The SEC recently released proposed rules for Equity Based Crowdfunding. One of the requirements for businesses looking to raise funding through equity based crowdfunding is to complete a new SEC Form C. Part of the Form C is to provide potential investors with a Use of Proceeds breakdown.
Right now, we don’t know exactly what the format of the Form C will look like, but I wanted to show 3 examples of what investors might be looking for in terms of a Use of Proceeds breakdown.
Software as a Service Example of Crowdfunding Use of Proceeds
Let’s say you are looking to raise $750,000 for your software as a service product. Your use of proceeds might look like this:
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$250,000 for user acquisition costs (Google Adwords, event sponsorship, marketing)
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$250,000 to hire additional software developers
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$100,000 to hire technical support
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$100,000 to hire additional sales team members
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$50,000 for working capital
Restaurant Example of Crowdfunding Use of Proceeds
Let’s say you are looking to raise $500,000 to open a second location of your restaurant.
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$250,000 in construction, furniture and equipment costs for new location
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$100,000 to hire and train new employees before the restaurant opens
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$50,000 to purchase initial inventory
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$50,000 for advertising and grand opening costs
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$50,000 for working capital
Consumer Product Example of Crowdfunding Use of Proceeds
Let’s say you are looking to raise $250,000 for a consumer product that you invented.
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$100,000 for inventory to fulfill orders
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$75,000 for advertising
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$50,000 for working capital
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$25,000 for advertising
These are just a few examples of how you might organize your use of proceeds. I will continue to update this post as more information becomes available related to equity crowdfunding and SEC Form C.
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