How Does Crowdfunding Work?
Billfolda helps investors find offers from companies that they believe in.
We do this by providing a transparent, flexible and efficient online gateway that connects promising companies to groups of investors.
Once an offer is completed we make sure the equity is properly transferred to the investors. Then Billfolda releases the funds to the entrepreneur.
Founders find a Lead investor
Typically Billfolda are not the first to invest, we are follow-on investors, backing founders who have already been vetted by experienced Angel investors who have negotiated pre-seed and seed investments terms.
When we see the founders leveraging the initial capital investment by successfully growing the company, building a strong team and achieving significant milestones we are interested.
We review the company’s strategic plan to assess how equity crowdfunding might fit in the growth cycle for each venture and where opportunity presents itself we will offer those businesses access to the proprietary Billfolda software.
A lot of great early stage companies apply, so it’s only a small number who will receive an access rights to progress a fundraising offer through Billfolda.
Entrepreneurs prepare and proof the offer
Billfolda provides the founders and their team access to our offer suite, a web application packed with tools to help ensure that the offer meets the legal requirements of crowd sourced funding.
In this secure environment, the Billfolda works alongside the founders curating the required proofs, checks and certifications before an offer can be published.
Billfolda members invest
We invite members, and select associates of the offer to review the proposal. You get to see all information regarding an investment and the respective terms including the valuation. Members can ask questions to the entrepreneurs and can read and respond to questions asked by other members. Each investor makes his or her own individual decision to invest and can do so at a click of a button, providing the offer is not fully subscribed.
Billfolda takes away the legal hassle for our members
As a Billfolda investor, you do not have to worry about the admin and legal paperwork regarding acquiring an investment. Our software and process ensure that you’ll be notified as the process progresses.
Billfolda transfers the ALL funds to the company
Many other investments are ‘pass the parcel’, your money is swapped with another investor who’s decided it’s a good time to sell.
At Billfolda, we believe that companies should grow your wealth, not pass it around, so when the legal documentation is finalised we transfer the funds to the company, net or our fees.
When a crowdfunding offer is successful, we are paid a % of the total funding round in shares, just like the ones you now own. At least part of our reward is lock step with yours, sharing the win’s and losses with you.
Once the company receives the investment, the excitement begins. Log into Billfolda to check how the company is doing based on its latest updates.
At this stage some companies will fail, and some others will succeed. You are an Angel investor therefore you have to expect some losses in some investments and if you are good at picking deals, great returns on others.
Most Angel investors look at a three to five years' return from their start-up investments. Sometimes it can take much longer. A few signposts to look for on the way include;
- Losses often occur earlier than the gains.
- Take note of the occasional off market trade(s).
- Don’t expect the same reporting as the ASX (It’s an SME and your founders are busy!)
- Be patient
For those companies that succeed, the exit is usually a trade sale (selling of the whole business to another company) or an IPO (Initial Public Offering– listing on the stock exchange). This is the stage where great returns can be achieved for astute investors.
Most successful Angel investors have portfolios of investments at various stages of evolution. Diversification and business acumen have been show to return above average results for those who believe in the right companies.
If something goes wrong (or wasn’t right)
If the deal wasn’t right for you or for us, it failed to reach the target, it had serious errors, or the situation changed during the offer period to a point that the offer should not continue, we will close it.
We do not invest in failure or profit from your loss. Your investment will be returned without any withdraw fee, exit charge or unnecessary delay.
If you change your mind, for any reason, you can exercise your cooling-off rights for up to 5 business days from the day of investment and or return to invest in another offer when you believe the company is worthy.
We are happy that your funds have been safeguarded and expect you are more likely to return again in the knowledge that Billfolda offers only proceed when the correct conditions are met. It’s true that the company does not pay us unless the offer is completed, so we do not receive a fee or shares in this case (unless exceptional circumstances apply, like an unplanned off-market exit).
Suffice it to say, we will be doubly committed to bringing you the best offer the next time you visit.
You might be wondering how a low margin service can hope to grow, or how we plan to succeed in a commission driven market.
Our belief is that you will back us.
We think Billfolda is significant evolution in fundraising, if not all forms of investment.
The idea that your service provider is someone whose growth is entirely dependent on parallel positive returns, who makes the same investments you make, and who’s willing to give you the ultimate control over the companies they invest-in is completely new.
If you like the idea, and agree, then we are backing you to gladly confirm the modest ‘backer’ donation we’ll add to your purchase on checkout. If you don’t, then feel free to delete it, as it is a service we are proud to offer in any event.
Backers are more like members than clients, so this is why we are alone in charging you some of the costs of taking part, even before you invest or apply for funding. It’s not a lot in the scheme of things, and at last you’ve found a service that’s clear about where our loyalties lie.
Together we can change we way things get done, and share the long term rewards!
Not an investor? See your How it works page for entrepreneurs instead.