Equity based crowdfunding

  1. The author of the project prepares a business plan and uploads it together with supporting materials on the web page. In order to do so he or she needs to register as a project author on Crowdfund.ge. The registration process is very simple and requires no inputs other than a username and a password.

  2. Detailed information regarding the author/authors of the project and their business plan is required when uploading a project.

  3. The Crowdfund team reviews uploaded projects and selects the most attractive ones.

  4. The team meets shortlisted project authors to obtain more information on their background and experience, discuss project details and agree investment terms. The main terms that need to be agreed upon include:
    • Equity contribution of the project author/authors
    • The amount of shares the project author/authors will receive in access of their cash investment
    • Project management and supervision structure

  5. After all project terms are agreed and the parties come up with the final business plan, the project authors incorporate a JVC (which in Georgia is a very simple and inexpensive procedure) and sign a standard agreement with crowdfund.ge

  6. A supervisor is appointed to the company to control its operations and make sure the investor's interests are not harmed in favor of the project author/authors. The supervisor will have a joint representation of the company together with the director, so the director will not be able to enter into any agreements with the contractors and its employees without the signature of the supervisor and the company will not be able to make money transfers from its bank account without the supervisor.

  7. At this point the project and it's supporting documents are listed publicly on the web page

  8. Listed projects are visible to all visitors of the web page. In case a visitor likes one of the projects, and wants to invest in it, he or she will need to register on the web page as an investor. The registration is a simple process. The only difference from standard registration processes on different web pages is that in this case the user will have to indicate his or her age, personal ID number and upload a scan of his or her ID.
  9. After registration, the investor can make transfers in favor of the projects. The payments can be made in two ways
    • via a wire transfer
    • or via a card payment

  10. The payments are accumulated on a transfer bank account.
    • In case the bank receives a confirmation from both Crowdfund and the project author, that the required minimum investment has been raised before the campaign deadline, the accumulated amount will be transferred to the company's bank account
    • The money will automatically be transferred in full back to the investors in case the bank doesn't receive a confirmation from both sides until the deadline of the campaign.

  11. After receiving the required investment, the company can start its operations under the supervision of the supervisor. The investors will have a right to change the supervisor at any point in time and appoint a supervisor they agree on or let the company operate without a supervisor.

  12. The investors are defended from the dilution of shares through Pre Emption Rights granted to them by the company's charter. Thus in case the company wants to issue additional shares, it will first have to offer such shares to the existing investors and sell to other, new investors only such shares that the existing investors refuse to buy.

 

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