Crowdfunding product information

 

Regardless of how much invest, we believe all investors have equal rights. We offer two ways to become a shareholder in a business: You can become a shareholder via a Convertible loan or directly invest in equity. Here you find more information about investing via these two types of crowdfunding.


Become a shareholder via a convertible loan crowdfunding

With a convertible loan, you can invest in a business now, and you can convert the invested amount to shares in the company you have invested in the future. You will get a discount vs the investors who invest in the follow up round.


Conversion moment

Conversion to shares usually happens when a next investor invests a significant investment of at least €100.000 in the business. This investor gets a share in the business. If you have invested in the convertible loan, you can decide to convert your investment and receive shares for the amount you have invested but with a discount. This means you will receive more shares for an equal amount than the follow up investor.


Discount

When you have invested in the convertible loan already before, you will receive shares in the company on the same terms as the follow-up investor, but with a discount. You receive this discount to reward you for investing for investing already earlier. The discount will be:


  • 15% when the conversion takes place within 1 year after closing the convertible loan.
  • 20% when the conversion takes place later than 1 year, but within 18 months after closing the convertible loan.
  • 30% when the conversion takes place later than 18 months after closing the convertible loan.
  • Only if conversion takes place within 3 months after closing the convertible note, there will be no discount.

Due to the discount, you will receive more shares for your investment, than the follow up investor will receive for the same amount.


Duration of the loan

The maximum standard duration of the loan is 5 years. If a conversion moment occurs during that period the loan you can convert your investment, which will cancel the loan. If during the 5 year duration of the loan no conversion moment has occurred, so the business didn’t receive any follow-up investment, you can decide to convert at the end of the 5 years. Alternatively the loan can be extended by another 2 years.

Return

When investing in a convertible note, there are 2 ways to get a return:


  1. Before your investment converts to shares in the business, you will receive yearly interest. This interest will be added to the amount you have invested. In case of conversion you will receive shares for the amount you invested + the interest you have received.
  2. After conversion, an increase in value of your company results in an increase of the value of the share you have in this company.

Because of a possible conversion, there are basically 2 phases:


The first phase - Before conversion:

You have invested in a loan: Interest will be added to the amount you have invested. Once there is a conversion moment, you can decide to convert your investment to shares in the company.


Do you prefer to not convert to shares in the company at that moment? That’s an option. If you decide not to convert to shares, your investment will still be a loan. Has the 5 year duration of the loan expired and you don’t want to convert? The loan can be extended by 2 years. You will then receive interest until you decide to convert, or until the entrepreneur repays the loan


The second phase - after conversion:

When you decide to convert, you will become a shareholder. The loan amount plus the interest will be converted to shares. You will receive a discount on the share price (Max 30% depending on the moment of conversion). All crowdfunding investors will be bundled in 1 legal entity: a STAK (stichting administratie kantoor). The STAK receives the shares in the company and you will receive certificates in this STAK.


As an investor you have all financial rights that come with a shareholding in a company.


The shares have the following rights:

  • Prefered right: When more shares are issued later on, you can buy additional shares to prevent dilution of your shareholding.
  • Anti-dilution: If within 12 months after conversion new shares are issued against a lower price than the conversion price, then you will receive additional shares (within having to pay extra) to prevent dilution.
  • Drag-along: If at least 70% of the regular shareholders (excluding the crowdfunders in the STAK) sell their shares, then you have to sell your shares as will. This means, in this case you cannot stop the sale of shares.
  • Tag-along: If at least 15% of the regular shareholders (excluding the crowdfunders in the STAK) sell their share, then you can sell your shares as well pro rata. This means, regular shareholders cannot sell shares in the company without also allowing for the crowdfunding investors to sell their shares.

More questions about convertible loan? See the FAQ

Equity crowdfunding

Investing directly in private companies can be a long and difficult process: official contracts have to be drawn up and each transaction must go through a legal notary. Symbid makes investing in an unlisted (private) company as simple as possible. What's the key to this simplicity? Symbid creates a safe and proven form of legal entity for every investment opportunity: the investment cooperative. This legal entity ensures all members (investors) have a say and share in the equity, but with no extra liability than the amount they invested.


So how does it work? Symbid creates an investment cooperative for every business that successfully attracts investment on our platform. All those who invest in a particular investment opportunity become members of an investment cooperative. The cooperative is the ultimate owner of a predetermined amount of equity (shares) in that company. Sounds complicated? Not at all. Concerned about the lack of ownership and control procedures? Don't be, it's all covered. Of course, there is a normal level of risk that applies to all investments: when a business can not meet its obligations, the business goes bankrupt and investors lose their capital.


Our method is comparable to the system of share certificates for public companies whereby each investor holds a certificate of a share but the shares themselves are held by a trust. Except Symbid investors have more control and influence than the holders of share certificates. This is because the member-owners of our investment cooperatives determine their own policy, have in general full voting rights and can therefore make their own decisions.


Return

With equity crowdfunding you become a co-owner of the business in which you invest, and can potentially profit from growth in the value of the business. Growing a business takes time, and therefore equity crowdfunding usually does not provide short-term returns. However, if the value of the business does grow, you may decide to sell your shares to an interested party, therefore making a profit on your investment.

The business in which you invest may choose to offer dividends. This will be stated in the materials of the crowdfunding campaign.


Equity investment opportunities on the Symbid platform include established businesses but also younger start-ups. A business may succeed in realizing its plans to grow the value of your investment, but may also be less successful or even go bankrupt. In this case you would lose your investment. For this reason, we recommend that you reduce the risk by spreading your investment across multiple businesses. Then, if one of the businesses goes bankrupt, you have not lost all your invested money


Who can invest via Symbid

Investors from all countries, except for the US and Canada can invest via Symbid. US law doesn’t yet allow non-professional American investors to invest in equity crowdfunding.