How The Investment Process Works

Modified on Thu, 12 Oct 2023 at 04:18 AM

When reviewing your account or investment purchase, you may notice that your investment status indicates another party must sign the subscription agreement. Not to worry. Due to the volume of orders, it is necessary to process them in batches across a rolling 2-4 week period. The investment status in your account will update automatically after this has happened.

Step 1) Subscription Agreement Signed

The investor signs (and submits) all required documentation, which includes Personal Identification Information (PII) required for all “Know Your Customer” (KYC) and “Anti-Money Laundering” compliance protocols, which is mandated by federal laws and regulations.

If the information provided doesn’t match the information on file in the KYC/AML database, you will be contacted by customer service who may ask you for additional documentation.

Step 2) Funds Remitted & Cleared

Once you’ve signed your subscription agreement, now you need to send payment for your shares via ACH, Credit/Debit Card, Wire, or by mail via check/money order.

Clearing times are as follows:

  • ACH – 10 calendar days upon receipt of funds
  • Wire – 24 hour hold upon receipt of funds
  • Credit Card – 24 hour hold upon receipt of funds
  • Check – 10 calendar days upon receipt of funds

Please keep in mind that all orders will be filled on a first come, first serve basis. This means once funds have cleared and are in escrow, assuming you clear AML/KYC, your allocation has been reserved.

Step 3) Subscription Agreement is Executed

Once the funds have cleared escrow and all KYC/AML checks have passed (if applicable), then the company raising money (the “Issuer”) has to sign their side of the subscription agreement.

Step 4) Settlement

Once the Issuer has signed the Subscription Agreement, three things happen…

  • The Issuer receives the money in escrow.
  • The investor will receive the Executed Subscription Agreement via the email specified in the original Subscription Agreement.
  • The Transfer Agent records your shares in “Book Entry.” a method of tracking ownership of securities where no physical certificate is issued to investors.

Transfer Agent works for the Issuer to record changes of ownership, maintain the issuer's security holder records, and distribute dividends.

Transfer Agents are required to be registered with the SEC, or if the transfer agent is a bank, with a bank regulatory agency.

In some cases, Issuers will manage this process themselves during the offering period. However, it is Equifund policy that all Issuers must demonstrate their ability to competently manage a capitalization table – or otherwise engage a Transfer Agent – prior to the close of the offering

However, aside from the administration, according to 17 CFR 227.303(a)(2)

“This information must be made publicly available on the intermediary's platform for a minimum of 21 days before any securities are sold in the offering, during which time the intermediary may accept investment commitments;”

This means we are required to wait 21 days from the opening of any offering before the transaction can be complete.

Please keep in mind that once your transaction has been executed, it is final and cannot be refunded for any reason!

Also, if you need to change any information – like name, address, or phone number – Equifund cannot update that information for you. You will need to contact the transfer agent to make any changes (for more information on this, please see our guide “How to Retitle Your Pre-IPO Shares).

That’s why it’s important to have your investment profile set up – with the right information – to ensure your shares are assigned correctly.

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