Fund Business Impact

Verified Check Report

Required Materials:

To obtain a Verified Check Report, you will need to contact info@crowdcheck.com and arrange for assistance from their team of due diligence professionals.

To Do List:

There are five actions for you and your team to complete:

1. Visit the website of CrowdCheck and review the Verified Check Report issued by this due diligence and disclosure firm.
2. Contact info@crowdcheck.com and discuss the documentation that CrowdCheck will need to prepare a Verified Check Report.
3. Identify key principals of your organization to participate in the background checking and due diligence process.
4. Coordinate your accountant’s review or audit of financial statements with the Verified Check due diligence process and obtain a final report from CrowdCheck.
5. Provide the link to your final Verified Check Report to Mark Livingston at TSIF for the Investment Readiness Check.

Coaching Tips:

Women and HeForShe investors will have many questions when they start reviewing your 3X-in-10™ Revenue Sharing Offer and Sustainable 10X Impact Business Plan. The first two questions will be:

1. Are the officers, management team, and principals of this enterprise to be trusted?
2. How do I know this enterprise and 3X-in-10™ Revenue Sharing Offer is legitimate?

In order to answer these and other questions, The Social Impact Foundation in fall 2017 contacted a due diligence and disclosure firm by the name of CrowdCheck. We made this decision because of CrowdCheck’s integrity and high-quality approach to background checking and due diligence review. For example:

• CrowdCheck uses an in-depth and comprehensive process that goes beyond what databases provide in order to ensure investment opportunities are valid and legally binding.
• CrowdCheck provides a robust and efficient due diligence solution to include helping enterprises prepare and submit compliant offering documents to the SEC.
• CrowdCheck is staffed with experienced due diligence analysts and securities lawyers providing customized assistance at a very affordable price.

We recommend visiting the CrowdCheck website to learn about the Verified Check Report and due diligence process. Look for the Services section on the main navigation menu and then click on Entrepreneurs. CrowdCheck provides three types of checks, including the Compliance Check and Foundation Check. We recommend the Verified Check because its high level of disclosure and transparency will raise the trust and confidence of women and HeForShe investors on your investment platform-of-choice.

Be sure to read Our Story in the About Us section of the CrowdCheck website. There, you’ll find a letter from Sara Hanks, Managing Partner of CrowdCheck and CrowdCheck Law, LLP. In this compelling letter, she explains the “so what” and “why” of their unique woman-owned organization.

You will see there’s a wealth of information on this site about the legal requirements for raising capital using the Regulation CF exemption. The website has a glossary of terms to help you understand key concepts in raising capital on a crowdfund investment platform. You’ll find this Glossary in the Resources/Education/Lexicon section of the website.

After reviewing, contact info@crowdcheck.com to start the process for obtaining a Verified Check Report. One of the initial tasks the CrowdCheck due diligence team will ask you to do is identify all of the principals, key officers, or other key individuals associated with your enterprise. This is a legal term with a very specific definition. To help you and your team become familiar with the term, we recommend reading: “What Are the Responsibilities of the Principal in a Company?”

The SEC Point of View

The Securities and Exchange Commission (SEC) looks at this question of “key individual” from a compliance point-of-view because of their mandate to protect investors from fraud. They use the term “bad actor” to make sure you’ve disclosed the backgrounds of all key principals, officers, or individuals associated with your enterprise.

CrowdCheck addresses this issue with a section on their website titled Bad Actor Report (look on the far right side of the main navigation bar). Be sure to read all six Learn More boxes to become familiar with the SEC’s expectations regarding “bad actor checks.” The CrowdCheck team will advise on who should be included in the background checking process, but be prepared to disclose any and all individuals who might fall into this role.

Verified Check Report

We require a Verified Check Report from CrowdCheck as a prerequisite to advertising your Revenue Sharing Offer to women and HeForShe investors in the 10X Impact Community Forum (if you choose to do this)

We made this decision because of the depth, breadth, and quality of information provided in the Verified Check Report. We believe your prospective revenue-sharing investors (including possibly The Social Impact Foundation) will appreciate this level of transparency and integrity.

Completing the Verified Check process does not happen in a couple of hours (more like 4–6 weeks). Plus, you will need to coordinate this due diligence review with the required financial statements review or audit (note that CrowdCheck does not conduct the review or audit of financial statements).

However, it’s a small price to pay if your enterprise is aiming to attract the right crowdfund investors with the right growth capital to scale your enterprises’ positive impact. In order to complete the CrowdCheck due diligence review, your enterprise will need to generate and/or produce the following documents (among others):

• Governance documents (incorporation papers, by-laws, etc.)
• Revenue Sharing Offering documents (3X-in-10™ or otherwise)
• Background and Bad Actor checks for all officers, directors, and principals of the firm
• Employment and educational backgrounds of key principals
• Sustainable 10X Impact Business Plan
• Key operating documents, including important contracts, leases, patents, and insurance policies (among other verification documents)
• Reviewed or audited financial statements for the previous two years
• Copies of tax filings for the previous two years
• And, as part of the Verified Check due diligence process, CrowdCheck will help draft the required SEC Form C disclosure

You can review an example of CrowdCheck’s final product and the quality of their due diligence by requesting a sample Foundation Report (reference the section on their website titled CrowdCheck Reports). The Verified Check Report we require builds on this Foundation Report.

The Verified Check service includes one-on-one assistance from the CrowdCheck professionals who will help your enterprise prepare a valid and legal Form C that meets SEC disclosure requirements. This alone will reduce the legal fees related to raising growth capital on your own. We think the level of quality and integrity provided by CrowdCheck’s Verified Check Report is worth every penny of the $5,000 cost (as of fall 2018) and will be recognized and appreciated by your prospective revenue-based investors.

Once the Verified Check Report is obtained, you will need to provide Mark Livingston at The Social Impact Foundation (TSIF) with a link to the report. Mark will be checking it as part of his review into your investment readiness. You will also need to make the final Verified Check Report available to prospective investors on your crowdfund investment platform-of-choice.

Review Questions:

Before moving to the Next Step, ask these questions:

1. Did we honestly answer all questions required in the Verified Check due diligence review?
2. Is there anything else we can do to raise investor trust and confidence?
3. How will we make the Verified Check Report accessible to prospective women and HeForShe investors on our Investment Platform Profile?

Estimated Time:

It will take approximately 4–6 weeks to obtain a Verified Check Report (completed simultaneously with the review or audit of financial statements by an independent accountant).

Featured Certified B Corporation: 

Conscious Company Magazine

Recommended Resources:

To learn more about the SEC’s expectations for raising capital using the Regulation Crowdfunding exemption, we recommend the following:

• Regulation Crowdfunding: A Small Entity Compliance Guide for Issuers (a publication of the SEC).
• Regulation Crowdfunding Rules, (a blog post authored by Sara Hanks, Managing Partner of CrowdCheck, regarding Regulation CF requirements).

Governance Documents Review

Required Materials:

To obtain a due diligence review of your governance documents, you will need to forward your corporate constitutive documents, company resolutions, and other necessary documentation to the due diligence team at CrowdCheck.

To Do List:

There are four actions for you and your team to complete:

1. Review the charter and governance documents of your business or social enterprise with owners, officers, and directors or members of your corporation or LLC.
2. Make any improvements as needed to ensure the stability and continuity of your enterprise and forward a copy of these documents to CrowdCheck for due diligence review.
3. Implement any changes to these agreements in response to issues identified by CrowdCheck and include the final Verified Check Report on your Investment Platform Profile.
4. Forward a link to your final Verified Check Report to Mark Livingston at TSIF for the Investment Readiness Check.

Coaching Tips:

An essential requirement for protecting the interests of investors and stakeholders is a due diligence review of your governance documents. Women and HeForShe investors will want to know if your enterprise is legitimate and if your legal affairs are in order. Some of the questions these investors will have include:

• Are your governance documents accurate, complete, and valid?
• Have you adequately protected intellectual property or trade secrets?
• Is there a succession plan to ensure business continuity in case of death, divorce, or partners who leave during the ten-year investment period?

If you doubt the seriousness of these issues, read The Importance of Understanding By-laws and Operating Agreements by the Apex Law Group in Seattle, Washington. Over the years, we’ve seen too many ownership teams face significant hardship because difficult issues were not addressed and resolved amicably (e.g., partnership dissolution).

In particular, note these comments from the Apex Law Group:

“It’s one of those things that largely go unnoticed until there is a company dispute or one member/shareholder wants to disassociate. Only then, when something goes wrong, are these documents pulled out and examined to determine how the dispute resolution process will work. Frequently there is no procedure (and if there is any guidance it’s just a standard jurisdiction and venue clause directing you to the courts) and the method of untangling the adverse parties becomes burdensome and costly to everyone involved. Many companies that do not hire legal counsel to help put these initial documents together, wind up hiring lawyers later on to help litigate the disputes that arise from inadequacies and inconsistencies in these documents. Hiring counsel to draft these documents is much less expensive than protracted civil litigation.

A lot of grief and unnecessary legal hassle can be avoided by taking the time to tailor and understand your operating agreement or bylaws from the outset. For instance, what happens in the case of a deadlocked vote? What if a majority owner becomes incapacitated or, heaven forbid, is killed? If they’re married, will their spouse inherit the interest in the LLC or Corporation? Do you want to be in partnership with someone’s spouse? All these questions and more can be answered through operating agreements and bylaws.”

To start the due diligence review, find the articles of incorporation or certificate of formation for your corporation or LLC (as appropriate for your state or province). These are your chartering documents. Also, locate your internal governance documents (corporate bylaws or LLC operating agreement). Take the time to review these documents with the principal stakeholders of your enterprise (e.g., owners, members, officers, and directors). Ask these individuals the three questions listed earlier. Commit to having “tough conversations” if necessary. You owe it to your prospective investors as well as the stakeholders of your business or social enterprise (as well as yourself).

External Assistance Required

After this internal review, make changes as appropriate and forward these documents to the CrowdCheck due diligence team. This is a required step in their background checking process and they will include a summary of their governance documents review in the final Verified Check Report.

Review the example Report from their website to see how CrowdCheck addresses this critical due diligence check. If the CrowdCheck team identifies any weak links in your governance documents, quickly resolve these issues prior to the launch of your crowdfund investment campaign.

Mark Livingston at The Social Impact Foundation will be reviewing this part of the Verified Check Report very closely. We do this because your business or social enterprise is planning to offer investors a ten-year revenue sharing investment offer. It’s incumbent on you and your team to assure women and HeForShe investors (and us) that your enterprise is built on a solid legal foundation and structured correctly to withstand major shocks and disruptions during the investment period.

Review Questions:

Before moving to the Next Step, ask these questions:

1. Did the due diligence team at CrowdCheck uncover any weak links in our governance documents?
2. Have we considered future scenarios of ownership change in the years ahead?
3. Do we have adequate succession and business continuity plans in place?

Estimated Time:

It will take 4–6 weeks to obtain a Verified Check Report from CrowdCheck. This process includes due diligence review of your governance documents.

Featured Certified B Corporation:  

Happy Family Brands

Recommended Resources:

To learn more about succession and business continuity planning, we recommend:

• “What is Business Continuity Planning”
• Business Succession: When Corporate Governance and Estate Planning Converge: Are you Setup Properly?
• Rhonda’s Rules: A Woman’s Guide to Getting & Keeping Her Affairs in Order

We also suggest:

• Founder’s Dilemmas (free 5-part video series from the Kauffman FoundersSchool).
• Intellectual Property (free 9-part video series from the Kauffman FoundersSchool).

Investor Pitch Deck and Profile Review

Required Materials:

To create an Investor Pitch, you will need to visit SlideModel.com. To create an Investment Platform Profile, you will need to select a funding portal as the launchpad of your 3X-in-10™ Growth Capital Campaign. To obtain a due diligence review of your communication assets prior to launch, you will need assistance from the team at CrowdCheck.

To Do List:

There are seven actions for you and your team to complete:

1. Create Investor Persona and Journey Canvases using tools from the Design a Better Business website.
2. Download the Investor Pitch template from SlideModel.com and create an Investor Pitch Deck for offline investor meetings and the Investment Platform Profile.
3. Identify and select an approved crowdfund investment platform that sponsors revenue-sharing offers using the Regulation Crowdfunding exemption.
4. Create an Investment Platform Profile on your funding portal-of-choice.
5. Forward your Investor Pitch Deck and link to your Investment Platform Profile to the team at CrowdCheck for review as part of the SEC Form C Review process.
6. Make any needed changes and ensure all relevant documents are available on the funding portal website (e.g., final Verified Check Report, Sustainable 10X Impact Business Plan, Investor Pitch Deck, Revenue Sharing Offering documents, promotional video, SEC Form C submittal package, etc.).
7. Forward the link to your Investment Platform Profile to Mark Livingston at TSIF for the Investment Readiness Check.

Coaching Tips:

Before jumping into development of advertising and marketing assets for your crowdfunding investment campaign, we urge you and your team to “step into the shoes” of women and HeForShe investors. This is critical, as many of your prospective investors will be first-time participants in online investing.

We recommend taking the time to design an “engaging experience” that guides prospective investors through each step of a win-win decision-making process focused on your high-quality 3X-in-10™ Revenue Sharing Offer.

Because your enterprise is preparing to launch a securities offering using a revenue sharing promissory note, you must comply with SEC requirements for advertising and promoting the 3X-in-10™ Offer and communicating with investors, both offline and online. Review these two documents for a quick refresher:

• Regulation Crowdfunding Rules
• Regulation Crowdfunding: A Small Entity Compliance Guide for Issuers

Then, go to the Design a Better Business website and download the Persona Canvas and Customer Journey Canvas. You previously used these templates in Module 2 of Business Impact Accelerator. Here, we recommend creating an Investor Persona and an Investor Journey Canvas to help you and your team empathize with the “investing experience” from the perspective of women and HeForShe investors. Consider all elements of their online experience, including those within your control and those delivered by the crowdfund investment platform you choose.

We leave it to you and your team to identify and select a funding platform-of-choice. We recommend checking out the Wefunder to start (they are partnering with CrowdCheck as of spring 2020). Just be sure the portal you eventually choose is approved by FINRA and sponsors revenue-sharing offers under the Reg CF exemption. Check Crowdfund Investing Platforms in the BIA Library for more information about funding platforms in the U.S. that support revenue-based investment offers (as of fall 2018).

Many of these funding portals offer online tools and word editors to help you develop an Investment Platform Profile and/or Investor Pitch Deck. Each portal will have their own standards for this profile. However, we recommend creating your own customized Investor Pitch Deck using the Investors Pitch PowerPoint template from SlideModel.com.

Note that SlideModel has a YouTube video about the design of this template. We recommend aligning this template with the section headings of the Sustainable 10X Impact Business Plan. As discussed in Module 3 of Business Impact Accelerator, your impact-driven business plan is a little different than profit-focused business plans. So, don’t be bashful about pointing this out by the design of your Investor Pitch Deck. 

Some funding portals will tell you the Investor Pitch Deck is more important than the business plan. This is not an entirely accurate statement. Your Pitch Deck is a document prospective investors will study after initially reviewing your online profile and viewing a promotional video (if you choose to use one). They will then seek out your Pitch Deck to get highlights of the Sustainable 10X Impact Business Plan and 3X-in-10™ Revenue Sharing Offer.

However, this “pre-screen” is just Phase 1 of their decision-making process. The second phase begins with a general review of your business plan and SEC Form C disclosure. The third phase moves to an in-depth review of your Sustainable 10X Impact Business Plan and Revenue Sharing Offering documents with perhaps questions posted on the funding portal’s website. The final phase is an investment decision (yes, no, or ignore).

Your aim is to move prospective women and HeForShe investors through each of these phases as smoothly as possible with a win-win result. For a refresher of this due diligence and decision making process, review relevant content from the Business Impact Accelerator Mini-Course and 3X-in-10™ Webinar Series.

Keep It Simple

There’s plenty of advice in books, articles, and YouTube videos about pitching to investors and promoting a crowdfund investment offering. The one consistent theme is “keep it simple.” Use the Persona and Journey Canvases to put yourself in the shoes of busy investors. What is the most important information that will capture their attention and motivate them to review your supporting documentation?

These investors may not do all of their due diligence checking in one sitting, but you want to stand out from all the other investment offers so they’ll “come back for more” and invest in your Vision of Sustainable 10X Impact.

There are two other points to keep in mind:

1. Crowdfund investors are responsible for conducting their own due diligence and making their own investment decisions. However, we’ve made this easier for them (and for you) through the CrowdCheck Verified Check Report and the TSIF Investment Readiness Checklist.
2. You must follow all marketing, advertising, and promotion guidelines established by the SEC for communicating your 3X-in-10™ Revenue Sharing Offer and 3X-in-10™ Growth Capital Campaign, both online and offline. Because this is a crowdfund campaign using Regulation Crowdfunding rules, you will need to direct all prospective investors to your Investment Platform Profile, Form C disclosure, and Revenue Sharing Offering documents for discussion of specific terms and conditions. Sorry, but there are no exceptions to this requirement.

When you complete your Investor Pitch Deck and Investment Platform Profile, forward these promotional assets to the CrowdCheck team for review. This is part of the service you’ve paid for with the Verified Check Report, so take advantage of this due diligence review. The team at CrowdCheck will review your marketing assets concurrent with the creation, review, and submittal of your SEC Form C package. They’ll also be checking to make sure all of your documents are aligned with each other (e.g., Sustainable 10X Impact Business Plan, Revenue Sharing Offering documents, Investor Pitch Deck, Verified Check Report, etc.).

When you’re ready, forward a link to the Investment Platform Profile to Mark Livingston for the Investment Readiness Check. You’re now just one step away from being able to advertise your 3X-in-10™ Growth Capital Campaign to women and HeForShe investors on the 10X Impact Community Forum.

We have several items for you to review in the Recommended Resources section to improve investor pitching and presentation skills. If you have any questions, please contact us directly through this website. We’re also available to schedule a short Skype or FaceTime conference to listen to your investor pitch and offer feedback.

Review Questions:

Before moving to the Next Step, ask these questions:

1. Did we create an Investor Persona and Journey Canvas to help us design and deliver a winning experience for women and HeForShe investors?
2. Did we communicate our story in a compelling manner, but in line with SEC regulatory requirements for investor communications?
3. Did we clearly direct all prospective investors to our Investment Platform Profile and funding portal-of-choice to learn about the terms and conditions of our 3X-in-10™ Revenue Sharing Offer?

Estimated Time:

It will take 8–24 hours to develop your Investor Pitch Deck and Investment Platform Profile (depending on materials already completed). The review of these promotional assets by the CrowdCheck team is included within the Verified Check Report timeframe (4–6 weeks).

Featured Certified B Corporation: 

Insamar

Recommended Resources:

To learn about the regulatory requirements for communicating with investors during a crowdfund investment campaign, we recommend the following:

• Regulation Crowdfunding Rules
• Regulation Crowdfunding: A Small Entity Compliance Guide for Issuers

To learn more about “how to” pitch your Revenue Sharing Offer and promote your Growth Capital Campaign, we recommend the following:

• “Virgin Startup: How to Pitch Your Business”
• “6 Public Speaking Tips to Hook Any Audience”
• “Crowdfunding Success Story”

We also recommend this free video series:

• Powerful Presentations (free 7-part video series from the Kauffman FoundersSchool).

Investment Readiness Check

Required Materials:

To complete the Investment Readiness Check, you will need to schedule an online interview with Mark Livingston of The Social Impact Foundation.

To Do List:

There are four actions for you and your team to complete:

1. Print the Investment Readiness Checklist and review the eight due diligence questions in the Investment Readiness Check.
2. Request and schedule an Investment Readiness Check after ensuring all documentation and links are ready for review.
3. Complete the Investment Readiness Check with Mark Livingston.
4. Provide an advertisement (“tombstone notice”) for the 10X Impact Forum communicating the launch of your 3X-in-10™ Growth Capital Campaign.

Coaching Tips:

Congratulations! Your enterprise has made it to the Investment Readiness Check! We want to acknowledge the hard work, dedication, and commitment of you and your team. Now, let’s advertise your high-quality 3X-in-10™ Revenue Sharing Offer to women and HeForShe investors in the 10X Impact Forum and begin marketing the 3X-in-10™ Growth Capital Campaign on your funding portal-of-choice.

As you may have surmised, we take our due diligence responsibility very seriously. The Investment Readiness Check enables us to assure women and HeForShe investors in the Forum that your business or social enterprise has followed all regulatory requirements and is ready for investment and ready to deliver sustainable results.

When you and your team are ready, contact Mark Livingston and request an Investment Readiness Check. He’ll respond with several proposed dates and times for the review. If you have not already done so, print the Investment Readiness Checklist. We will be referencing the following eight questions during the process.

Investment Readiness Questions

Mark Livingston has the responsibility to ensure these questions are reviewed:

1. Were any issues identified in the Verified Check Report from CrowdCheck that would make prospective investors or securities regulators doubt the integrity or trustworthiness of this team or enterprise?
2. Did the financial statements review or audit raise any issues that would concern prospective investors, tax authorities, or securities regulators?
3. Did this business or social enterprise address all questions in the Business Plan Checklist and submit a high-quality Sustainable 10X Impact Business Plan?
4. Are the governance documents of this enterprise sufficient to protect the long-term interests of investors and stakeholders?
5. Are the 3X-in-10™ Revenue Sharing Offering documents properly structured and legally binding?
6. Did the Form C disclosure conform to all SEC requirements under the Regulation Crowdfunding exemption?
7. Are promotional materials compliant with SEC requirements and do they clearly direct all prospective investors to an approved crowdfund investment platform?
8. Is this enterprise ready to promote their 3X-in-10™ Revenue Sharing Offer to women and HeForShe investors in the Women’s Impact Investing Network?

In working through each question, Mark will let you know if there are any issues or concerns. His job is to be honest–remember the fiduciary standard we have to protect every prospective investor? But we won’t leave you “high and dry.” We will work with you to resolve the issue.

There is one final step you’ll need to complete before we feature your enterprises’ Revenue Sharing Offer and Growth Capital Campaign to women and HeForShe investors in the 10X Impact Forum. This step requires creation of an advertisement or “tombstone notice” clearly directing prospective investors to your platform-of-choice. You can Google this term and find many examples of notices used in investment campaigns.

Review Questions:

Before scheduling an Investment Readiness Check, ask these questions:

1. Did we provide Mark Livingston at The Social Impact Foundation with all links and required documentation for this final review?
2. Do we have an advertisement or “tombstone notice” ready for women and HeForShe investors in the 10X Impact Community Forum?
3. Did we clearly direct all prospective investors to our funding portal-of-choice?

Estimated Time:

It will take you and your team approximately 30–60 minutes to meet with Mark via Zoom, Skype, or FaceTime to complete the Investment Readiness Check and plan for the advertising of your 3X-in-10™ Revenue Sharing Offer to members of the 10X Impact Forum.

Featured Certified B Corporation:  

A to Z Wineworks

Recommended Resources:

To learn more about successful crowdfund investment campaigns, we recommend the following video:

• “Crowdfunding Success Story”