FAQ

Reg CF Investor FAQs

What is Vicinity’s funding portal?

We are a place where everyone can gain access as stakeholders and lenders to businesses and owners in their community. This is where financial capital meets social capital. With our registered funding portal, you can help finance your community with the hope of earning a return – financial as well as social.

  You may already value the opportunity to shop local or eat local. Now you can invest local. Choose your investments and join a community supporting local resilience.

What is Reg CF?

“Regulation Crowdfunding” or Title III of the 2012 JOBS Act (aka “Reg CF”) became a new law in May 2016 allowing everyone 18 years and older to be able to invest in private companies through a regulated intermediary. A main part of our role is to comply with the rules and regulations set forth by the SEC and FINRA for Reg CF.

Investing Details

What type of investments are offered?

Vicinity works with issuers on a variety of equity or debt structures that can align investors with their business goals. These structures include:

Preferred Equity

Definition: Shares that give investors priority over common shareholders for dividends and liquidation, often with fixed returns or special rights 

Example:  Investors receive a 6% annual preferred return before common shareholders get any profits.

Convertible Notes

Definition: A form of short-term debt that converts into equity (typically preferred stock) during a future financing round, usually at a discount or with a valuation cap.  

Example: An investor loans $100K to a startup via a convertible note that converts into equity at a 20% discount when the company raises its next round.

SAFE Notes (Simple Agreement for Future Equity)

Definition: A simplified agreement where investors provide capital in exchange for the right to receive equity in a future priced round, without accruing interest or having a maturity date.  

Example: An investor gives $50K under a SAFE that converts to equity when the company raises its next round at a $5M cap

Term Loans

Definition: Traditional loans with fixed repayment schedules over a set term, often with interest, collateral, or covenants.  

Example: A brewery borrows $250K with a 5-year term loan at 8% interest, repaid in monthly installments.

Revenue Share Note

Definition: A revenue share note (RSN) is a financial instrument where a company receives capital from an investor in exchange for a promise to pay back a predetermined percentage of their revenue over time until a specified amount (often a multiple of the initial investment) is repaid.

Example: An investor provides $200K to a SaaS company under a revenue share note. The company agrees to repay 5% of its monthly gross revenue until a total of $300K (1.5x the original investment) is repaid.

Getting Paid

What are my payment options?

Our standard investment payment options are ACH or Wire bank transfer.

What fees do I have to pay to make an investment?

Vicinity charges nothing up front, and 1% of amounts paid back to you from the issuer, though a credit card fee will also apply if you choose that payment option.

Where do my funds go?

Your investment is placed in an escrow account hosted by North Capital, and stays there until the fundraising target is met before being transferred to the business. If the target is not met, it will be refunded to you.

What if something goes wrong with my payment?

You will get a notification if something goes wrong. If something seems wrong or you need help or clarification, please email us at [email protected]. We will be happy to help!

Can I cancel my investment and get a refund?

Yes, you can change your mind up to 48 hours before a fundraise closes and receive a full refund. You will be notified before that point, but unfortunately investments cannot be cancelled within the 48 hour window.

How is Vicinity compensated?

Vicinity charges nothing upfront, but retains a 1% service fee on investor returns paid from the issuer, and the issuer is charged 8% of the total funding amount. The compensation amount for any given company will always be listed on their offering page, and is typically a combination of cash and securities.

Legal

How much can I invest?

Reg CF limits how much you may invest in any 12-month period depending on a combination of your net worth (not including the value of your primary residence if you own your home) and your annual income. This limit applies to the total amount you are able to invest across ANY Reg CF platform (not just Vicinity). We actually make this calculation for you when you register on our platform.

  You can also review our Educational Materials for more specifics on this topic, including how to calculate your limit.

Does Vicinity give investment advice or recommendations?

No. We provide a place where owners can showcase their business and you can peruse opportunities for investment within your own community. Each company provides their own information and they vouch for themselves. It is not legal for us to provide investment advice or recommend any company.

Can I invest through an entity?

Yes. For a number of reasons you may want to invest through a business entity (LLC) or a Self-Directed IRA. For more information about these options, please email us at [email protected].

Risks

How Risky are Investments through Vicinity?

Whether you invest in a debt or equity instrument, you must understand that it is possible that you will lose all of your investment. You should only invest what you can afford to lose. All of this is based on future performance, which no one can predict as hard as they may try!

Can I Resell my Investments?

Assume not. There is not a developed secondary market for these types of investments, so don’t count on finding a buyer. Also, Reg CF prohibits the resale of securities for one year, except to the issuer, an accredited investor, a family member, or their trust.

What else can you tell me about Debt Investments?

When compared to equity investments debt can be a little less risky, be a little more liquid (since you likely will get incremental payments over time), but they may have less or capped upside.

What else can you tell me about Equity Investments?

An equity investment only will give you a return upon a future sales event by the company (like an acquisition or an IPO). This means you need to be able to afford losing your investment and waiting quite a while (7+ years).

Also, you should expect that an equity ownership stake will be diluted due to additional financing rounds that could happen in the future. This could be due to success and a need for more capital or a lack of success and need to avoid bankruptcy. Either way would mean you own a smaller percentage of the business.

Finally, it would be rare that an equity investment on Vicinity to offer voting rights as this can be quite the logistical challenge for a company that could have hundreds of investors. Assume your investment does not, unless otherwise specified.

FAQ