Frequently Asked Questions

EquityNet is the original and only patented equity crowdfunding platform. It is used by entrepreneurs, investors, government entities, business incubators, and other members of the entrepreneurial community to plan, analyze, and capitalize young, privately-held businesses.  Thousands of entrepreneurs have used EquityNet to efficiently plan and fund their business and have raised over $217 million to-date. To see how EquityNet works visit www.equitynet.com/how-it-works.aspx

Entrepreneurs / Business Owners or Managers.  Any entrepreneur or business owner in any stage or type of private businesses (from pre-revenue start-ups to $100M/yr in revenue) can use EquityNet.  EquityNet is not applicable to publicly-traded companies.

Investors. Individual investors, investment groups, venture capitalists, angel investors, government entities, grant agencies, non-profits, and banks all use EquityNet.

Business Supporters.  Consultants, government entities, business incubators, service providers, small business development centers, universities, and other members of the entrepreneurial community all use EquityNet.

Entrepreneurs: Much of EquityNet is free, without the need for a credit card.  However, certain features require a paid subscription.  Paid subscriptions start as low as $109 per month and can be seen in your account.  To pay, click on the gold "Subscribe Now" button in your account and follow the prompts. We accept Visa, MasterCard, Discover, and American Express. To sign up visit www.equitynet.com/sign-up.aspx?m=ent

EquityNet is not a registered broker-dealer, so we do not take a commission on any resulting deal.  The only fee for entrepreneurs is the subscription cost.

Investors: The investor side of EquityNet is free.  Sign up at www.equitynet.com/sign-up.aspx?m=inv

Supporters: Supporters can purchase subscriptions for entrepreneurs and are eligible to receive volume discounts up to 50% per client company. Contact us at 866.542.3638 to pay by check or credit card. To learn more visit www.equitynet.com/supporter.aspx

Entrepreneurs sign up here: www.equitynet.com/sign-up.aspx?m=ent

Investors sign up here:  www.equitynet.com/sign-up.aspx?m=inv

The EquityNet How it Works page shows the EquityNet process for each type of user.  If you have any questions on the process or how to get started, contact us at 866.542.3638.

Entrepreneurs who use EquityNet are 5X more likely to obtain funding than those who don't.  Why?  Because EquityNet offers more than simple funding sites.  EquityNet guides you through an educational process of what investors want to know. EquityNet's patented analytics and business benchmarking provide investors and entrepreneurs with an efficient funding process. For more, visit www.equitynet.com/crowdfunding-technology

It depends. Entrepreneurs who complete the EquityNet process quickly have gone on to raise funding in weeks, sometimes days.  Others spend 6 months to a year or longer.  The more time and effort an entrepreneur puts into the software, the more they will get out of their EquityNet experience. 

EquityNet does not handle transactions.  When an investor wants to invest in an EquityNet company, they will message the entrepreneur and schedule a time to discuss the investment.  The investment will happen outside of EquityNet.

No. We are a subscription service.  EquityNet is not a registered broker-dealer, so we do not take a commission on any resulting deal.  The only fee is the subscription cost for entrepreneurs.

Yes, with EquityNet you get to keep all funds that you raise.  We do not handle transactions and we do not take a commission on funds raised.  We make money off entrepreneur subscriptions and subscription add-ons, not commissions.  So, you get to keep all the funding that you raise, even if you do not complete your funding goal.

EquityNet is a web-based crowdfunding platform. EquityNet is not a registered broker-dealer and does not offer investment advice or advise on the raising of capital through securities offerings. EquityNet does not recommend or otherwise suggest that any investor make an investment in a particular company, or that any company offer securities to a particular investor. EquityNet takes no part in the negotiation or execution of transactions for the purchase or sale of securities, and at no time has possession of funds or securities. No securities transactions are executed or negotiated on or through the EquityNet platform. EquityNet receives no compensation in connection with the purchase or sale of securities.

We are a subscription service.  EquityNet is not a registered broker-dealer, so we do not take a commission on any resulting deal.  The only fee is the subscription cost for entrepreneurs.

Furthermore, much of EquityNet is free, without the need for a credit card.  However, certain features require a paid subscription.  Paid subscriptions start as low as $109 per month and can be seen in your account.  To pay, click on the gold "Subscribe Now" button in your account and follow the prompts. We accept Visa, MasterCard, Discover, and American Express. To sign up visit www.equitynet.com/sign-up.aspx?m=ent

If we missed anything, feel free to contact us and ask away.

Crowdfunding is the use of small amounts of capital from a large number of individuals to finance a business venture. Crowdfunding makes use of the easy accessibility of vast networks of friends, family and colleagues through social media websites like Facebook, Twitter and LinkedIn to get the word out about a new business and attract investors. Crowdfunding will increase entrepreneurship by expanding the pool of investors from whom funds can be raised beyond the traditional circle of owners, relatives and venture capitalists.

Equity crowdfunding is a type of crowdfunding where the investor receives ownership (i.e. “equity”) in the company in exchange for the investment.  Equity crowdfunding is different from donation-based crowdfunding sites, like Kickstarter, where backers only receive a product or service gift from the company, not company ownership.

Today, equity crowdfunding is possible only for accredited investors. That means all participants must meet the standards set by the US Securities and Exchange Commission to be an accredited investor.  The most common way a person qualifies is by meeting income or net worth standards.

Pending the adoption of implementing Rules by the US Securities and Exchange Commission, the JOBS Act will allow non-accredited investors to invest through a new exemption to the securities regulations.  Until that time, ‘equity crowdfunding’ for non-accredited investors is not yet permitted.

The Jumpstart Our Business Startups Act or JOBS Act, is a law intended to encourage funding of United States small businesses by easing various securities regulations. It was signed into law by President Obama on April 5, 2012. The term "The JOBS Act" is also sometimes used informally to refer to just Titles II and III of the legislation, which are the two most importance pieces to the crowdfunding and startup community. Title II passed on September 23, 2013. Title III is still pending.

Title II of the JOBS act enabled general solicitation, or public fundraising.  Title II was passed on September 23, 2013.  General solicitation allows companies to tell the general public they're raising money—on EquityNet, LinkedIn, Facebook, blogs, company websites, TV, advertisements, wherever.  Although companies can advertise to the public, they can still only accept money from accredited investors (until Title III is passed).

Title III of the JOBS act will enable companies to raise money from unaccredited investors.  Title III is still pending, but is expected to pass in mid-2014.

All small companies are allowed to offer and sell their securities under the SEC’s Reg D.  Once Title III of the JOBS act is passed, this may change, but until then any offer to sell securities that doesn't meet an exemption must be registered with the SEC. 

Under the Securities Act of 1933, any offer to sell securities must either be registered with the SEC or meet an exemption.  Regulation D (or Reg D) provides three exemptions from the registration requirements, allowing some smaller companies to offer and sell their securities without having to register the securities with the SEC.  For more information about these exemptions, read the SEC's publications on Rules 504, 505, and 506 of Regulation D.

While companies using a Reg D exemption do not have to register their securities and usually do not have to file reports with the SEC, they must file what’s known as a "Form D” after they first sell their securities.  Form D is a brief notice that includes the names and addresses of the company’s owners and stock promoters but contains little other information about the company.

The SEC recommends that if you are thinking about investing in a Reg D company, you should call its Public Reference Branch at (202) 551-8090 or send an email to publicinfo@sec.gov to determine whether a company has filed Form D or to obtain a copy.  If the company has not filed a Form D, this should alert you that the company may not be in compliance with federal securities laws.

Note that this caveat appears on the SEC webpage: "We have provided this information as a service to investors.  It is neither a legal interpretation nor a statement of SEC policy.  If you have questions concerning the meaning or application of a particular law or rule, please consult with an attorney who specializes in securities law."

For more, visit www.sec.gov/answers/regd.htm

Rule 506(c) is a new exemption that allows general solicitation, or public fundraising. Rule 506(b) is the exemption that companies have used for decades that bans public fundraising. Companies can choose between 506(b) or 506(c).  506(c) is quickly becoming the most common choice.

The main difference with 506(c) is the higher standard for ensuring that every investor is accredited. For both 506(b) and 506(c), you should have a "reasonable belief" that an investor is accredited before accepting their investment. With 506(b), founders often take the investors own word, and take relatively few steps toward verifying it. That standard isn't good enough for 506(c); you must also take "reasonable steps" to verify that your investors are accredited. For more, visit www.sec.gov/info/smallbus/secg/general-solicitation-small-entity-compliance-guide.htm

Yes.

No.  Title III of the JOBS act will enable companies to raise money from unaccredited investors.  Title III is still pending, but is expected to pass in mid-2014.

As much as you want.  Currently, you may only accept funds from accredited investors.  Accredited investors have no limits on how much they can invest.

When Title III passes, which will allow unaccredited investors to invest, there will be limitations on how much a company can raise from unaccredited investors.  It is expected that companies will be limited to a $1M maximum.  However, companies will be able to do a concurrent raise from accredited investors.  So, if you're looking for $3M, you could raise $1M from unaccredited investors and $2M from accredited investors.

General solicitation is public fundraising.  General solicitation allows companies to tell the general public they're raising money—on EquityNet, LinkedIn, Facebook, blogs, company websites, TV, advertisements, wherever.  On September 23, 2013, the U.S. passed Title II of the JOBS act that allows startups to raise money publicly.  Although companies can advertise to the public, they can still only accept money from accredited investors.

Absolutely.  See the “Funding” section of your EquityNet company profile to enable public fundraising.  In the “Funding” section, select “Show funding publicly and privately” to add your “Funding Goal” and “Raised So Far” amount to your public profile. 

In your entrepreneur account, see the “Profile” tab and locate the "Funding" section.  In the “Funding” section, select “Show funding publicly and privately”.

When you preview your "Public Profile" you will notice that your “Funding Goal” and “Raised So Far” amount are now visible on your public profile.

In your entrepreneur account, see the “Profile” tab and locate the "Funding" section.  In the “Funding” section, select “Show funding privately only”. Your funding information will now only show privately to pre-approved EquityNet investors. 

You may still use your "Public Profile", your "Funding" section will just not be visible.

We do not give legal advice.  We suggest you contact your attorney.  When you do general solicitation, you must at least:
1. Only sell to "accredited investors".
2. Take "reasonable steps" to verify that they are indeed "accredited investors". For example, your investor could provide you with an income tax form.
3. File Form D within 15 days of the first sale of securities in the offering.

Violation can lead to a one year hold on your fundraising efforts and a return of capital to investors.

EquityNet’s Popularity metric is an automated, unbiased, and patent protected indicator of investor interest in the business.  Popularity allows investors and entrepreneurs to see what deals are most interesting to other investors.

Dozens of proprietary attributes go into the Popularity metric.  Some of these attributes include profile views, funding raised, and investor response rates. 

In order to increase their popularity, entrepreneurs are encouraged to both reach out to investors who might be interested in their deal (via Crowdfund) and share their profile with media outlets and their existing contacts (via Crowdcast).

Yes, your business information is confidential and secure. Our Privacy Policy and Terms of Use serve effectively as an NDA between EquityNet and its members. The only parties that will see your business information are the parties with which you choose to share, i.e. investors and business supporters.

After clicking the "Share Plan" button, entrepreneurs will see a confirmation note that asks them to verify and confirm the share. All EquityNet investors and business supporters have agreed to not disclose an entrepreneur's information without prior authorization.  EquityNet is designed to maximize user control of private and confidential information and otherwise minimize user concerns.  Here are some examples of how we achieve this:

•    Our business and revenue model consists of fee-based services.  We do not share in or benefit from any deal or interaction. Our platform is completely independent with no agency issues such as conflict of interest.
•    We do not share any user information (including business plan info) with any other parties.
•    The EquityNet input process features many "optional" questions and other potentially private or confidential criteria that an entrepreneur can opt-out if he/she decides to forgo.
•    Authorization to provide business plan information to investor-users and business supporter-users is controlled exclusively by associated entrepreneurs.
•    Peer comparisons are entirely anonymous with no potential for investor identification of a specific peer enterprise without authorization by an associated entrepreneurs.

Pursuant our privacy policy and user's agreement, a user's proprietary business information is never shared with anyone unless the user chooses to share their information with an investor or business supporter. View our Privacy Policy and Terms of Conditions at www.equitynet.com/sign-up.aspx

Pursuant our privacy policy and user's agreement, a user's proprietary business information is never shared with anyone unless the user chooses to share their information with an investor or business supporter.

Every EquityNet investor goes through a self-accreditation process when they sign up. They are also required to complete a profile that describes themselves and their investment interests. Then, new investor signups are screened by EquityNet’s staff before being allowed to access deals.  In fact, we only allow access to deals to around one-third of the investors who sign-up.

Even with all that filtering, EquityNet does not endorse investors. Research investors. Take their money at your own risk.  Be aware that scam artists, posing as legitimate investors, often prey on an entrepreneur’s fund-raising efforts. This is a time when entrepreneurs are vulnerable, and are sometimes willing to take the first deal that may arise.

While EquityNet is doing all we can to prevent fraudulent investors from entering the site, there are some things entrepreneurs need to watch for. With the following tips, entrepreneurs can better prepare themselves to avoid scamming.

No Money Up Front
Generally, investors will not ask for money up front, and they will not ask you to wire it to them. If you ever have questions or concerns, ask the investor. If the investor is unwilling to answer to your satisfaction, then move cautiously before entering into an agreement.

Face-to-Face Meetings
Meeting a potential investor face-to-face is critical. If an investor is about to invest into a business idea, the investor should be eager to meet with you. If not, beware.

Beware of Foreign Funding
The Sophisticated Nigerian 419 Scam is one such scam. Beware of any international “firm” which requires a “fee” to be sent through a wire transfer to a foreign bank. The FBI warns against this and other similar scams. Take a moment to familiarize yourself with other scams where you could be targeted. See www.fbi.gov/scams-safety/e-scams/e-scams

Verify Accreditation
To invest in your company the investor must be accredited.  Do not work with anyone who is unfamiliar with what it means to be an accredited investor. For more information about the requirements to be an Accredited Investor, visit www.sec.gov/answers/accred.htm

Report to EquityNet
Please let EquityNet know of anyone who you find to be suspicious by emailing info@equitynet.com. This will help us in our continuing efforts to keep our investor network limited to only the most credible and sophisticated investors.

It is rare for someone to care enough about your idea to steal it.  Furthermore, investors want to invest, not execute and operate companies. An idea without execution is worthless.

If you are still worried, much of the EquityNet profile and plan input is optional.  So, leave sensitive information off of your profile.

EquityNet employs a wide range of security measures to ensure the privacy, safety, and integrity of user information, including for both personal and business information.  Our comprehensive security measures include the following aspects:

Data Center Security:
•    24/7 premise security and monitoring
•    ID badge and biometric scan required for entry
•    Locked server cabinets

Network & Data Security:
•    Network firewall protection
•    Redundant network and power feeds
•    VeriSign SSL encryption
•    Authorize.Net secure payment gateway
•    Trustwave Payment Card Industry Data Security compliance

User Data Management:
•    Data replication
•    Redundant servers
•    Daily database backup

Page Encryption:
•    SSL Server Certificate
•    High-Grade Page Encryption
•    Verified by VeriSign Trust Network

Company Policies:
•    EquityNet Privacy Policy
•    EquityNet Terms and Conditions of Use

Any entrepreneur, business owner, or manager in any stage or type of private businesses (from pre-revenue start-ups to $100M/yr in revenue) can use EquityNet.  EquityNet is not applicable to publicly-traded companies.

No.  EquityNet is designed with flexibility to accommodate all ranges of private businesses, whether it's an $100M/yr in revenue international biotech company, a pre-revenue one person software start-up, or a modest one location coffee shop.

EquityNet offers expert analyst assistance to help guide you through the planning and fundraising process.  To read more, sign up an entrepreneur account at www.equitynet.com/sign-up.aspx?m=ent.  After you have signed up and are in your account, locate the green banner at the top of your account and click "Learn More".

To speak with an expert EquityNet analyst about our Premium Assistance, call us at 866.542.3638. 

No.  Entrepreneurs without an interest in equity capital can use EquityNet to find loans and grants and also access a network of business supporters.  Entrepreneurs who are not interested in seeking any type of outside investment or support still benefit from EquityNet by organizing, analyzing, and optimizing their business planning.

Both.  The EquityNet business plan input process is easier for entrepreneurs with an existing business plan.  However, an entrepreneur without an existing business plan can use EquityNet to create their business plan from the very beginning.

Entrepreneurs: Much of EquityNet is free, without the need for a credit card.  However, certain features require a paid subscription.  Paid subscriptions start as low as $109 per month and can be seen in your account.  To pay, click on the gold "Subscribe Now" button in your account and follow the prompts. We accept Visa, MasterCard, Discover, and American Express. To sign up visit www.equitynet.com/sign-up.aspx?m=ent

EquityNet is not a registered broker-dealer, so we do not take a commission on any resulting deal.  The only fee for entrepreneurs is the subscription cost.

Investors: The investor side of EquityNet is free.  Sign up at www.equitynet.com/sign-up.aspx?m=inv

Supporters: Supporters can purchase subscriptions for entrepreneurs and are eligible to receive volume discounts up to 50% per client company. Contact us at 866.542.3638 to pay by check or credit card. To learn more visit www.equitynet.com/supporter.aspx

We have one main subscription type that provides you with unlimited access to the software.  You just choose how much time you want to subscribe.  You may choose the month-to-month minimum or annual maximum. The more time upfront, the bigger the discount.

We also have two "Add-Ons" to you may choose to utilize.  The first is "Basic Assistance" and the other is "Premium Assistance".  Log in to your account to learn more.

Paid-subscriptions auto-renew unless the subscription is cancelled. Subscriptions are designed to auto-renew on their expiration date so entrepreneurs can maintain active communication with investors on the site. To cancel the renewal of your subscription, sign in to your account and click the “Cancel Subscription” link in My Account.  Basic Assistance and Premium Assistance add-ons do not auto-renew.

To cancel your subscription, sign into your account and click on the “Cancel Subscription” link in your My Account tab.  Once you click the “Cancel Subscription” link you will be emailed a notice of your cancellation.  Subscription cancellations can only be performed by users (per our Terms of Use policy).

You may still access your paid features until your term expires.  Your card will not be charged and your subscription will no longer renew automatically.

If you would like to reactivate the renewal of your subscription before the remainder of your subscription expires, log in and choose "Change Subscription" or "Reactivate Subscription" under your "My Account" tab.

When the remainder of your subscription expires, your profile and business plan(s) data will remain in your account. If you would like to recover your profile and business plan(s) and reactivate the renewal of your subscription, log in to your account and checkout to renew your subscription.

Your information will remain accessible in your EquityNet account even after your subscription expires. You can easily view your information again by renewing your subscription within your account. 

No. We are a subscription service.  Investment transactions happen outside of EquityNet and we are no longer involved.  EquityNet is not a registered broker-dealer, so we do not take a commission on any resulting deal.  The only fee is the subscription cost for entrepreneurs.

We offer two subscription add-ons: Basic Assistance and Premium Assistance.

Basic Assistance - Receive profile and funding assistance from EquityNet’s staff of expert analysts. 

Premium Assistance - Receive profile, funding, research and business plan assistance from EquityNet's staff of expert analysts.

Log in to your entrepreneur account to learn more about the subscription add-ons.

All entrepreneurs will want to create a business profile.  A business profile is like an executive summary and can be done rather quickly. 

Your EquityNet profile is the first thing that potential investors see when they log on to the site, so you want to make sure that it represents your company well and provides enough information about it to pique their interests. What follows is a brief step-by-step guide to help you complete the ten key fields of your profile. See www.equitynet.com/blog/definitive-guide-building-equitynet-profile

Your profile will go live on EquityNet as soon as you, 1) complete the necessary minimum input fields, and 2) check "Show privately in EquityNet" and/or "Show publicly on EquityNet".

Once you have completed both of these requirements, you will see the red "Not Showing" notice change to a green "Showing" notice. 

Your profile will instantly go live on EquityNet as soon as you, 1) complete the necessary minimum input fields, and 2) check "Show privately in EquityNet" and/or "Show publicly on EquityNet".

However, EquityNet's staff is notified of new profiles and profile updates and reserves the right to remove profiles.  If you suspect your profile has been removed we suggest you refine the content or contact us to discuss how to get added back.  

A "private" profile allows you to show your business profile to EquityNet accredited investors.  The profile only includes the information that you provide. It does not include your business plan.  Since the only people who can view your private profile are pre-approved EquityNet investors, who have a password protected log in, it is called "private".

Subsequently, it is important to note that showing your funding information privately is not considered general solicitation because investors are using a password protected investor login.

A "public" profile allows you to show your business profile to anyone you wish outside of EquityNet.  The profile only includes the information that you provide. It does not include your business plan. 

It is recommended that you share and promote your public profile on your social media sites and marketing campaigns. On the "Profile" tab, click "View Public" to obtain your public profile's unique URL. 

Most likely it it is because you have not done one of the following, 1) completed the necessary minimum input fields, and 2) checked "Show publicly on EquityNet".

Once you have completed both of these requirements, you will see the red "Not Showing" notice change to a green "Showing" notice. 

If you have completed both of the requirements above and are still are not showing on the Browse Companies page, it may be possible that your profile was hidden due to it's content.

You can see who has viewed your private profile by searching in the "Funding" tab.  This will show you the investors who have signed up on EquityNet who have viewed your private profile.

You can see also see the total of who has viewed your public profile in the last 30 days in your "Dashboard" tab.  Since visitors to your public profile are users who have not yet signed up with EquityNet, there is no way to know who they are, so we can only tell you the total number of views.

A few times a month we choose companies to be featured on the homepage.  To increase your chances of being selected to be on the homepage:

1) be sure your profile and plan are complete, and represent a viable investment opportunity,
2) be sure your public profile is showing, and that your fundraising information is showing publicly,
3) drive as much traffic to your public profile page as possible.

Click "View Public" on your profile tab to see suggestions for how to send traffic to your public profile page.

EquityNet's patented web-based software enables you to create a custom business plan in less time and money than traditional approaches.  EquityNet guides you through the characterization of your business venture and prompts you only for information that is most valuable to your business and investors/lenders.  With over 100 informative help notes, the input process is highly educational and prepares you to achieve success with outside parties, regardless of the stage of your business.

With a paid subscription you receive your business plan analysis.  This includes your business valuation and investment attractiveness; your business's strengths and weaknesses; benchmarks of multiple business factors against businesses similar to yours; an analysis of your cash flow and capitalization planning; and the capability to perform "what-if" scenarios (with varying business assumptions) to optimize your plan.

You can then review profiles of and share your plan with hundreds of EquityNet members, including business consultants, grant providers, angel investors, and venture capitalists.  Competing e-marketplaces offer disorganized, unstructured collections of business plans for their members which prevent each plan from being studied in detail.  EquityNet investors and business supporters are empowered by a patented, streamlined process to absorb much more detail about your plan and opportunity, giving you a better chance of getting your message across, receiving assistance, and getting funding.

No. Plans are never made public. The only EquityNet investors or business supporters that will see your plan are the ones that you personally choose to share with.  The entrepreneur has complete control over who sees and who does not see their plan.

All entrepreneurs will want to create a profile.  A profile is like an executive summary and can be done rather quickly, sometimes as quick as an hour.  If you choose to use the EquityNet business plan software, on average, 80% of entrepreneurs finish a plan in 1-4 hours and 20% finish in over 4 hours.  The more time an entrepreneur puts into the software, the more they will get out of their EquityNet experience.

For a checklist of what an entrepreneur will need to complete the input process, visit www.equitynet.com/planchecklist.aspx.

EquityNet uses statistical information that is unique to each industry sector.  So, only one industry sector can be selected for your company at a time.  A user should choose an industry sector based on the composition of their business so that the sector captures as much of their business activity as possible. When a user enters individual products or services, each can be classified in a separate industry sector.

You can see your Business Plan at anytime.  In order to compute your Business Plan Analysis, EquityNet's Enterprise Analyzer^TM needs a 100% complete business plan before your Business Plan Analysis can show.

To combine flexibility, structure, and efficiency, Enterprise Analyzer's input process does have some sequential dependencies so that the system can learn about an enterprise and utilize that understanding in subsequent sections.  This enables the system to prompt you for only the information that is most valuable to your business and investors/lenders based on your previous responses.

Once section 1 is complete, most of the other sections can be completed randomly.

A Business Plan Analysis is the report that the EquityNet software system produces on the business.  It has many additional components that the Business Plan does not.  Some of these include: an assessment of the business's strengths and weaknesses, a comparison of business to industry peers, additional financial metrics, and an estimate of the business valuation.

To see a sample Business Plan, click here

To see a sample Business Plan Analysis, click here

A Business Plan Analysis is the report that the EquityNet software system produces on the business.  It has many additional components that the Business Plan does not.  Some of these include: an assessment of the business's strengths and weaknesses, a comparison of business to industry peers, additional financial metrics, and an estimate of the business valuation.

To see a sample Business Plan, click here

To see a sample Business Plan Analysis, click here

The need for a streamlined business plan, as opposed to a lengthy traditional plan, is becoming the norm among leading entrepreneurs and investors.  Several top studies find that traditional business plans offer little value in fundraising because time constraints prevent venture investors from studying each plan in detail.  Other studies find that entrepreneurs spend too much time in the plan creation process, often taking months, or in some cases years, to produce and polish a plan.  EquityNet simplifies the planning process by prompting you for only the information that is most valuable to your business and investors/lenders.  This allows you to create and share your very own standardized business plan in hours, not months.  To read more about how EquityNet solves this problem, visit www.equitynet.com/equitynet-technology/ 

The enterprise valuation methodology employed by EquityNet's patented Enterprise Analyzer^TM is based on discounted cash flow analysis that incorporates both enterprise attributes and assumptions and market-based pricing and discounting parameters.  Enterprise Analyzer allows a user to adjust potentially hundreds of enterprise assumptions (e.g. financial projections) and recalculate valuation and investment estimates in seconds.  As a result you can easily make adjustments to align Enterprise Analyzer's valuation estimate with that which you generate via a spreadsheet approach.  You can view a more detailed description of Enterprise Analyzer's valuation methodology here www.equitynet.com/equitynet-technology/.

In calculating valuation metrics for a private enterprise, Enterprise Analyzer incorporates current valuation ratios from public markets to establish a fair market value for the enterprise at the time of projected liquidity event.  Focused on the law of one price, this value is based on the revenue of the enterprise at the liquidity event and the corresponding public market "price/sales" ratio for that enterprise classification.  This ratio is determined as a function of the enterprise operating profit margin at the liquidity event.

Yes, Enterprise Analyzer uses ratios (and produces ratios) in two ways; 1) Enterprise Analyzer uses ratios based on over 500,000 actual cases of Enterprise failure and success over the last several decades, and 2) Enterprise Analyzer produces ratios for the company being analyzed, mostly in the form of annual metrics that can be used for time-based trend analysis.  You can see some of these ratios in the Summary, Financial, and Historical & Projected Metrics sections of the Business Plan Analysis^TM report.

Note most conventional industry ratios are single metrics that aggregate statistics on both young and mature large companies.  Given the substantial differences between young and mature companies, these conventional industry ratios are often of limited relevance and value to young companies.  Enterprise Analyzer goes beyond highly aggregated industry ratios by benchmarking the company being analyzed over a series of years to companies of similar industry character and age.  Enterprise Analyzer then alerts companies when their ratios (particularly forward-looking assumptions) are abnormal as compared to their peer group.

EquityNet conducted research on private business failure for many years and built a large library of statistical correlations that relate over 30 internal and external enterprise attributes (e.g., management experience, capitalization, time duration, economic environment, etc.) with enterprise failure and success.  These statistical correlations are contained in EquityNet’s proprietary "Knowledge Base" and are used by Enterprise Analyzer to quantify 10 dimensions of survival risk for each enterprise.

EquityNet’s research encompassed hundreds of studies on business failure and the consultation of various experts/authors in the field.  The scope of this research included data from over 500,000 cases of enterprise failure and success and hence, a diversity of enterprise types and maturities.  This enables the multivariate algorithms of Enterprise Analyzer to reference statistical correlations that are specific to the character of the enterprise in terms of industry sector and maturity.  As an example, Enterprise Analyzer references differing statistical correlations for a software enterprise than for a biotech enterprise.

When back tested, these correlations typically produce 60% to 80% classification accuracy, which is generally considered to represent a level of precision sufficient for screening-level analysis of private enterprises.  As described in U.S. Patent No. 7,698,188, the Knowledge Base used by Enterprise Analyzer employs a data feedback mechanism that will enable Enterprise Analyzer to "learn" from its prior predictions and to utilize a continuously expanding base of statistical correlations.

Note: Risk quantification produced by Enterprise Analyzer is based on enterprise attributes and forward-looking assumptions as provided by entrepreneurs and/or their agents.  While computational accuracy is ensured, Enterprise Analyzer cannot guarantee the validity or rational nature of enterprise attributes nor the validity of its risk quantification in cases where unreasonable enterprise attributes or forward-looking assumptions are provided.  EquityNet recommends that the risk quantification produced by Enterprise Analyzer be viewed in context of the enterprise attributes and forward-looking assumptions as provided by entrepreneurs and/or their agents.

You can learn more about Enterprise Analyzer's risk quantification process at:
www.equitynet.com/equitynet-technology

Most conventional industry ratios are single metrics that aggregate statistics on both young and mature large companies.  Given the substantial differences between young and mature companies, these conventional industry ratios are often of limited relevance and value to young companies.  Enterprise Analyzer goes beyond highly aggregated industry ratios by benchmarking the company being analyzed over a series of years to companies of similar industry character and age.  For example, if a 3 year old company is being analyzed that has a certain revenue growth rate in 2013, the revenue growth rate value will be benchmarked to other 3 year old companies.  Enterprise Analyzer then alerts companies when their ratios (particularly forward-looking assumptions) are abnormal as compared to their peer group. 

Enterprise Analyzer's estimated Probability of Enterprise Survival is segmented into ten standardized categories of business strengths and weaknesses. A direct comparison in each of the ten categories is provided between the enterprise and the peer group median.

Investment / Debt Duration - The duration of the investment or loan needed by the enterprise.    

Capitalization & Financial Condition - The financial condition and projected operational cash flow/burn and capitalization of the enterprise.

Accounting & Financial Control - The frequency and extent of accounting and financial control functions of the enterprise.

Management Experience - The extent of various forms of experience of the enterprise’s management team. A function of years with company, years of management experience, years of industry experience, and years of startup experience.

Management Education - The educational level for the enterprise’s management team. A function of the highest educational level obtained and degree type.

Planning - The extent of various forms of planning performed by the enterprise.

Production & Personnel - The various forms of resource requirements of the enterprise.
 
Market Size & Growth - The total weighted balance of size and growth rate for each projected market of the enterprise.
 
Competitive Rivalry & Protection - The extent of competitive rivalry and competitive intellectual protection of the enterprise.
 
External Economic Environment - The condition of the external economic environment of the enterprise.

“Crowdcast” or “Crowdcasting” is a way for entrepreneurs to send an email invitation to their personal contacts in order to build exposure for their company.

This allows entrepreneurs to drive web traffic to their profile.  This traffic can be for marketing purposes and for exposure to potential investors.  When an investor views the profile and is interested, they will sign up on EquityNet and go through our investor approval process.  This can be a good filter to make sure you are dealing with credible and professional investors.

There are two ways to crowdcast.  You may either “Access Your Email Contacts” or “Paste In Your Email Contacts”.

If you choose to access your email contacts, you will be asked which of your contacts that you would like to invite.  You will select the contacts and then proceed to send the invitation email.   In order to access your email contacts you will need your contacts in an email account with either Gmail, Yahoo, Outlook.com, Hotmail, MSN, Windows Live, Yahoo, AOL, or Plaxo.  If you use multiple email accounts, you can crowdcast with all of your accounts.

If you choose to paste in your email contacts, all you have to do is copy your email address, paste them in the form, and click “Send”.  You may paste multiple email addresses by placing them on their own line or separating them with a “;”.

We encourage you to access your email contacts because this is the easiest way to share with a lot of contacts, fast.  We also encourage you to send invitations to all of your contacts in order to amplify your exposure and maximize networking effects.

Absolutely.  After you select your email provider, you will be asked which of your contacts that you would like to invite.  You will select the contacts and then proceed to send the invitation email.

Yes.  The crowdcast feature can be used by entrepreneurs on a free or paid subscription.

Absolutely.  Just log into your account, visit the “Crowdcast” tab, and click “Preview Email”.

After you have completed your EquityNet profile in the “Profile” tab, visit the “Crowdfund” tab.  Once there, locate the profile of the investor who you could like to share with and click “Message”.

After you have completed your EquityNet plan in the “Plans” tab, visit the “Crowdfund” tab.  Once there, locate the profile of the investor who you could like to share with and click “Share Plan”.

As many as you wish.  There is no limitation to the amount of investors you can contact.

Best practice is to message an investor and share your plan with them at approximately the same time. However, you may not be comfortable sharing your plan with every investor, so some entrepreneurs choose to message the investor first.  When you message an investor and share your plan with them at the same time, they will receive two emails which could increase your chances of getting an investor's attention.

For entrepreneurs who are comfortable sharing their plan with all investors on EquityNet, we made it easy to do so in just a few clicks.  Go the "Crowdfund" tab in your account and you will see a gold colored profile labeled "All Capital Providers".  Click the share plan button and your plan will immediately appear in an open directory where any pre-approved EquityNet capital provider can view your plan in their EquityNet account.

Yes, although we will not offer legal advice, we can point you in the right direction for what you will need to do, including what documents you will need to offer and close a transaction.  We also have preferred partners that will be pleased to help you.  Contact us for more details. 

That depends a variety of factors, including company maturity, business valuation, funding amount, the type of investor, and more.  EquityNet's patented business analysis software can help you determine how much equity ownership an investor will expect. Furthermore, if you are having trouble answering this question, you could benefit from EquityNet's Premium Assistance.  An expert EquityNet analyst can help you run "what-if" scenarios to optimize your capitalization planning. 

To help get responses from investors, we recommend the following:

• Send messages to investors in the "Capital Providers" tab.
• Share your business plan with investors in the "Capital Providers" tab.
• Consider messaging and sharing with Business Supporters in the “Business Supporters” tab.
• Consider sharing your plan with the investor or business supporter right after you message them.
• Visit the investor’s website listed on their profile to learn more about them and their deal-flow submission preferences. 
• Give it time.  Achieving success in funding takes time. We recommend you that you give it at least a 3-month or longer commitment.  That way you have more chances to communicate with EquityNet investors.
• Share your public EquityNet profile with your email contacts and social networks so you can reach the widest audience.

Go to your "Profile" tab and click "View Public".  A pop-up will show a link that contains your public profile link.  Your link and profile will look like this: www.equitynet.com/c/esecure-systems-llc.

To share your public profile we recommend the following:

• Email your public page to all your email contacts. Use Outlook, Gmail, Yahoo Mail, Hotmail, etc...
• Email your public page to all your LinkedIn contacts. Post your page to your LinkedIn profile page.
• Email your public page to all your Facebook contacts. Post your page to your Facebook profile page.
• Email your public page to all your Twitter contacts. Post your page to your Twitter profile page.
• Put your public page up on your website. Don’t have a website yet? Use this page as your site!
• Share your page link anywhere there’s a listing for your company. Press Releases, Crunchbase, Wikipedia, Blogs, etc...

All types of investors use EquityNet.  Some of the investor types include Angel Groups, Individual Investors, Debt Providers, Government Funding Sources, Non-Profile Funding Sources, and Venture Capital Groups.

At EquityNet, we deliver more than just large numbers of entrepreneurs and investors. Our patented business plan software and equity crowdfunding platform combines novel analytics, business benchmarking, and standardization to achieve an efficient funding experience for both entrepreneurs and investors. Entrepreneurs use EquityNet’s unique capabilities to analyze and optimize their business plans before they engage investors. Investors and business supporters use EquityNet’s advanced technology to efficiently screen and analyze businesses to fund and support entrepreneurs.

To learn more about how investors use EquityNet, visit www.equitynet.com/how-it-works.aspx.

Absolutely not.  EquityNet doesn’t take the human factor out of the investment decision process; it simply expedites and enhances the probability of success at the first meeting between potential investors and entrepreneurs by facilitating the exchange of information and providing objective and independent analytics.

The entrepreneur will be more confident that a potential investor has an interest and that the investor truly understands the company, the risks, and probability of success. Further, by using Enterprise Analyzer, the investment community automates the grunt work of evaluating hundreds of business plans in order to identify with confidence “the enterprise” that best matches their interests, expertise, and investment criteria.  This frees partner and staff time for work that requires personal insight and knowledge. 

Listing on EquityNet as a potential funding source is restricted to “Accredited Investors.” For more information about the requirements to be an Accredited Investor, visit www.sec.gov/answers/accred.htm. You must meet one or more of the following criteria:

• Any natural person who has individual net worth, or joint net worth with the person’s spouse, that exceeds $1 million at the time of the purchase, excluding the value of the primary residence of such person;
• Any natural person with income exceeding $200,000 in each of the two most recent years or joint income with a spouse exceeding $300,000 for those years and a reasonable expectation of the same income level in the current year;
• Any bank, insurance company, registered investment company, business development company, or small business investment company;
• Any employee benefit plan, within the meaning of the Employee Retirement Income Security Act, if a bank, insurance company, or registered investment adviser makes the investment decisions, or if the plan has total assets in excess of $5 million;
• Any charitable organization, corporation, or partnership with assets exceeding $5 million;
• Any director, executive officer, or general partner of the company selling the securities;
• Any business in which all the equity owners are accredited investors;
• Any trust with assets in excess of $5 million, not formed to acquire the securities offered, whose purchases a sophisticated person makes.
  

Every EquityNet investor goes through a self-accreditation process when they sign up. They are also required to complete a profile that describes themselves and their investment interests. Then, new investor signups are screened by EquityNet’s staff before being allowed to access deals.  In fact, we only allow access to deals to around one-third of the investors who sign-up.

Even with all that filtering, EquityNet does not endorse investors. Research investors. Take their money at your own risk.  Be aware that scam artists, posing as legitimate investors, often prey on an entrepreneur’s fund-raising efforts. This is a time when entrepreneurs are vulnerable, and are sometimes willing to take the first deal that may arise. 

While EquityNet is doing all we can to prevent fraudulent investors from entering the site, there are some things entrepreneurs need to watch for. With the following tips, entrepreneurs can better prepare themselves to avoid scamming. 

No Money Up Front
Generally, investors will not ask for money up front, and they will not ask you to wire it to them. If you ever have questions or concerns, ask the investor. If the investor is unwilling to answer to your satisfaction, then move cautiously before entering into an agreement. 

Face-to-Face Meetings
Meeting a potential investor face-to-face is critical. If an investor is about to invest into a business idea, the investor should be eager to meet with you. If not, beware. 

Beware of Foreign Funding
The Sophisticated Nigerian 419 Scam is one such scam. Beware of any international “firm” which requires a “fee” to be sent through a wire transfer to a foreign bank. The FBI warns against this and other similar scams. Take a moment to familiarize yourself with other scams where you could be targeted. Seewww.fbi.gov/scams-safety/e-scams/e-scams

Verify Accreditation
To invest in your company the investor must be accredited.  Do not work with anyone who is unfamiliar with what it means to be an accredited investor. For more information about the requirements to be an Accredited Investor, visit www.sec.gov/answers/accred.htm

Report to EquityNet
Please let EquityNet know of anyone who you find to be suspicious by emailing info@equitynet.com. This will help us in our continuing efforts to keep our investor network limited to only the most credible and sophisticated investors. 

In order to review deals, we first ask that you tell us a little about you and your investment preferences.  Much of the investor profile is optional, so you may choose to leave sections blank. The investor profile helps us assure that you are a credible and professional investor and will help EquityNet's software find investment opportunities that might interest you.

The most common reason is because you have not completed your investor profile.  Log in to your investor account and complete your profile.  We will get in touch with you within one business day after you complete your profile.

If you have completed your profile and are still not approved, you may want to complete more of the input fields of your profile.  The more our staff can learn about you from your profile, the better your chance of being approved.  Contact us if you are still unsure.

EquityNet does not handle transactions.  To invest in an EquityNet company, message the entrepreneur and schedule a time to discuss the investment.  The investment will happen outside of EquityNet.

EquityNet takes no part in the negotiation or execution of transactions for the purchase or sale of securities, and at no time has possession of funds or securities. No securities transactions are executed or negotiated on or through the EquityNet platform. EquityNet receives no compensation in connection with the purchase or sale of securities.

As much as you want, if you are an accredited investor.  Currently, entrepreneurs may only accept funds from accredited investors.  Accredited investors have no limits on how much they can invest.

When Title III passes, which will allow unaccredited investors to invest, there will be limitations on how much unaccredited investors can invest.  It is expected that unaccredited investors will be capped at 5% to 10% of their annual income.

If you are an accredited investor, you may invest now.  EquityNet is currently limited to only accredited investors.

If you are an unaccredited investor, you cannot invest until Title III of the JOBS act passes, which is expected in mid-2014.

There are actually two pre-money valuations in an EquityNet Business Plan Analysis, the valuation that the entrepreneur entered and the valuation that the EquityNet software calculates. 

EquityNet's Enterprise Analyzer estimates business valuation based on 3,000+ private and public market ratios and factors. Proprietary valuation correlations for each specific sector are incorporated into a discounted cash flow model that is adjusted dynamically based on comparable rates of return within EquityNet’s real-time peer benchmarking database. For more, visit www.equitynet.com/crowdfunding-technology

Conducting due diligence is your responsibility.  Ask detailed questions. 

You do not need to be part of any group to invest.  The increasing popularity of crowdfunding is bringing more and more individual investors into the private domain.  There are hundreds of individual investors using EquityNet.

Yes, unless the law of your country prevents you from investing in this manner.

A business supporter is simply any entity that assists entrepreneurs.  Business supporter types that use EquityNet include: business incubators, small business development centers, universities, government support agencies,business consultants, non-profits, service providers, and more.

To learn more about how business supporters use EquityNet, visit www.equitynet.com/supporter.aspx.

An access code is a way for entrepreneurs to receive usage that was pre-paid by an investor or business supporter.   Unless an entrepreneur comes to EquityNet under the guidance of an investor or business supporter, they will not need an access code. 

Investors or business supporters distribute their access codes in the "Invites" tab in their account.  Each time an access code is used, one pre-determined use will be given to the entrepreneur and one use will be subtracted from the investor or business supporter's account.

Investors or business supporters who registered to receive deal flow from existing EquityNet entrepreneurs only, and do not intend to pay for their own client entrepreneurs, will not need an access code.

Contact us to schedule a demo.   Visit www.equitynet.com/supporter.aspx.

See the bottom of this page for some current supporters that are using EquityNet www.equitynet.com/supporter.aspx.

Supporters can obtain volume discounts up to 50% per client company, depending on volume. To discuss discounts or to see the entrepreneur process, schedule a demo at www.equitynet.com/supporter.aspx