Invest." So, why not ask the founders themselves?

When visiting a startup's campaign page, scroll to the Discussion section to connect directly with the founder. There, you can find the founders' responses to previous questions, and you can always ask your own questions while the campaign is live.

Read the Form C Disclosure

Form C disclosures will be listed on each campaign's home page for your viewing.

These include the following information:

• Information about the specific business of the company.

• Information about the founders and the team.

• The target offering amount and the deadline to reach that target.

• The use of proceeds raised in case the minimum target amount and maximum target amount to be raised are reached.

• The current financial condition of the issuer and its financial statements.

• Any risks associated with investing in the company.

We advise that you carefully read over a company's Form C before investing in their campaign.

Startups are vetted by Launchparty and its partners via a four-step process.

If, at any point during our internal vetting process, we consider that a startup is not yet ready to fundraise on Launchparty, we will provide each founder with a detailed step-by-step guide to prepare to launch a campaign on Launchparty.

Step 1: Sourcing

First, startups are required to submit an online application to apply to raise on Launchparty. After receiving a startup's application, a Launchparty representative reviews the pitch deck and information provided regarding the startup's team, product, traction and progress, previous legal and fundraising history, and the amount they intend to raise on Launchparty.

Step 2: Assessment

Second, we conduct our own internal due diligence to see whether the startup is a good fit to raise on Launchparty. We hold two formal meetings with the founders, one hosted by our collegiate scouts and another by senior representatives of the funding portal.

The first meeting is held to screen applicants on the growth potential of the startup itself, including the founders' knowledge of the market, the product's potential as a unique solution to a present problem.

The second meeting with senior members of the Launchparty team is held to evaluate the applicant's potential of successfully raising on Launchparty and to negotiate the deal terms of their potential raise (e.g. how much money they intend to raise, when they intend to raise, what type of security, valuation cap, etc.).

Following these two meetings, Launchparty team members will conduct independent research to evaluate whether the statements made by the applicant founders are certifiable and factual, including the size of their market and previous funding history.

Step 3: Structuring

After an internal vote to accept an applicant onto Launchparty, senior Launchparty representatives will provide a formal offer to the applicant.

This final offer will include explicit deal terms, including a valuation cap and a funding goal, as well as the expected duration and timing of the live campaign on the platform and any other essential information.

The founders of the applicant startup can accept or reject this offer, or request to negotiate the terms offered in the final offer. Should an applicant startup request to negotiate the terms of a potential campaign, Launchparty representatives will schedule another meeting in the hopes of finding a consensus on the terms and date of the Regulation Crowdfunding campaign.

If no consensus is agreed upon in this interview, then the prospective issuer will not accept the prospective issuer onto the platform at this moment. The prospective issuer is free to apply again to raise on the platform.

Step 4: External Due Diligence

After an applicant startup accepts the terms of their fundraise on Launchparty, we will request that the applicant founders provide to senior Launchparty representatives any additional required documents and information.

After Launchparty receives this information from the applicant startup, we will forward their information to our partners at Crowdcheck, who will externally conduct legal due diligence on an applicant startup, including:

• Bad Actor Reports, for up to three covered individuals

• Background Checks

• Form C review (to ensure that Regulation CF requirements are met and that the issuer is a legitimate entity able to make its proposed securities offering)

After receiving the green light from Crowdcheck, a startup will be formally onboarded onto Launchparty to raise funding!

The founders of an accepted platform will work closely with Launchparty team members to prepare all necessary documentation, founder accounts, marketing materials, and outreach to potential investors.

Equity crowdfunding is the process of raising money from public investors through the sale of securities; in exchange for a small amount of cash, investors receive equity ownership in the business venture.

For example, Launchparty is an equity crowdfunding platform where users can invest in startups in exchange for a slice of the firm's future equity!

Crowdfunding is an umbrella term that refers to the general process of raising money from the public (i.e, the "crowd").

Equity crowdfunding takes this a step further by introducing equity stakes for investors in return for their money raised. Launchparty is an equity crowdfunding platform.

This is different from rewards crowdfunding, in which startups solicit donations from individuals in exchange for a product or service (i.e. a "reward") in lieu of equity.

Reg CF

Reg CF (or Regulation Crowdfunding) implements the crowdfunding provisions of the JOBS Act, which is essentially an exemption from securities law that allows a private company to raise capital from the public. In other words, it legalizes companies to offer and sell securities through crowdfunding, and in turn, it allows equity crowdfunding platforms like Launchparty to exist!

2016 JOBS Act

The Jumpstart Our Business Startups Act (JOBS Act) established crowdfunding provisions that allow early stage businesses to offer and sell securities.

A registered funding portal is a type of SEC registrant that is required under Title III of the JOBS Act that streamlines the SEC registration process for companies that are crowdfunding.

The Financial Industry Regulatory Authority, or FINRA, is a government-authorized not-for-profit organization that oversees U.S broker-dealers, protects investors, and ensures the market's integrity.

Testing-the-waters is an exemption under SEC Rule 241 that allows founders to test and gauge investor interest before they have committed to launch a full-blown equity crowdfunding campaign.

When launching a crowdfunding campaign, a Form C is the document that discloses details about the terms of the crowdfunding offering, the company's business, and any other important related information.

This disclosure helps investors evaluate whether or not to invest in the company.

No! If you haven't raised your first dollar, we will do our best to help you secure it.

Now, that does not mean that all startups that apply to raise without raising money beforehand will be accepted onto the platform. Nevertheless, we will do our best to accommodate your startup's needs so that you are fit to raise on our platform, even if it's your first time raising money.

The per-campaign fees are yet to be determined.

Companies fundraising on Launchparty under Reg CF must disclose a limited amount of information to you, including:

1. general information about the company,
2. its officers and directors,
3. a description of the business,
4. the planned use for the money raised from the offering, often called the use of proceeds,
5. the funding goal,
6. the deadline for the offering, related-party transactions,
7. risks specific to the company or its business, and
8. financial information about the company.

You should use this information to determine whether a particular investment is appropriate for you. The type of financial information disclosed as well as verification of finances varies based on whether the issuer has raised via crowdfunding in the past, as well as the amount being raised.

• $107,000 or less - financial statements and certain specific line items from income tax returns are required, both of which are certified by the principal executive officer of the company. In certain situations, issuers raising up to $250,000 may rely on self-certification.
• $107,000.01 to $535,000 - financial statements are reviewed by an independent public accountant and the accountant's review report is provided as well as certification by the principal executive officer of the company. A review is some level of scrutiny of the financials by a CPA.
• $535,000.01 to $5 million - if first time crowdfunding, then financial statements reviewed by an independent public accountant and the accountant's review report if available are disclosed for offerings up to $1.07M: otherwise financial statements audited by an independent public accountant and the accountant's audit report must be prepared and disclosed. An audit provides a higher level of scrutiny by the accountant than a review as well as some verification by the accountant.

Additionally, all offerings on Launchparty have a discussion thread on each startup's offering page where you should ask any questions you have and review questions asked by other investors. When a campaign is live, you should expect founders to respond within 5 business days.

Once an offering has closed, the issuer may provide updates on the results of its operations and financial statements through its website on an annual basis. These updates are likely to be less regular and robust than those provided by public companies to their shareholders.

There are numerous ways for an issuer to legally discontinue providing these updates, so you should not rely on these updates being provided indefinitely. Launchparty does not make the issuer's post-closing disclosure available to you through its website.

Launchparty caters to all investors 18 years old or older based in the United States, whether accredited or non-accredited.

However, we hope that investors of all types know the risks of startup investing before making their first transaction. If you can't afford to lose all of the money you propose to invest in startups on Launchparty, we advise that you double-think your choice to invest.

Make sure that you realize that startup investments are long-term commitments. If you cannot afford to hold onto your investment for 5 to 10 years, we advise that you double-think your decisions to invest in startups.

At this current moment, no.

Upon the successful completion of a successful campaign on Launchparty, users that invest in a startup fundraising in a Reg CF campaign on Launchparty will be issued a Crowd SAFE.

A Crowd SAFE is a type of security that slightly differs from a SAFE (simple agreement for future equity, see “What is a SAFE note?” above).

Investors using the Crowd SAFE receive a financial stake in the company, but they are not immediately holders of equity. Instead, Crowd SAFE agreements convert to equity if an investor's company reaches a liquidity event (see "What is a liquidity event?")

Risk note: Trigger events are not guaranteed. Investors should see them only as possibilities. If a trigger event does not happen, you may never get a return on your investment.

If a company fundraises on Launchparty via Crowd SAFE, unless and until the Crowd SAFE is converted into an equity stake, you will have no information or voting right as an investor in the company.

If and when you receive voting shares in a company, your voting rights could possibly be diluted when the company raises additional funds.

From Investopedia:

"An escrow agent is 'a person or entity that holds property in trust for third parties while a transaction is finalized or a disagreement is resolved.'"

In our case, the escrow agent holds the money you invest in a startup until their campaign is closed. If the raise is successful, your investment is transferred from an escrow account managed by the escrow agent to the startup; if the campaign fails, your money will be refunded to you.

Our friends at Silicon Valley Bank serve as the escrow agent for all campaigns launched on Launchparty.

Woohoo! You've just invested in a startup.

After your investment, your funds are transferred to an escrow account created by and in the custody of Boston Private Bank.

If the campaign is successful (e.g. if the startup raises its desired fundraising goal), then your money will be transferred to the startup.

If the campaign fails, you will be refunded your investment.

Short answer: yes.

Startup investing is risky, and you should only invest what you can afford to lose. It's entirely possible that you lose every dollar you invest via Launchparty.

Every investment opportunity listed on Launchparty is much riskier than a public company listed on a stock exchange, as those listed here are early-stage private companies. Even the brightest young founders can fail, so don't invest more than you can afford to lose.

Most likely yes.

Upon a startup receiving a future valuation, it's incredibly likely that your investment will be diluted.

This comes with a catch: as your shares are diluted at a later fundraising round, the value of your shares also increases. Thus, you may lose a percentage of your ownership in the company, but the amount that your smaller percentage of shares is often worth more than your initial shares.

To illustrate this: the first investor in Facebook, Peter Thiel, purchased about 10% of the company for $500,000. By 2011, his ownership stake was diluted to about 3 percent, but estimated to be worth about $2 billion.

If you invested in the company, congratulations! You now hold a security sold by the issuer.

Once the campaign closes, a company is required to file at least one annual report under Regulation CF, no later than 120 days after the end of its fiscal year.

We strongly recommend that startups provide at least quarterly updates to keep investors engaged and up-to-date on how the company is doing.

However, be aware that companies are not obligated to provide frequent updates to Launchparty. In some circumstances, there may not be an ongoing relationship between the issuer and the intermediary; for example, if a startup does not wish to fundraise again using Launchparty.

Additionally, there are some circumstances when an issuer may cease to publish annual reports and, therefore, investors may not have the most up-to-date financial information . For example, if the company ceases operations, they are likely to not provide investors with current financial information.

Be sure to check with the startups' teams, not Launchparty, to receive frequent updates on their progress.

There are two ways you can pay for your investment: bank transfer or credit card. If you choose to pay by credit card, we impose a $10,000 limit.

Processing time and pending investments

After investment, you will have 7 days to confirm that your payment is sent to an escrow account associated with the campaign, or your investment will be automatically cancelled.

Help with failed payment

You'll receive an email from us if your payment fails. Listed in that email will be instructions detailing how to fix your failed payment.

If you do not receive an email, contact us at support@launchparty.vc, and we'll help sort out your payment issue.

For Regulation CF campaigns on Launchparty, you can cancel your investment anytime up to 48 hours prior to the offering's deadline, and you will receive a full refund. Investments cannot be cancelled once the fundraise closes.

You'll receive a five-day notice via e-mail when a fundraise is about to close.

Once the minimum funding target is met, many companies do a "rolling close", where investments that have successfully applied to invest are executed and funds are transferred, but the round is still open to receive new investments. You'll still receive a five-day notice if this occurs. Once your funds are transferred to the company, you no longer can cancel your investment or obtain a refund.

Yes.

Issuers have authority on whether or not to accept your investment or to cancel your investment before the closure of a campaign. For example, a company may cancel an investment from a user that works for a competitor.

After the round closes, the company will receive the funds, and your investment cannot be cancelled by the company or by you.

The exact nature of the fees you pay per investment are yet to be determined.

We do not issue fractional shares; so, in the case that a fractional share case were to arise, we round down your initial commitment.

To explain: say the share price of a company is $30, and you invest $350. In this case, we'll lover your commitment to $330 for you to purchase 11 shares.

In the case of a "reserved" investment, none of your money has been sent to the company.

Once a company finalizes its contract and finishes all other legal disclosures, you will receive an email from us asking you to reconfirm your investment.