Fund Business Impact

Module Six Description

In this sixth Module of Business Impact Accelerator©, your impact-driven enterprise will complete two levels of due diligence review and finish all preparations for launch of a 3X-in-10™ Growth Capital Campaign on a crowdfund investment platform.

You and your team will complete four Activities …

  1. Raise Investor Trust and Confidence
  2. Protect Investors and Stakeholders
  3. Promote 3X-in-10™ Revenue Sharing Offer
  4. Confirm Investment Readiness

… and produce eight Deliverables:

  • Verified Check Report
  • Financial Statements Review or Audit
  • Sustainable 10X Impact Business Plan Review
  • Governance Documents Review
  • 3X-in-10™ Offer Review
  • SEC Form C Review
  • Investor Pitch Deck and Profile Review
  • Investment Readiness Check

These Deliverables will enable your enterprise to accelerate the launch of a 3X-in-10™ Growth Capital Campaign by advertising it to women and HeForShe investors on your crowdfund investing platform.

For each Deliverable, we provide step-by-step instructions and coaching tips for completion. We also feature a Certified B Corporation to benchmark and offer a list of resources to help you understand requirements for raising capital on a crowdfund investment platform. If you have any questions, please contact us directly through this website.

Raise Investor Trust and Confidence

In this Activity, you and your team will raise investor trust and confidence by completing the first three requirements of the Investment Readiness Checklist. You’ll do this by obtaining a Verified Check Report from CrowdCheck and an independent review or audit of your financial statements. You’ll also conduct a final review of your Sustainable 10X Impact Business Plan.

Raising investor trust and confidence is important because as you learned in Gender Wealth Strategy©, women and HeForShe investors have not had a positive experience with our biased and broken system of finance and investment. As one of the leaders of an impact-driven enterprise, it is incumbent on you to assure investors of your honesty, integrity, and trustworthiness.

By meeting these due diligence requirements, your enterprise will ensure readiness to raise flexible revenue-based growth capital and deliver sustainable results during a ten-year investment period.

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:

Next Step

Financial Statements Review or Audit

Financial Statements Review or Audit

Required Materials:

To obtain a review or audit of your financial statements, you will need the services of an independent and qualified public accountant. You will also need to review an article from the CrowdCheck Blog to learn more about this regulatory requirement.

To Do List:

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

  1. Review SEC guidelines on the Regulation Crowdfunding exemption, including requirement for review or audit of financial statements by an independent public accountant.
  2. Obtain the services of an independent and qualified public accountant licensed to do business in your state.
  3. Provide financial statements and documents for the review or audit.
  4. Review the accountant’s report and implement any changes to internal controls.
  5. Forward the report to the CrowdCheck due diligence team for review and inclusion in the final Verified Check Report.
  6. Be ready to discuss the results of your financial statements review or audit with Mark Livingston during the Investment Readiness Check.

Coaching Tips:

The independent review or audit of your financial statements prior to launching a crowdfund investment campaign assures investors, securities regulators, and other stakeholders that your enterprise is honest, trustworthy, and transparent. It’s one of the key documents the team at CrowdCheck will be reviewing and discussing in their Verified Check Report. It is also one of the key requirements of the TSIF Investment Readiness Checklist.

The SEC has established requirements for “issuers” of securities seeking to use the Regulation CF exemption. One of the requirements under the Reg CF exemption is a review or audit of financial statements by an independent and qualified public accountant. Review pages 3–4 in the SEC document titled “Regulation Crowdfunding: A Small Entity Compliance Guide for Issuers.” This Guide is written in “plain English” with disclosure requirements clearly outlined for the review or audit of financial statements. Note the SEC requirements for different offering levels on page 3.

A well-written review of Regulation Crowdfunding requirements and financial statement disclosures can be found in this blog post titled Regulation Crowdfunding Rules. It’s written by Sara Hanks, Managing Partner of CrowdCheck, who you were introduced to in the previous section. In a separate blog post from the CrowdCheck website, Andrew Stephenson (Vice-President of Product Management and Strategy at CrowdCheck) discusses the requirement for accountant independence.

If you and your team are not clear about the difference between a financial statements review or audit, we recommend reading Guide to Financial Statement Services: Compilation, Review, and Audit from the American Institute of Certified Public Accountants.

External Assistance Required

You will need to obtain the services of an independent public accountant to perform the financial statements review or audit. We recommend an accountant licensed in your state familiar with the Reg CF requirements. You will need to find an accountant that not only can provide this one-time service, but will be available for ongoing review or auditing in the future (keep in mind the independence standard however). If there is any question about the independence of your accountant, ask the team at CrowdCheck.

Although the SEC does not require ongoing reviews or audits, we recommend an annual review of your financial statements. This voluntary disclosure will assure women and HeForShe investors that your reporting of top-line revenue and quarterly revenue-sharing payments is accurate, honest, and transparent. It will also enable your enterprise to meet one of the provisions in the 3X-in-10™ Revenue Sharing Promissory Note template regarding “verification of revenue” (reference Revenue Sharing Templates in the BIA Library).

The cost of obtaining review or audit services from an independent public accountant will vary. Reviews may cost your enterprise anywhere from $2,500–$4,000+ depending on geographic location and quality of financial records and statements. Audits might cost twice this amount. You can reduce these costs by providing the accountant or accounting firm with well-organized records and documentation. Read these two articles regarding the importance of following Generally Accepted Accounting Principles and getting ready for a financial review or audit:

In the Recommended Resources section, we have two publications from the American Institute of CPAs regarding standards the accountant will need to follow. The second document describes the limitations of what an accountant provides in her or his “conclusions.” Do not make the mistake of thinking their review (or audit) takes you “off the hook.” This goes for the due diligence review process at CrowdCheck. You and your team are 100% responsible for ensuring accuracy and truthfulness of all reported information, disclosures, and “forward-looking statements.”

Take Action to Improve Controls

We also recommend you consider an initial audit of your financial statements. Yes, an audit will cost more, but we think this level of quality assurance will help your enterprise attract the patient investors and flexible capital needed to take your business or social enterprise to the next level.

In addition, you will get feedback about the strength of your internal control systems. These recommendations will enable you to develop a more robust accounting and financial system capable of bearing the weight of 5–10% (or more) annual revenue growth over a ten-year investment period.

Remember, you have an option of including CrowdCheck due diligence review and accounting review or audit services as line items in your growth capital budget and 3X-in-10™ Revenue Sharing Offer (reference Module 3, Establish Scaling Plans).

Be sure to review the formal report issued from your accountant with all team members and principals of your enterprise, including board members (as appropriate). Immediately implement any action plans to increase the strength and improve the integrity of your accounting and internal financial control systems.

Save a copy of the formal report issued by your accountant. You will need to send a copy of this report along with reviewed or audited financial statements to the due diligence team at CrowdCheck. Examine the sample Report from their website to see how they discuss and reference your financial statements in the final Verified Check Report. We’ll be intently reviewing this part of the report in the TSIF Investment Readiness Check.

Review Questions:

Before moving to the Next Step, ask these questions:

  1. Did we obtain the services of an independent public accountant licensed to conduct business in our state and was independence verified by the CrowdCheck team?
  2. Is everyone on the team clear about SEC requirements for Regulation Crowdfunding financial disclosure?
  3. What did we learn about our internal financial and accounting controls? What do we need to improve?

Estimated Time:

It will take approximately 2–4 weeks for an independent public accountant to review or audit your financial statements (depending on the quality of your records and their schedule availability). This work will need to be coordinated with the due diligence process of CrowdCheck.

Featured Certified B Corporation:  

Silver Chef

Recommended Resources:

To learn more about Regulation Crowdfunding requirements for review or audit of financial statements, we recommend the following:

Next Step

Sustainable 10X Impact Business Plan Review

Sustainable 10X Impact Business Plan Review

Required Materials:

To conduct a final review of your Sustainable 10X Impact Business Plan, you will need to obtain a copy of the most recent version of your five-year scaling and growth plan and schedule a review meeting with your team.

To Do List:

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

  1. Generate a copy of the most recent version of your Sustainable 10X Impact Business Plan.
  2. Review this five-year business plan (including pro forma financial statements) and make any changes to wording that may be inappropriate for conducting a securities offering with a 3X-in-10™ Revenue Sharing Offer.
  3. Identify questions you think prospective investors will ask about your five-year plan and incorporate these questions into your Investor Pitch Deck and Investment Platform Profile.
  4. Provide a copy of your Sustainable 10X Impact Business Plan to the due diligence team at CrowdCheck and to Mark Livingston at TSIF for the Investment Readiness Check.

Coaching Tips:

This activity focuses on reviewing the quality and integrity of your Sustainable 10X Impact Business Plan one final time before the launch of your 3X-in-10™ Growth Capital Campaign on a crowdfund investment platform.

To start, ensure you and your team have a copy of the most recent five-year business plan, including pro forma financial statements or projections. Be sure everyone has access to the Business Plan Checklist to verify all items of a high-quality impact-driven business plan have been adequately addressed.

Ask your team to spend individual study time to read the business plan one more time and conduct a “quality assurance” check. Ask them to look for words, phrases, or terms that might be misconstrued by investors as “promises” or “guarantees.” Yes, there will be disclosures (warning statements) in your offering documents and 3X-in-10™ Revenue Sharing Promissory Note and 3X-in-10™ Note Subscription Agreement about “forward-looking statements”, but you bear the responsibility for making sure all claims are truthful.

Then, moderate a meeting of the entire team to discuss results of this final quality assurance review. Apply the same standard you used to identify the average annual revenue growth rate in your 3X-in-10™ Revenue Sharing Offer: “under-promise and over-deliver.” Stay focused on using the terms “potential” or “forward-looking.” If there’s any doubt, highlight the statements in question and ask the CrowdCheck team for guidance.

During the second half of this meeting, ask team members for the “top 10” questions investors might ask about the Sustainable 10X Impact Business Plan, including pro forma financial projections. Note that you are extremely limited in what you can say about the 3X-in-10™ Revenue Sharing Offer outside of your investment platform-of-choice, but you can describe the future scaling and sustainable growth plans of your enterprise in offline Investor Pitches or meetings.

In all cases, you must direct prospective investors looking for “more information” to your Investment Platform Profile where you can answer questions regarding the terms and conditions of your Revenue Sharing Offer. Per crowdfund investing laws, your funding portal-of-choice will have established a way for investors to communicate with you and ask questions about the terms of your offering, business plan, or pro forma financial statements. You will need to identify a point of contact to respond to these questions and clearly communicate the role of this individual in your organization. Your funding portal-of-choice will walk you through their system for communicating with prospective investors.

After you make any final changes to the five-year plan, be sure to provide a copy to the due diligence team at CrowdCheck. You will also need to provide a copy for Mark Livingston at The Social Impact Foundation. By assuring the quality and integrity of your Sustainable 10X Impact Business Plan (along with the Verified Check Report from CrowdCheck and your Revenue Sharing Offer), your enterprise will make a very strong “case for investment” to women and HeForShe investors (as well as TSIF).

Review Questions:

Before moving to the Next Step, ask these questions:

  1. Did we find opportunities to improve the quality and integrity of our plans and financial projections?
  2. Did we find and change any terminology or wording that securities regulators might find objectionable?
  3. Did we identify questions prospective investors might have for us? Do we know how we’re going to respond to these questions?

Estimated Time:

It will take approximately 2–3 hours to review the Sustainable 10X Impact Business Plan and prepare for “next steps” in your 3X-in-10™ Growth Capital Campaign.

Featured Certified B Corporation:  

Participate

Recommended Resources:

To learn more about the do’s and don’t of making “forward-looking statements”, we recommend the following articles and examples:

Next Step

Protect Investors and Stakeholders

Activity Description

In this Activity, you and your team will protect the interests of investors and stakeholders by obtaining a due diligence review of your governance documents and 3X-in-10™ Offer. You will also create and file a Form C with the Securities and Exchange Commission.

Protecting the interests of investors and stakeholders is important because as you learned in Gender Wealth Strategy©, many women and HeForShe investors are new to crowdfund investing. As one of the leaders of an impact-driven enterprise, it is incumbent on you to assure these investors your legal affairs are in order and your offering documents comply with securities regulations.

Together, these Deliverables will help your enterprise to complete our Investment Readiness Check and advertise your high-quality Revenue Sharing Offer and 3X-in-10™ Growth Capital Campaign to women and HeForShe investors.

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:

We also suggest:

Next Step

3X-in-10™ Offer Review

3X-in-10™ Offer Review

Required Materials:

To obtain a due diligence review of your 3X-in-10™ Offer, you will need to forward a copy of your 3X-in-10™ Revenue Sharing Promissory Note and 3X-in-10™ Note Subscription Agreement to the CrowdCheck team.

To Do List:

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

  1. Review your 3X-in-10™ Revenue Sharing Promissory Note and 3X-in-10™ Note Subscription Agreement one more time with team members, as well as owners, officers, or members of your corporation or LLC, including directors (as applicable).
  2. Forward a copy of your Revenue Sharing Offering documents to CrowdCheck for due diligence review and inclusion in the Verified Check Report.
  3. Implement any changes to the 3X-in-10™ Revenue Sharing Promissory Note and 3X-in-10™ Note Subscription Agreement as recommended by the CrowdCheck team (if required).
  4. Include these Revenue Sharing Offering documents in your Form C submittal package to the SEC (see next section of this Activity).
  5. Forward links to your final Verified Check Report and Investment Platform Profile to Mark Livingston at TSIF for the Investment Readiness Check.

Coaching Tips:

In this part of Module 6, we focus on the Revenue Sharing Offering documents you will be advertising to women and HeForShe investors. In order to comply with securities regulations, you must ensure these Revenue Sharing Offering documents are legal and valid. Plus, you will need to include these legal documents in your SEC Form C submittal package and on your Investment Platform Profile. These documents  must be able to withstand legal scrutiny if you’re going to raise flexible revenue-based growth capital lawfully and compliantly.

In Module 3 of Business Impact Accelerator, you downloaded the 3X-in-10™ Revenue Sharing Templates from the BIA Library. At that time, we recommended creating a first draft using information from your Revenue Sharing Offer (e.g., revenue sharing percentage, average annual revenue growth rate, starting revenue base, investment multiple or “cap”, investment time period, and amount of growth capital to raise).

It’s now time to review these documents one more time with your team as well as owners, officers, or members of your corporation or LLC. Make sure everyone understand the terms and conditions of this promissory note and subscription agreement.

External Assistance Required

Once your internal review is finished, forward a copy of your 3X-in-10™ Revenue Sharing Promissory Note and 3X-in-10™ Note Subscription Agreement to the team at CrowdCheck. This is a standard part of their due diligence review.

The team at CrowdCheck is very familiar with these documents since they created them for us at The Social Impact Foundation. However, the due diligence analysts at CrowdCheck will be reviewing specific terms and conditions to make sure everything is done lawfully and compliantly. You will need to make any changes to your Revenue Sharing documents if the CrowdCheck team finds something that is not clear or questionable. Please follow their directions to the letter to ensure your revenue-based investment offer is properly structured and legally binding.

You need to be aware these Revenue Sharing Offering documents will become part of your Form C submittal package to the SEC. CrowdCheck analysts will be helping your enterprise with drafting the Form C and submitting it to the SEC as required by Regulation Crowdfunding requirements.

You will also need to provide Mark Livingston at TSIF with links to your final Verified Check Report as well as the Investment Platform Profile. We’ll review your Form C submittal package and Revenue Sharing Offering documents from that funding portal’s website.

Congratulations! You are almost ready to start advertising your Revenue Sharing Offer to women and HeForShe investors!

Review Questions:

Before moving to the Next Step, ask these questions:

  1. Do all team members, as well as directors, owners, officers, and members of this enterprise understand the terms and conditions of the Revenue Sharing Offering documents?
  2. Did the CrowdCheck due diligence team “sign-off” on our promissory note?
  3. Did we include any changes recommended by the team at CrowdCheck (if applicable)?

Estimated Time:

It will take 4–6 weeks to obtain a Verified Check Report from CrowdCheck. This Report includes review of your 3X-in-10™ Revenue Sharing Promissory Note and 3X-in-10™ Note Subscription Agreement.

Featured Certified B Corporation:  

The Vegan Broker Inc.

Recommended Resources:

To learn more about the basics of contracts, we recommend “How to Make a Contract”.

To review the Regulation Crowdfunding requirements your 3X-in-10™ Revenue Sharing Offering documents must comply with, we recommend reading:

Next Step

SEC Form C Review

SEC Form C Review

Required Materials:

To create and file a Form C offering document with the SEC, you will need assistance from the CrowdCheck due diligence and disclosure team.

To Do List:

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

  1. Review Regulation Crowdfunding rules and SEC Form C requirements with your entire team.
  2. Collaborate with the CrowdCheck team in creating and filing a Form C offering document compliant with SEC requirements for raising capital on a crowdfund investment platform.
  3. Notify the securities regulators in your state that your enterprise has filed a Form C submittal package with the SEC.
  4. Provide a link to the SEC Form C on your Investment Platform Profile to Mark Livingston at TSIF for the Investment Readiness Check.

Coaching Tips:

One of the items in our Investment Readiness Checklist is a Form C disclosure statement to be created and filed with the SEC 21 days before launch of a crowdfund investment campaign (this includes any communication about the campaign).

Note: the SEC will not be “approving” these disclosure documents. They do not take a position–pro or con–on the investment merits of your 3X-in-10™ Revenue Sharing Offer. They do, however, want to confirm you’ve followed all rules and requirements for raising capital on a SEC-registered crowdfund investment platform and funding portal. And be warned, they do not like to see business plans, investor pitch decks, or other materials that make breathless pronouncements about guaranteed investment returns. It makes them very nervous (remember Bernie Madoff?).

Understand the Regs

As a first step, review Regulation Crowdfunding requirements one more time with your entire team to ensure complete understanding. Yes, we know this may be repetitious, but with additional study, you only deepen your understanding of what the SEC is looking for as they seek to fulfill their mission of protecting investors.

Here are the links you’ve seen in previous sections of Module 6:

Also, take the time to review this document on the SEC website, Crowdfunding Filing Review. It clarifies the review process and provides helpful tips and suggestions. As well, here’s a link to the SEC Form C that you and the CrowdCheck team will be completing.

Step-by-Step Guidance from CrowdCheck

As a part of your Verified Check Report service, the team at CrowdCheck will assist your enterprise in drafting the Form C, “EDGARizing” it, and filing the document with the SEC. They will guide you through the disclosure process.

The Verified Check process also includes a review of other offering materials, including video script, Investor Pitch Deck, and Investment Platform Profile (more about this in the next Activity). A summary of their review will be included in your final Verified Check Report that needs to be placed on your Investment Platform Profile.

When the Form C has been submitted to the SEC, send a courtesy letter to securities regulators in your state informing them you have submitted this important regulatory disclosure. Provide your contact information as well as SEC and EDGAR identification numbers. If desired, they will be able to access your specific information online. Although Form C preempts state regulatory requirements for Regulation CF capital raising, it’s always smart to keep state officials in the loop. You never know when an investor in your state will contact them directly to confirm the legitimacy of your Revenue Sharing Offer.

The last step of this Activity is to forward a link to your Investment Platform Profile to Mark Livingston at The Social Impact Foundation (TSIF). We’ll review your Form C submittal package on your funding portal’s website to complete this requirement of the Investment Readiness Check. You never know, TSIF may make a Program-Related Investment (PRI) in your Revenue Sharing Offer.

Review Questions:

Before moving to the Next Step, ask these questions:

  1. Did we include all information required in the SEC Form C offering document?
  2. Did we answer all questions from the CrowdCheck legal team honestly and accurately?
  3. Do we understand the “21-day wait requirement” prior to launching our crowdfund investment campaign on an approved funding portal (including communication requirements)?

Estimated Time:

It will take 4–6 weeks to obtain a Verified Check Report from CrowdCheck. This due diligence service includes assistance from CrowdCheck in creating and filing your Form C offering documents to the Securities and Exchange Commission.

Featured Certified B Corporation: 

Come True Social Enterprise Co., Ltd.

Recommended Resources:

To learn more about the SEC’s mission, we recommend the following:

Next Step

Promote 3X-in-10™ Revenue Sharing Offer

Activity Description

In this Activity, you and your team will set the stage for advertising and marketing your 3X-in-10™ Revenue Sharing Offer and 3X-in-10™ Growth Capital Campaign. You’ll do this by first creating an Investor Pitch Deck and Investment Platform Profile, and then obtaining a due diligence review of these assets from the team at CrowdCheck.

Advertising your Revenue Sharing Offer is important because as you learned in Gender Wealth Strategy©, many more women and HeForShe investors are seeking to investments that create social and economic value. As one of the leaders of an impact-driven enterprise, it is incumbent on you to attract these mission-aligned investors and win their support, but in a manner that meets crowdfund investment requirements.

Together, these two Deliverables will enable your enterprise to launch a Growth Capital Campaign and raise the flexible capital needed to scale impact and grow sustainably.

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:

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:

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

We also recommend this free video series:

Next Step

Confirm Investment Readiness

Activity Description

In this Activity, you and your team will confirm readiness to launch a 3X-in-10™ Growth Capital Campaign on a crowdfund investment platform. You’ll do this by completing the Investment Readiness Check.

Confirming investment readiness is important because as you learned in Gender Wealth Strategy©, 40–60% of major strategic initiatives and change efforts fail to deliver sustainable results. As one of the leaders of an impact-driven enterprise, it is incumbent on you to show investors your business or social enterprise is ready for investment, sustainable growth, change, and transformation.

By completing the Investment Readiness Check, your enterprise will be able to advertise its high-quality Revenue Sharing Offer to women and HeForShe investors.

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:

Next Step

Module Six Review

Module Six Review

Module Six of Business Impact Accelerator© focused on these Deliverables and Outcomes:

  • Verified Check Report (raise investor trust and confidence with a comprehensive background check and due diligence review from the team at CrowdCheck)
  • Financial Statements Review or Audit (raise investor trust and confidence by meeting all SEC requirements for financial disclosure)
  • Sustainable 10X Impact Business Plan Review (raise investor trust and confidence with a high-quality business plan and pro forma financial statements)
  • Governance Documents Review (protect investors and stakeholders by ensuring your enterprises’ legal affairs are in order)
  • 3X-in-10™ Offer Review (protect investors and stakeholders by ensuring your 3X-in-10™ Revenue Sharing Promissory Note and Note Subscription Agreement are correctly structured)
  • SEC Form C Review (protect investors by ensuring your revenue sharing investment offering meets all SEC disclosure requirements)
  • Investor Pitch Deck and Profile Review (promote your 3X-in-10™ Revenue Sharing Offer following all SEC regulatory requirements)
  • Investment Readiness Check (complete a final review of investment readiness before promoting your high-quality 3X-in-10™ Revenue Sharing Offer to women and HeForShe investors in the Women’s Impact Investing Network)

So, how did you do? Are you ready for the next step? If so, congratulations! Now, let’s get your 3X-in-10™ Growth Capital Campaign started with women and HeForShe investors in the 10X Impact Community Forum. We can’t wait to feature your high-impact enterprise!

Published by Mark Livingston

Mark Livingston is President of The Social Impact Foundation and creator/author of the WIIN Learning Platform. He is also a Certified Pickleball Coach and Teaching Professional at Coach Mark LLC (www.coach-mark.com).

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