- Raised $725K pre-seed; investors include Anthemis Group and ffVC
- Customers include a Fortune 500 Japanese auto manufacturer and two multi-billion dollar hedge funds
- Selected as part of the inaugural AI Nexus Lab in collaboration with NYU and ffVC; graduated from the FinTech Innovation Lab, run by the NYC Partnership Fund, in 2018
- Coverage of 4,000 stocks in the U.S. and Canada; we represent up to 98% of the investable market cap in the U.S.
- Average prediction accuracy of approximately 60% (unaudited and based on management estimates)
- Total Amount Raised: US $214,500
- Total Round Size: US $1,070,000
- Seed :
- Minimum Investment: US $1,000 per investor
- : Crowd Note
- US $7,500,000 :
- Side by Side Offering
WHY WE ARE HERE
We are working on some of the world’s most complex and interesting financial challenges. Our unique approach combines machine learning innovations with a rigorous research process and the relentless energy and focus of a technology start-up enabling us to solve exceptionally tough financial analysis, information processing, and investment management problems.
The idea of using quantitative strategies is very attractive to many hedge funds, but funds have not been able to produce successful machine learning models internally. Even existing quantitative funds that are not using nuanced enough AI models are struggling.
WHAT WE DO
Our technology provides clients with tools to translate complex financial and unstructured data into accurate and impactful predictions. As a result, our clients enjoy breakthrough performance in predictive analytics for financial markets.
Our analytical platform allows people to ask and answer complex questions, identify market anomalies, and improve investment performance without requiring astronomical investments in data, technology, or computing capabilities.
We will work with global hedge funds, asset managers, banks, and corporations to monitor, link, classify, and measure large volumes of information across the globe to identify emerging trends and model their impacts.
WHO WE ARE
We have assembled a team composed of finance, engineering, and data science professionals from companies such as Susquehanna International Group, Bloomberg, Citi, J.P. Morgan, Intel, Merrill Lynch, and NASA. Our engineers and scientists have decades of practical expertise in artificial intelligence technologies, distributed information processing, and data science and our unique culture is based on an unwavering focus on executing in service of our clients.
Financial markets live on data. There is a lot of data spread out across numerous disconnected sources where it is rapidly diversifying in type and volume. This has made data increasingly difficult to use every day in financial analysis. Many investment professionals who need to make sense of this data lack the data processing and analytical tools to easily investigate this information and receive sound insights in a language and format they understand.
Enter Alpha Vertex!
We deliver analytical solutions powered by machine learning that provide our clients with capabilities to process large structured and alternative data sets at scale, identify market anomalies, and build predictive models that generate alpha. Our technology aims to level the playing field by making the capabilities that are kept secret by large hedge funds available more broadly.
Our current suite of products includes:
- Predictive Models: Stock selection models licensed to investment managers and used to uncover equities that are likely to outperform/underperform. Additionally, we offer bespoke models for large multinationals that are useful in forecasting the forward prices of commodities such as crude oil, iron ore and steel, grains, etc.
- Alternative Datasets: Our rich datasets provide unique insights across a broad range of investment themes leveraging big data techniques such as natural language understanding, anomaly detection, sentiment, and relation extraction.
Our latest alternative datasets use natural language models that are trained to track what is being said by company executives about the prospects for their business, their view on the global economy, litigation, and global supply chains to deliver consolidated information that may not be represented in any single information source.
- Alpha Signals: Alpha signals are Indicators derived from multiple sources designed to assist in the prediction of stock returns. Our alpha signals provide quantifiable data on hard to find information, such as the estimated number of data scientists at Google, FB, or Microsoft, or indicators on companies with high employee turnover or low morale.
Models and Data as a Service
- Our products and services are delivered as enterprise cloud solutions that include APIs to facilitate the delivery of large quantities of data. Clients license the models, signals, or data sets on a subscription basis.
- Subscription fees are tiered based on the number of securities required and range from $30,000 to $100,000 per year.
- Customers requiring bespoke models pay an additional build fee and an annual license for the models which can typically cost $100,000+ per year.
Licensing of Investment Strategies
We have begun conversations with asset managers to design and license investment strategies. The commercial model would be a percentage of the strategies’ profits, ranging from 10% to 15% of the gross profits.
Retail customers have access to long/short trade ideas on third party platforms such as StockTwits. We intend to pursue additional redistribution agreements with other platforms and data marketplaces.
BENEFITS OF USING OUR SOLUTION
The key advantages of our solutions include:
- Continuous innovation and access to state of the art machine learning methods
- Secure, private, scalable, and reliable APIs offering ease of integration and configuration
- Strong model performance and forecasting capability even during volatile periods
Co-Founders, Mutisya Ndunda and Michael Bishop, met while working in the financial industry in New York. For over 15 years they held executive and management level positions at companies like Bloomberg, JP Morgan, and Susquehanna International Group. After realizing that technology and data were transforming the financial services industry, Mutisya and Michael began to talk about creating a company that leveraged technology to help uncover hidden insights in data.
They enlisted the help of several mathematicians and data scientists that shared the same vision and passion to take advantage of this opportunity. Knowing that the industry is complex and mature, they sought out the experience and advice of several investors and advisors who are experts in the space.
We have non-disclosure agreements in place with our customers so we cannot disclose who they are. The pilots and customers we have worked with include a Fortune 500 auto manufacturing company, multi-billion dollar hedge funds, and multinational corporations.
Our prediction accuracy ranges from 55%-60%. Our win rate in our StockTwits premium room is currently at 62% from inception.
A Side by Side offering refers to a deal that is raising capital under two offering types. If you plan on investing less than US $20,000.00, you will automatically invest under the Regulation CF offering type. If you invest more than US $20,000.00, you must be an accredited investor and invest under the Regulation D offering type.
US $14,500 (under Reg CF only)
Investors who invest $50,000 or less will have their securities held in trust with a Custodian that will serve as a single shareholder of record. These investors will be subject to the Custodian’s Account Agreement, including the electronic delivery of all required information.
Investments counted towards the escrow target may be senior to and have different terms from the Crowd Note used in this offering. Two investments from Anthemis and ffvc totaling $200,000 were made on a separate convertible note at the same valuation cap, interest rate, and discount rate(the "Prior Convertible Note"), and their investments are counted towards the escrow target for this round. You can review the terms offered under Exhibit A of the “Purchase Agreement” available in the Data Room.
$2,000 (“Bronze”) — 3 month subscription access to Alpha Vertex’s premium StockTwits community for long/short trade ideas based on our unique quantitative equity models.
$5,000 (“Silver”) — 12 month subscription access to Alpha Vertex’s premium StockTwits community for long/short trade ideas based on our unique quantitative equity models.
$10,000 (“Gold”) — All of the above plus a private video conference with team members discussing specific investment insights generated by Alpha Vertex’s products.
$25,000 (“Platinum”) — All of the above, plus investor level access to private research produced by Alpha Vertex's data scientists.
$100,000 (“Diamond”) — All of the above, plus arranged and paid airfare and a dinner invitation to meet with Alpha Vertex's CEO and key players. Also includes invitations to annual updates with the Alpha Vertex senior management team.
It is advised that you consult a tax professional to fully understand any potential tax implications of receiving investor perks before making an investment.
The graph below illustrates theor the of Alpha Vertex's prior rounds by year.
Alpha Vertex, Inc. (“the Company”) was incorporated on December 14, 2016 under the laws of the State of Delaware, and is headquartered in New York, New York. The Company provides analytical solutions provided by machine learning to perform large scale information processing as well as predictive analytics and modeling for portfolio managers, traders, and investors.
For the financial year ending December 31, 2017 the Company recognized $58,481 in revenue; for the financial year ending December 31, 2017 the Company recognized $191,815 in revenue, representing 227% revenue growth from 2017 to 2018. The Company has generated substantial net losses and negative cash flows from operating activities since it commenced operations. It has incurred a net loss of $593,140 for the year ended 2018, and a total net loss of $1,010,838 since inception.
Liquidity and Capital Resources
The proceeds from the Offering are essential to our operations. We plan to use the proceeds as set forth above under "Use of Proceeds", which is an indispensable element of our business strategy. The Offering proceeds will have a beneficial effect on our liquidity, as we have approximately $186,510 in cash on hand as of March 31, 2019 which will be augmented by the Offering proceeds and used to execute our business strategy.
The Company currently does not have any additional outside sources of capital other than the proceeds from the Combined Offerings.
Capital Expenditures and Other Obligations
The Company does not intend to make any material capital expenditures in the future.
Trends and Uncertainties
After reviewing the above discussion of the steps the Company intends to take, potential Purchasers should consider whether achievement of each step within the estimated time frame is realistic in their judgment. Potential Purchasers should also assess the consequences to the Company of any delays in taking these steps and whether the Company will need additional financing to accomplish them.
The financial statements are an important part of this Form C and should be reviewed in their entirety. The financial statements of the Company are attached to the Form C as Exhibit B.
According to Morgan Stanley, the pool of assets in quantitative strategies (i.e. AI-driven strategies) at retail funds and hedge funds surged to $1.5 trillion and is growing at a rate of 17% annually.
While the idea of using quantitative strategies is attractive to many hedge funds, these investment managers require new analytical systems and statistical algorithms that allow machines to leverage large amounts of data, model, and uncover non-linear relationships that a human would find hard to detect to deliver strong investment performance.
The Financial Times reports that traditional providers like Bloomberg and Reuters are losing market share to smaller financial data and analytics providers, underlining the global finance industry’s gradual shift away from costly desktop terminals to new technologies like machine learning.
COMPETITIONOur closest competitors include data analytics companies like Kensho, Walnut Algorithms, Ernest Research, and DataMinr.
Solutions from competitors focus on leveraging one type of alternative data, such as social media, to select stocks. In our opinion, none of the competitors deliver comprehensive modeling technologies which include several financial and non-traditional datasets to forecast asset returns.
EXITSFirms that have successfully solved the problem have opted to raise assets and run hedge funds or have been acquired. Some of the recent exits in our space:
- Kensho — Financial intelligence products leveraging graph technology. Acquired by S&P for $550M.
- Quandl — Alternative and financial data platform. Acquired by Nasdaq for an undisclosed amount.
- Alpine Data — Big data predictive solutions. Acquired by TIBCO for an undisclosed amount.
- Nutonian — AI modeling and forecasting engine. Acquired by Data Robot for an undisclosed amount.
The Company’s cash position is relatively weak. The Company currently has only $186,510 in cash balances as of March 31, 2019. This equates to approximately 6 months of runway. The Company believes that it is able to continue extracting cash from sales to extend its runway. The Company could be harmed if it is unable to meet its cash demands, and the Company may not be able to continue operations if they are not able to raise additional funds.
Its proprietary technology has a limited history and may perform below expectations. The Company uses proprietary technology that has not been previously implemented on customer projects, and it may experience technological problems that it is unable to foresee. If the implementation of its proprietary technology is unsuccessful, it could negatively impact the successful operation of projects using its systems and may result in additional payments, deductions or defaults under its agreements. In addition, there is a lack of long-term reliability data for its proprietary system. Actual long-term performance of these projects, may fall short of expectations. Its equipment may be susceptible to damage from weather-related or other unforeseen events. Equipment performance issues could result in significant operational problems for its Company, including increased maintenance costs, decreased revenue, warranty claims, inability to meet delivery requirements or defaults under its agreements.
The company is still beta testing the first version of their application. Sophisticated technology platforms often contain errors or defects, such as errors in computer code or other systems errors, particularly when first introduced or when new versions or enhancements are released. The development of new or enhanced products is a complex and uncertain process requiring the accurate anticipation of technological and market trends, as well as precise technological execution. Despite quality assurance measures, internal testing and beta testing by customers, the Company cannot guarantee that its current and future products, including upgrades to those products, will be free of serious defects, which could result in lost revenue, refunds without a commensurate decrease in costs, delays in market acceptance, increase in costs, reputational harm and costs associated with defending or settling claims. If upgrades are not properly implemented, the availability and functioning of our products could be impaired.
Many of the company’s contracts are understood to be contingent / to trigger on the successful development and proof of concept of its product. The Company’s product is still in development, and the Company’s business depends almost entirely on its successful development and commercialization. The Company will require substantial additional development, testing, and potentially regulatory approval before it is able to commercialize its product effectively. This process may take many years and may require the expenditure of substantial resources beyond the proceeds raised in this offering. Accordingly, even if the Company is able to obtain the requisite financing to continue to fund the development of its products, it cannot guarantee that the platform or any other product candidates will be successfully developed or commercialized.
Historically, the Company has depended on a limited number of customers for a substantial majority of its revenue. If the Company fails to retain or expand its customer relationships or if its customers cancel or reduce their purchase commitments, its revenue could decline significantly. Currently, revenue is concentrated in two customers which are responsible for the substantial majority of the Company’s revenue. As a result of this customer concentration, the Company’s revenue could fluctuate materially and could be materially and disproportionately impacted by purchasing decisions of its significant customer. In the future, any significant customer may alter their purchasing patterns at any time with limited notice, or may decide not to continue to purchase the Company’s solutions at all, which could cause its revenue to decline materially and materially harm its financial condition and results of operations. If the Company is not able to diversify its customer base, it will continue to be susceptible to risks associated with customer concentration. Additionally, if the Company were to lose these clients, it could be harmed and may not be able to continue operations if they are not able to add additional clients to fill the loss.
The Company’s sales cycle is long and may be unpredictable, which can result in variability of its financial performance. Additionally, long sales cycles may require the Company to incur high sales and marketing expenses with no assurance that a sale will result, which could adversely affect its profitability. The Company’s results of operations may fluctuate, in part, because of the resource-intensive nature of its sales efforts and the length and variability of the sales cycle. A sales cycle is the period between initial contact with a prospective customer and any sale of its products. The sales process involves educating customers about the Company’s products, participating in extended evaluations and configuring the products to customer-specific needs. The length of the sales cycle, from initial contact with a customer to the execution of a purchase order, can span several months. During the sales cycle, the Company may expend significant time and money on sales and marketing activities or make other expenditures, all of which lower its operating margins, particularly if no sale occurs or if the sale is delayed as a result of extended qualification processes or delays. It is difficult to predict when, or even if, it will make a sale to a potential customer or if the Company can increase sales to existing customers. As a result, the Company may not recognize revenue from sales efforts for extended periods of time, or at all. The loss or delay of one or more large transactions in a quarter could impact its results of operations for that quarter and any future quarters for which revenue from that transaction is lost or delayed.
The Company has a limited operating history upon which you can evaluate its performance. Since the Company’s inception on December 14, 2016, it has been designing and developing its product. While sales efforts have begun, and the Company has accepted a number of deposits for sales, the Company requires additional capital to manufacture and ship its product at scale. There are numerous risks that may prevent or delay the start of product shipments. Accordingly, the Company has no history upon which an evaluation of its prospects and future performance can be made. Its proposed operations are subject to all business risks associated with new enterprises. The likelihood of its creation of a viable business must be considered in light of the problems, expenses, difficulties, complications, and delays frequently encountered in connection with the inception of a business, operation in a competitive industry, and the continued development of advertising, promotions, and a corresponding client base. The Company’s operating expenses may increase for the near future. There can be no assurances that the Company will ever operate profitably. You should consider the Company's business, operations and prospects in light of the risks, expenses and challenges faced as an early-stage company.
Industry consolidation may result in increased competition, which could result in a loss of customers or a reduction in revenue. Some of our competitors have made or may make acquisitions or may enter into partnerships or other strategic relationships to offer more comprehensive services than they individually had offered or achieve greater economies of scale. In addition, new entrants not currently considered to be competitors may enter our market through acquisitions, partnerships or strategic relationships. We expect these trends to continue as companies attempt to strengthen or maintain their market positions. The potential entrants may have competitive advantages over us, such as greater name recognition, longer operating histories, more varied services and larger marketing budgets, as well as greater financial, technical and other resources. The companies resulting from combinations or that expand or vertically integrate their business to include the market that we address may create more compelling service offerings and may offer greater pricing flexibility than we can or may engage in business practices that make it more difficult for us to compete effectively, including on the basis of price, sales and marketing programs, technology or service functionality. These pressures could result in a substantial loss of our customers or a reduction in our revenue.
The Company is subject to rapid technological change and dependence on new product development. Their industry is characterized by rapid and significant technological developments, frequent new product introductions and enhancements, continually evolving business expectations and swift changes. To compete effectively in such markets, the Company must continually improve and enhance its products and services and develop new technologies and services that incorporate technological advances, satisfy increasing customer expectations and compete effectively on the basis of performance and price. Their success will also depend substantially upon our ability to anticipate, and to adapt our products and services to our collaborative partner’s preferences. There can be no assurance that technological developments will not render some of our products and services obsolete, or that they will be able to respond with improved or new products, services, and technology that satisfy evolving customers’ expectations. Failure to acquire, develop or introduce new products, services, and enhancements in a timely manner could have an adverse effect on their business and results of operations. Also, to the extent one or more of their competitors introduces products and services that better address a customer’s needs, their business would be adversely affected.
Failure to obtain new clients or renew client contracts on favorable terms could adversely affect results of operations. The Company may face pricing pressure in obtaining and retaining their clients. Their clients may be able to seek price reductions from them when they renew a contract, when a contract is extended, or when the client’s business has significant volume changes. Their clients may also reduce services if they decide to move services in-house. On some occasions, this pricing pressure results in lower revenue from a client than the Company had anticipated based on their previous agreement with that client. This reduction in revenue could result in an adverse effect on their business and results of operations. Further, failure to renew client contracts on favorable terms could have an adverse effect on their business. The Company's contracts with clients generally run for several years and include liquidated damage provisions that provide for early termination fees. Terms are generally renegotiated prior to the end of a contract’s term. If they are not successful in achieving a high rate of contract renewals on favorable terms, their business and results of operations could be adversely affected.
The Company has generated substantial net losses and negative operating cash flows since its inception as part of the development of its business. The Company has generated substantial net losses and negative cash flows from operating activities since it commenced operations. It has incurred a net los of $593,140 $1,010,838 for the year ended 2018. Before achieving profitability it will generate continued losses. Its costs may also increase due to such factors as higher than anticipated financing and other costs; non-performance by third-party suppliers, licensees, partners or subcontractors; and increases in the costs of labor or materials. If any of these or similar factors occur, its net losses and accumulated deficit could increase significantly and the value of its stock could decline.
The development and commercialization of the Company’s products and services are highly competitive. It faces competition with respect to any products and services that it may seek to develop or commercialize in the future. Its competitors include major companies worldwide. The market is an emerging industry where new competitors are entering the market frequently. Many of the Company’s competitors have significantly greater financial, technical and human resources and may have superior expertise in research and development and marketing approved services and thus may be better equipped than the Company to develop and commercialize services. These competitors also compete with the Company in recruiting and retaining qualified personnel and acquiring technologies. Smaller or early stage companies may also prove to be significant competitors, particularly through collaborative arrangements with large and established companies. Accordingly, the Company’s competitors may commercialize products more rapidly or effectively than the Company is able to, which would adversely affect its competitive position, the likelihood that its services will achieve initial market acceptance and its ability to generate meaningful additional revenues from its products and services.
Maintaining, extending and expanding our reputation and brand image are essential to our business success. We seek to maintain, extend, and expand our brand image through marketing investments, including advertising and consumer promotions, and product innovation. Increasing attention on marketing could adversely affect our brand image. It could also lead to stricter regulations and greater scrutiny of marketing practices. Existing or increased legal or regulatory restrictions on our advertising, consumer promotions and marketing, or our response to those restrictions, could limit our efforts to maintain, extend and expand our brands. Moreover, adverse publicity about regulatory or legal action against us could damage our reputation and brand image, undermine our customers’ confidence and reduce long-term demand for our products, even if the regulatory or legal action is unfounded or not material to our operations. In addition, our success in maintaining, extending, and expanding our brand image depends on our ability to adapt to a rapidly changing media environment. We increasingly rely on social media and online dissemination of advertising campaigns. The growing use of social and digital media increases the speed and extent that information or misinformation and opinions can be shared. Negative posts or comments about us, our brands or our products on social or digital media, whether or not valid, could seriously damage our brands and reputation. If we do not establish, maintain, extend and expand our brand image, then our product sales, financial condition and results of operations could be adversely affected.
We must acquire or develop new products, evolve existing ones, address any defects or errors, and adapt to technology change. Technical developments, client requirements, programming languages, and industry standards change frequently in our markets. As a result, success in current markets and new markets will depend upon our ability to enhance current products, address any product defects or errors, acquire or develop and introduce new products that meet client needs, keep pace with technology changes, respond to competitive products, and achieve market acceptance. Product development requires substantial investments for research, refinement, and testing. We may not have sufficient resources to make necessary product development investments. We may experience technical or other difficulties that will delay or prevent the successful development, introduction, or implementation of new or enhanced products. We may also experience technical or other difficulties in the integration of acquired technologies into our existing platform and applications. Inability to introduce or implement new or enhanced products in a timely manner could result in loss of market share if competitors are able to provide solutions to meet customer needs before we do, give rise to unanticipated expenses related to further development or modification of acquired technologies as a result of integration issues, and adversely affect future performance.
Our business could be negatively impacted by cyber security threats, attacks and other disruptions. Like others in our industry, we continue to face advanced and persistent attacks or threats of attacks on our information infrastructure where we manage and store various proprietary information and sensitive/confidential data relating to our operations. These attacks may include sophisticated malware (viruses, worms, and other malicious software programs) and phishing emails that attack our products or otherwise exploit any security vulnerabilities. These intrusions sometimes may be zero-day malware that are difficult to identify because they are not included in the signature set of commercially available antivirus scanning programs. Experienced computer programmers and hackers may be able to penetrate our network security and misappropriate or compromise our confidential information or that of our customers or other third-parties, create system disruptions, or cause shutdowns. Additionally, sophisticated software and applications that we produce or procure from third-parties may contain defects in design or manufacture, including "bugs" and other problems that could unexpectedly interfere with the operation of the information infrastructure. A disruption, infiltration or failure of our information infrastructure systems or any of our data centers as a result of software or hardware malfunctions, computer viruses, cyber attacks, employee theft or misuse, power disruptions, natural disasters or accidents could cause breaches of data security, loss of critical data and performance delays, which in turn could adversely affect our business.
The reviewing CPA has included a “going concern” note in the reviewed financials. Specifically, the financial statements clarify that “the Company has incurred losses from inception of approximately $1,010,838 which, among other factors, raises substantial doubt about the Company's ability to continue as a going concern. The ability of the Company to continue as a going concern is dependent upon management's plans to raise additional capital from the issuance of debt or the sale of stock, its ability to commence profitable sales of its flagship product, and its ability to generate positive operational cash flow. The accompanying financial statements do not include any adjustments that might be required should the Company be unable to continue as a going concern.”
We have not prepared any audited financial statements. Therefore, you have no audited financial information regarding the Company’s capitalization or assets or liabilities on which to make your investment decision. If you feel the information provided is insufficient, you should not invest in the Company.
Investments counted towards the escrow target may be senior to and have different terms from the Crowd Note used in this offering.Two investments from Anthemis and ffvc totaling $200,000 were made on a separate convertible note (the "Prior Convertible Note"), and their investments are counted towards the escrow target for this round. These investments were made with the same valuation cap, interest rate, and discount rate as this offering. These investors, however, may have different rights than those assigned under the Crowd Note in this offering. Additionally, these investors would vote as a separate series of notes, and may amend their note separately from this Crowd Note. Furthermore, the indebtedness evidenced by the Crowd Note is subordinated in right of payment to the prior payment in full of the Prior Convertible Note. You can review the terms offered under Exhibit A of the "Purchase Agreement" available in the Data Room.
Start-up investing is risky. Investing in startups is very risky, highly speculative, and should not be made by anyone who cannot afford to lose their entire investment. Unlike an investment in a mature business where there is a track record of revenue and income, the success of a startup or early-stage venture often relies on the development of a new product or service that may or may not find a market. Before investing, you should carefully consider the specific risks and disclosures related to both this offering type and the company which can be found in this company profile and the documents in the data room below.
Your shares are not easily transferable. You should not plan on being able to readily transfer and/or resell your security. Currently there is no market or liquidity for these shares and the company does not have any plans to list these shares on an exchange or other secondary market. At some point the company may choose to do so, but until then you should plan to hold your investment for a significant period of time before a "liquidation event" occurs. A "liquidation event" is when the company either lists their shares on an exchange, is acquired, or goes bankrupt.
The Company may not pay dividends for the foreseeable future. Unless otherwise specified in the offering documents and subject to state law, you are not entitled to receive any dividends on your interest in the Company. Accordingly, any potential investor who anticipates the need for current dividends or income from an investment should not purchase any of the securities offered on the Site.
Valuation and capitalization. Unlike listed companies that are valued publicly through market-driven stock prices, the valuation of private companies, especially startups, is difficult to assess and you may risk overpaying for your investment. In addition, there may be additional classes of equity with rights that are superior to the class of equity being sold.
You may only receive limited disclosure. While the company must disclose certain information, since the company is at an early-stage they may only be able to provide limited information about its business plan and operations because it does not have fully developed operations or a long history. The company may also only obligated to file information periodically regarding its business, including financial statements. A publicly listed company, in contrast, is required to file annual and quarterly reports and promptly disclose certain events — through continuing disclosure that you can use to evaluate the status of your investment.
Investment in personnel. An early-stage investment is also an investment in the entrepreneur or management of the company. Being able to execute on the business plan is often an important factor in whether the business is viable and successful. You should be aware that a portion of your investment may fund the compensation of the company's employees, including its management. You should carefully review any disclosure regarding the company's use of proceeds.
Possibility of fraud. In light of the relative ease with which early-stage companies can raise funds, it may be the case that certain opportunities turn out to be money-losing fraudulent schemes. As with other investments, there is no guarantee that investments will be immune from fraud.
Lack of professional guidance. Many successful companies partially attribute their early success to the guidance of professional early-stage investors (e.g., angel investors and venture capital firms). These investors often negotiate for seats on the company's board of directors and play an important role through their resources, contacts and experience in assisting early-stage companies in executing on their business plans. An early-stage company may not have the benefit of such professional investors.
Representatives of SI Securities, LLC are affiliated with SI Advisors, LLC ("SI Advisors") Representatives of SI Securities, LLC are affiliated with SI Advisors, LLC ("SI Advisors"). SI Advisors is an exempt investment advisor that acts as the General Partner of SI Selections Fund I, L.P. ("SI Selections Fund"). SI Selections Fund is an early stage venture capital fund owned by third-party investors. From time to time, SI Selections Fund may invest in offerings made available on the SeedInvest platform, including this offering. Investments made by SI Selections Fund may be counted towards the total funds raised necessary to reach the minimum funding target as disclosed in the applicable offering materials.
Frequently Asked Questions
A Side by Side offering refers to a deal that is raising capital under two offering types. This Side by Side offering is raising under Regulation CF and Rule 506(c) of Regulation D.
The Form C is a document the company must file with the Securities and Exchange Commission (“SEC”) which includes basic information about the company and its offering and is a condition to making a Reg CF offering available to investors. It is important to note that the SEC does not review the Form C, and therefore is not recommending and/or approving any of the securities being offered.
Before making any investment decision, it is highly recommended that prospective investors review the Form C filed with the SEC (included in the company's profile) before making any investment decision.
Rule 506(c) under Regulation D is a type of offering with no limits on how much a company may raise. The company may generally solicit their offering, but the company must verify each investor’s status as an accredited investor prior to closing and accepting funds. To learn more about Rule 506(c) under Regulation D and other offering types check out our blog and academy.
Title III of the JOBS Act outlines Reg CF, a type of offering allowing private companies to raise up to $1 million from all Americans. Prior capital raising options limited private companies to raising money only from accredited investors, historically the wealthiest ~2% of Americans. Like a Kickstarter campaign, Reg CF allows companies to raise funds online from their early adopters and the crowd. However, instead of providing investors a reward such as a t-shirt or a card, investors receive securities, typically equity, in the startups they back. To learn more about Reg CF and other offering types check out our blog and academy.
When you complete your investment on SeedInvest, your money will be transferred to an escrow account where an independent escrow agent will watch over your investment until it is accepted by Alpha Vertex. Once Alpha Vertex accepts your investment, and certain regulatory procedures are completed, your money will be transferred from the escrow account to Alpha Vertex in exchange for your securities. At that point, you will be a proud owner in Alpha Vertex.
To make an investment, you will need the following information readily available:
- Personal information such as your current address and phone number
- Employment and employer information
- Net worth and income information
- Social Security Number or passport
- ABA bank routing number and checking account number (typically found on a personal check or bank statement)
If you are investing under Rule 506(c) of Regulation D, your status as an Accredited Investor will also need to be verified and you will be asked to provide documentation supporting your income, net worth, revenue, or net assets or a letter from a qualified advisor such as a Registered Investment Advisor, Registered Broker Dealer, Lawyer, or CPA.
An investor is limited in the amount that he or she may invest in a Reg CF offering during any 12-month period:
- If either the annual income or the net worth of the investor is less than $100,000, the investor is limited to the greater of $2,000 or 5% of the lesser of his or her annual income or net worth.
- If the annual income and net worth of the investor are both greater than $100,000, the investor is limited to 10% of the lesser of his or her annual income or net worth, to a maximum of $100,000.
Separately, Alpha Vertex has set a minimum investment amount of US $1,000.
Accredited investors investing $20,000 or over do not have investment limits.
You are a partial owner of the company, you do own securities after all! But more importantly, companies which have raised money via Regulation CF must file information with the SEC and post it on their websites on an annual basis. Receiving regular company updates is important to keep shareholders educated and informed about the progress of the company and their investment. This annual report includes information similar to a company’s initial Reg CF filing and key information that a company will want to share with its investors to foster a dynamic and healthy relationship.
In certain circumstances a company may terminate its ongoing reporting requirement if:
- The company becomes a fully-reporting registrant with the SEC
- The company has filed at least one annual report, but has no more than 300 shareholders of record
- The company has filed at least three annual reports, and has no more than $10 million in assets
- The company or another party purchases or repurchases all the securities sold in reliance on Section 4(a)(6)
- The company ceases to do business
However, regardless of whether a company has terminated its ongoing reporting requirement per SEC rules, SeedInvest works with all companies on its platform to ensure that investors are provided quarterly updates. These quarterly reports will include information such as: (i) quarterly net sales, (ii) quarterly change in cash and cash on hand, (iii) material updates on the business, (iv) fundraising updates (any plans for next round, current round status, etc.), and (v) any notable press and news.
Currently there is no market or liquidity for these securities. Right now Alpha Vertex does not plan to list these securities on a national exchange or another secondary market. At some point Alpha Vertex may choose to do so, but until then you should plan to hold your investment for a significant period of time before a “liquidation event” occurs. A “liquidation event” is when Alpha Vertex either lists their securities on an exchange, is acquired, or goes bankrupt.
You can return to SeedInvest at any time to view your portfolio of investments and obtain a summary statement. If invested under Regulation CF you may also receive periodic updates from the company about their business, in addition to monthly account statements.
This is Alpha Vertex's fundraising profile page, where you can find information that may be helpful for you to make an investment decision in their company. The information on this page includes the company overview, team bios, and the risks and disclosures related to this investment opportunity. If the company runs a side by side offering that includes an offering under Regulation CF, you may also find a copy of the Alpha Vertex's Form C. The Form C includes important details about Alpha Vertex's fundraise that you should review before investing.
For offerings made under Regulation CF, you may cancel your investment at any time up to 48 hours before a closing occurs or an earlier date set by the company. You will be sent a reminder notification approximately five days before the closing or set date giving you an opportunity to cancel your investment if you had not already done so. Once a closing occurs, and if you have not canceled your investment, you will receive an email notifying you that your securities have been issued. If you have already funded your investment, your funds will be promptly refunded to you upon cancellation. To cancel your investment, you may go to your account's portfolio page by clicking your profile icon in the top right corner.
If you invest under any other offering type, you may cancel your investment at any time, for any reason until a closing occurs. You will receive an email when the closing occurs and your securities have been issued. If you have already funded your investment and your funds are in escrow, your funds will be promptly refunded to you upon cancellation. To cancel your investment, please go to your account's portfolio page by clicking your profile icon in the top right corner.