- Over $3MM in revenues from Catering and Meal delivery from 2016-2017.
- James Beard Award winning chef Luciano Pellegrini
- Crateful has done catering for brands such as WeWork, Ferrari, Tesla, Infiniti, and Rolls Royce.
- Crateful Meal Plan has delivered to 1,500 customers
- 4.5 star rating on Yelp
- Total Amount Raised: US $89,465
- Total Round Size: US $1,070,000
- Seed :
- Minimum Investment: US $500 per investor
- : Crowd Note
- Side by Side Offering
- : US $4,500,000 before May 30, 2018
- Valuation Cap Schedule: See Full Schedule
Americans are increasingly obese and overweight (over ⅔ of the US population) and many busy urban professionals, new mothers, etc do not have a convenient, healthy, enjoyable way to lose weight and stay in shape.
From what we've noticed, there are not enough solutions in the market at the moment for the convenience-oriented discerning customer:
- DIY Meal Kits (raw ingredients and recipes) can be inadequate since customers may be able to use it consistently for all daily meals.
- Weight Loss programs offer poor food choices.
- Shopping and portioning requires a lot of time and enormous motivation.
Crateful has created a gourmet, organic, fully prepared portion-controlled meal delivery service, customizable for any dietary need, made fresh by award-winning chefs and delivered to the customer’s home every day.
Our goal is to provide truly convenient, seriously good food that makes dieting easy and enjoyable.
The Addressable Market
An estimated 45 million Americans go on a diet each year and spend $33 billion on weight-loss products and 77% of Americans say they are actively trying to eat healthier. However, the number of Americans who are overweight or obese is actually on the rise, with over 2/3 of Americans beyond the overweight threshold in 2017.
The reason is that diets are very hard to stick to, either because they are impractical (shopping, meal kits) or because the food doesn’t taste good and/or leaves people hungry and not feeling satisfied.
And while the meal delivery market (on demand and meal kits) has exploded, reaching $20 billion in 2017, it has clearly not found a solution yet.
With 88% of Americans willing to pay a premium for better quality, healthier food, the meal delivery experience needs to be seamless and truly enjoyable, so that dieting and healthy eating can be easy to accomplish.
As a digitally/ online native brand that combines high-quality, state of the art food preparation techniques with advanced meal customization and online marketing tools, Crateful aims to address all the needs of the market.
The VCs have poured billions of dollars building consumer awareness for meal kits, but the fully prepared meal delivery space has been completely overlooked. While it is a premium product, the customer experience is far superior in every other way. Customized meals for the whole day, and no prep or cleanup at all.
Furthermore, we believe we don't need that many customers to build a large business because the average amount of revenue per customer is relatively high. This is a promising category that is not on the radar screens of U.S. VCs.
What Customers Think Today:
- "I tried four different meal delivery services and when I found Crateful I didn't need to look elsewhere! I have been using their services for five months now and super happy.
- Armen (Customer; $15,000 purchased)
- "Good food, good choice, impeccable delivery. Used the services twice for 40 days and lost more than 10 pounds each time!"
- Johanna (Customer)
- "Beyond expectation—truly amazing food! Beautifully presented with incredible flavors in each extremely high quality healthy meal. An amazing way to achieve fitness goals without giving up enjoying food."
- Kimberly (Customer)
- "Beautiful fresh meals that we looked forward to daily! They adhered to all dietary issues and took good care of us. Wonderful folks!"
- Courtney & Frank (Customer)
- "Hands down my favorite food delivery service that I have subscribed to. I have tried my share from .... Now to come to the food delivery service that takes the cake... Crateful!
I'm so impressed with the quality of food, presentation, and inspiration built into the meal plans that you can order. I ordered the vegetarian option, mindful. Just looking at the biodegradable packaging, my mindful sticker, and my amazing food makes me smile…"
**The individuals above were not compensated in exchange for their testimonials. In addition, their testimonials should not be construed as and/or considered investment advice.
In a world where 88% of shoppers want healthier food options and are ready to pay a premium for them, we felt it was important to create a brand anchored in wholesome, convenient and truly delicious foods, and to deliver them directly to our customers’ doorstep.
In doing so, our goal is to understand and cater to the consumer’s dietary needs like no meal delivery company has done before, creating a product that is perfect for anyone who wants to lose weight and stay in shape while caring about the quality and taste of the food.
Crateful is fully prepared food, engineered to offer the best taste when reheated, that makes dieting an easy-to-stick-to, joyful experience, while also catering to anyone who is simply interested in the convenience of healthy and delicious food.
- Mostly organic, always high-quality ingredients
- Locally sourced from farm wholesalers
- Made by award-winning chefs
- Professional nutritionists
- Healthy, balanced, calorie-controlled meals
- Eco-friendly, BPA-free, made in USA packaging that is both microwave and oven-safe… No fuss, not even a dirty dish. Just add heat and enjoy.
- Breakfast, Lunch, Snack and Dinner starts at $48/day, including delivery.
- Minimum order is Lunch & Dinner for 5-days.
- Breakfast and Dessert can be added to the order for, respectively, $7 and $5 per day.
- Packages of 5, 10, 20 and 40 days, as well as ongoing subscription
How are we going to improve on this? By creating a new, upgraded user experience that will allow the customer to not only select (and change) the delivery dates and the dislikes/restrictions, but also to see and change any item on the menu, with just 36 hrs notice.
Our business model is focused on selling subscription meal plans with an increasing gross margin and increasing customer retention.
The gross margin has grown to over 45% since inception driven by our ability to create an efficient production and delivery system. Customer retention has also increased from 38% in 2017 to the current 43%, and has the potential to grow much further once we implement the new user experience allowing for menu changes by the customer.
Our growth strategy is to achieve a dominant position in the Southern California market before expanding to other markets. We plan to invest the capital we are raising in marketing (80%) and technology (20%) to achieve this initial result within 2 years, focusing just as much on customer retention (long-term subscription perks, full menu and schedule customization, food quality and variety) as on acquisition.
Customer retention is the key to our business: with average revenue per customer (ARPU) of just $1,500 per year (equivalent to about 1 month of food), Crateful can grow to $20MM in revenues with just 13,500 active customers per year in SoCal, and to $200MM in revenues with just 135,000 nationally.
Our recipe for success, therefore, relies on creating a model that:
- will make it possible to acquire new customers through engaging digital marketing campaigns targeting the diet, health and fitness audiences;
- will easily allow us to retain customers for a long time, increasing ARPU;
- will not require us to keep investing large sums into new customer acquisition. This is the key to profitability and has been the downfall of our predecessors in the Meal Kit space.
Proprietary techniques and processes to produce and deliver the best tasting food in the prepared meal delivery space, better KPIs, a superior business model, highly customizable options and a tested, seamless service aimed at optimizing customer retention.
Our LA-based brand launched in 2016 focusing on testing for the meal plan operations while growing the ancillary but strategic catering revenue stream. Founded by Andrea Marotti and Emanuele Ponzo, together with world-class executive chefs such as Luciano Pellegrini (James Beard Award Winner, Executive Chef at Crateful), applied all their expertise and knowledge to create the perfect system of recipes, processes and procedures. We want to ensure that the customer experience with the food is seamless and truly enjoyable so that dieting can become something to look forward to.
Please detail your customer acquisition metrics.
It is important to note that, a comprehensive digital marketing campaign only ran in Q1 and Q2 of 2017. This is the period we invested in online paid ads to generate our Proof of Concept data (see KPIs slid in Deck). After which, during Q3 and Q4 2017, we took what we learned and focused on optimizing the efficiency of the operations and on improving the gross profit potential.
Please detail the plan regarding the LTV.
We assume LTV to be equal to the Average Revenue Per User, which is currently over $1.4K based on calculations from the last 6 months (Oct 2017-March 2018). The plan to increase LTV is to: A. Currently, our customers can select restrictions and dislikes but cannot see the actual menu that they will receive, nor can they make any changes to that menu. The first step to increase retention and LTV will be to create a new website/ app that will allow customers to customize their menu and make changes to individual meals.. Allowing these much wider customizations will remove uncertainty and will therefore make it easier for customers to go for longer orders. B. refocusing our communication towards a Healthy Dieting lifestyle rather than just Top Quality Food. Dieting customers tend to subscribe for much longer periods of time than customers that just want quality and convenience, therefore driving a substantial increase in LTV. We have been able to gather some competitor data that shows that the ARPU we’ve projected are well within these competitor’s ARPU.
Can you provide more color to your multiple revenue models? Please walk me through the catering, delivery, etc.
Meal Plans and Catering are two separate revenue streams that leverage most of the same kitchen, staff and management infrastructure, increasing efficiencies and contributing to covering the fixed costs. Catering is a traditional business which generates short term revenues and can continue to grow up to a certain point (see projections). Most of our catering is high-end events for private individuals, luxury brads, large corps, for which we manage food, staff, equipment rentals. Occasionally we cater photo shoots or corporate lunches that are delivered on site by our staff (we have 1 driver employed), with our own van. This stream is seasonal with a peak during Q4 due to holiday parties. Meal Plans: They are produced in the same kitchen, with partially the same staff. The majority of the deliveries are handed over to a third party (Calidelivers) while our Driver Captain supervises the hand off of the cooler bags and stands by to cover any unforeseen issue that might arise. Meal Plan revenues are also somewhat seasonal, with a decrease in Nov/Dec due to holidays, but mostly are directly correlated to the investment in online advertising.
The company was launched in October 2015 with Catering and an initial testing phase for the Meal Plans. For the MP, all of 2016 was dedicated and invested in extensive product R&D such as testing of the recipes, processes and techniques to use for production, packaging and delivery. Once we felt our processes were scalable and our product was top quality with respect to all existing competitors, and launched (Jan-June 2017) a 6 month online marketing campaign investing primarily in SEM and FB Ads as well Email and influencer marketing. The resulting data was used to model the projections. In Q3 and Q4 2017 we focused on making the whole system more efficient and optimized, in order to reduce costs and increase Gross Profits for the MP.
How many active users and how many are being added each month?
1,500 users that have ordered at least once. New monthly users are now low due to the mentioned lack of any online marketing and customer acquisition campaign.
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 $39,465 (under Reg CF only)
US $5,000,000 before Jun 29, 2018
All non-Major Purchasers will be subject to an Investor Proxy Agreement (“IPA”). The IPA will authorize SeedInvest to act as representative for each non-Major Purchaser and take certain actions for their benefit and on their behalf. Please see a copy of the IPA included with the Company's offering materials for additional details.
Those investing over $5,000:
- 10% of amount invested worth of Gift Cards for our complimentary deliveries in SoCal.
- 25% OFF Coupon Code valid for 1 Year - If you live in SoCal and plan to use Crateful, this perk will essentially provide you with savings that might be equivalent to amount invested!
- Crateful’s chef apron and tote bag.
- Transferable to any other location Crateful will cover in the future.
Those investing before May 21st, 2018 will receive:
- 10% of amount invested worth of Gift Cards for our complimentary deliveries in SoCal.
- 20% OFF Coupon Code valid for 1 Year
- Crateful’s chef apron
- Transferable to any other location Crateful will cover in the future.
Those investing after May 21st, 2018 will receive:
- 5% of amount invested worth of Gift Cards for our complimentary deliveries in SoCal.
- 15% OFF Coupon Code valid for 1 Year
- Transferable to any other location Crateful will cover in the future.
The investors above, as well as all other investors will receive the following:
- Exclusive Crateful tote bag and chef’s apron
- Investor-only offers throughout the year, including events, sales, and launches.
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 Crateful's prior rounds by year.
Eat Crateful, Inc. (“the Company”) is a corporation organized under the laws of the States of California, and Delaware. The Company prepares and delivers artisan meals through Naturale LLC, its wholly owned subsidiary.
Prior to 2018, the Company operated exclusively as Naturale, LLC. In 2018, the Company reorganized as a corporation, with members of Naturale, LLC receiving shares of stock in Eatcrateful, Inc. in exchange for units comprising all membership interests in Naturale, LLC. The Company is now the sole member of Naturale, LLC.
The Company will conduct an equity crowdfund offering during calendar year 2018 for the purpose of raising operating capital. The Company’s ability to continue as a going concern or to achieve management’s objectives may be dependent on the outcome of the offering or management’s other efforts to raise operating capital.
The Company recognizes revenue when persuasive evidence of an arrangement exists, delivery has occurred, or services have been rendered, the fee for the arrangement is fixed or determinable and collectability is reasonably assured.
The Company records advertising expenses in the year incurred.
The Company prepares food for sale and delivery in a common food production space, which it occupies under an operating lease. The lease commenced in April of 2017, and runs through the end of March, 2018, at which point the Company will have the option to renew for an additional term. Future minimum payments due under the lease are $7,400 per month in rent, plus a $375 health fee, through the end of the lease term.
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 $69,428 in cash on hand as of February 28, 2018 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 hereto as Exhibit B.
Prior to 2016, the Company borrowed money for the purpose of financing the purchase of software and a vehicle (“the Loans”). The loans are governed by standard repayment terms and are secured by the assets they were used to purchase.
An estimated 45 million Americans go on a diet each year and spend $33 billion on weight-loss products, with the weight-loss market reaching $66 billion in 2017, with a wellness & fitness market that has grown to $168 billion in 2017.
At the same time, the ease of online ordering is causing more people to eat in. A massive 79 percent surge in the total U.S. food home delivery market over the next five years is predicted. Online Delivery, including on-demand, is modeled to grow from $20 billion in 2017 to $55 billion by 2022.
More specifically, the fresh-food meal-kit delivery (raw ingredients & do-it-yourself recipes) market was valued at approximately $4.65 billion and is forecast to reach $11.6 billion by 2022, with billions having already poured into this space.
You may notice that none of the above data refers to the Fully Prepared Meal Plans… and there lies the opportunity.
A Diet You Can Actually Stick To:
Prepared meal plans are, by far, more convenient than meal kits and, most importantly, can truly represent a daily long-term solution to dieting and weight loss. The problems with the Meal Kit model is inherent in the service: how many times a day, each week, can one afford the time to try out a brand new recipe, with no certainty of success? This model has never represented a sustainable long-term solution for the convenience-oriented dieting customer. Prepared meal plans, on the other hand, are a perfect fit for this rising need.
While it true that the delivery and meal kit markets are overcrowded, we believe it is a fallacy that our market is. The prepared meal space has no clear market leader, with no company having achieved national stature and a handful of small local companies swimming in an enormous, unexploited market.
We believe the primary reason why investors should not be over-concerned with defensibility is that this is a large market that could contain multiple successful national-level companies, of which, to date, there are none. Additionally, we believe the wealth of recipes, techniques and processes that Crateful has developed over two years of testing and development with one of the world’s best Chef are hard to be found in any recipe book and could only be developed with the same amount of testing, creativity and time.
Crateful's goal is to grow to over $20 million in revenues by having approximately 13,500 customers per year at an average ARPU of $1,500, which represents about 1 month of meals. The direct target population (with interests in Health, Fitness, Wellness, Diets and with Household Income greater than over $100k) in the Southern California market is approximately 3 million. To get to goal we need to convert approximately 0.45% of the target audience. Considering that during our Proof of Concept marketing campaign we had a 2.2% conversion rate, we believe this should be an attainable goal.
Risks Related to the Company’s Business and Industry
Our operations and revenue experience some seasonality in that the holiday months tend to have increased sales. Quarterly results may vary and are not necessarily an indication of future performance. The seasonality of Crateful’s revenue and operations could exacerbate fluctuations due to other factors, including costs of expansion, upgrades to systems and infrastructure, or changes in business or macroeconomic conditions.
We are subject to many U.S. federal and state laws and regulations, including those related to privacy, food safety, and law enforcement. These laws and regulations are constantly evolving and may be interpreted, applied, created, or amended, in a manner that could harm our business. The technology and use of the technology in our product may not be legislated, and it is uncertain whether different states will legislate around this technology, and, if they do, how they will do so. Violating existing or future regulatory orders or consent decrees could subject us to substantial monetary fines and other penalties that could negatively affect our financial condition and results of operations.
Failure by our transportation providers to deliver our products on time or at all could result in lost sales. We currently rely upon third-party transportation providers for a significant portion of our product shipments. Our utilization of delivery services for shipments is subject to risks, including increases in fuel prices, which would increase our shipping costs, and employee strikes and inclement weather, which may impact the ability of providers to provide delivery services that adequately meet our shipping needs.
Crateful be may unable to maintain, promote, and grow its brand through marketing and communications strategies. It may prove difficult for the Company to establish itself as a well known brand in the competitive meal delivery space, and the product may be in a market where customers will not have brand loyalty.
In order for the Company to compete and grow, it must attract, recruit, retain and develop the necessary personnel who have the needed experience. Recruiting and retaining highly qualified personnel is critical to our success. These demands may require us to hire additional personnel and will require our existing management personnel to develop additional expertise. The failure to attract and retain personnel or to develop such expertise could delay or halt the development and commercialization of our product candidates. If we experience difficulties in hiring and retaining personnel in key positions, we could suffer from delays in product development, loss of customers and sales and diversion of management resources, which could adversely affect operating results. Our consultants and advisors may be employed by third parties and may have commitments under consulting or advisory contracts with third parties that may limit their availability to us.
The development and commercialization of our products and services are highly competitive. We face competition with respect to any products and services that we may seek to develop or commercialize in the future. Our competitors include major companies worldwide. Many of our competitors have significantly greater financial, technical and human resources than we have and superior expertise in research and development and marketing approved services and thus may be better equipped than us to develop and commercialize services. These competitors also compete with us 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, our competitors may commercialize products more rapidly or effectively than we are able to, which would adversely affect our competitive position, the likelihood that our services will achieve initial market acceptance and our ability to generate meaningful additional revenues from our products and services.
The Company’s expenses will significantly increase as they seek to execute their current business model and expand on client base. Although the Company estimates that it has enough runway until end of year, they will be ramping up cash burn to promote revenue growth and fund other Company operations after the raise.
Crateful has raised several times previously. Because of that, the management team owns a smaller amount of the business than what is typical for a seed stage business.
Founders background. The management team may not come from a strong backgrounds in the food industry.
About 60% of the company's customers churn over the course of a 12 month period. Because of this, the Company will need to invest heavily in marketing to acquire and retain customers on a consistent basis. Beyond that, the company's overall revenue is heavily correlated to advertising/marketing budgets.
The reviewing CPA has included a “going concern” note in the reviewed financials. The Company will conduct an equity crowdfund offering during calendar year 2018 for the purpose of raising operating capital. The Company’s ability to continue as a going concern or to achieve management’s objectives may be dependent on the outcome of the offering or management’s other efforts to raise operating capital.
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.
The Company has a pending litigation. Crateful is involved in a breach of contract lawsuit with a vendor regarding posting social media as an influencer. The influencer demanded more than 10 times what she is owed, so Crateful filed a 998 Offer, which means if she does not exceed this amount, she will owe 100% of attorney's fees. The case is set for trial in the fall of 2018. Per Createful’s General Counsel, the Company does not believe the exposure to be more than $5,000 from the case. For legal fees, the General Counsel has done all the initial legal work as a partner in Crateful, and plans to work out some additional equity should this go to trial.
We may decide to reinforce the company’s cash position by securing loans for about $150,000 in the next month or so. We would use some of these funds to launch an initial, limited digital marketing campaign focused partly on new customer acquisition and partly on converting existing leads (subscribers who have not purchased in the past 6 months). As a result of these decisions and other factors we may decide to secure the above mentioned loan.
Risks Related to the Securities
The Crowd Notes will not be freely tradable until one year from the initial purchase date. Although the Crowd Notes may be tradable under federal securities law, state securities regulations may apply and each Purchaser should consult with his or her attorney. You should be aware of the long-term nature of this investment. There is not now and likely will not be a public market for the Crowd Notes. Because the Crowd Notes have not been registered under the 1933 Act or under the securities laws of any state or non-United States jurisdiction, the Crowd Notes have transfer restrictions under Rule 501 of Regulation CF. It is not currently contemplated that registration under the 1933 Act or other securities laws will be effected. Limitations on the transfer of the Crowd Notes may also adversely affect the price that you might be able to obtain for the Crowd Notes in a private sale. Purchasers should be aware of the long-term nature of their investment in the Company. Each Purchaser in this Offering will be required to represent that it is purchasing the Securities for its own account, for investment purposes and not with a view to resale or distribution thereof.
You may be subject to a different valuation cap from other investors in this Offering. The Company has an evaluated valuation cap of $5,000,000. However, investors that invest earlier in the Offering may be rewarded with a lower valuation cap. Investors that have their subscription received no later than May 30, 2018 will be issued Tier 1 Notes, which have a valuation cap of $4,500,000. Investors that have their subscription received after May 30, 2018 but no later than June 29, 2018 will be issued Tier 2 Notes, which have a valuation cap of $5,000,000. Investors that invest earlier in the Offering are rewarded with a lower valuation cap, and their notes may therefore convert at a lower price. Investments made by SI Selections Fund I, L.P. and through the SeedInvest Auto Invest program will always deemed Tier 1 Notes, regardless of the date the subscription was received. Other than the differences in the valuation cap described herein, there are no other differences between Tier 1 Notes and Tier 2 Notes.
We are selling convertible notes that will convert into shares or result in payment in limited circumstances. These notes only convert or result in payment in limited circumstances. If the Crowd Notes reach their maturity date, investors (by a decision of the Crowd Note holders holding a majority of the principal amount of the outstanding Crowd Notes) will either (a) receive payment equal to the total of their purchase price plus outstanding accrued interest, or (b) convert the Crowd Notes into shares of the Company’s most senior class of preferred stock, and if no preferred stock has been issued, then shares of Company’s common stock. If there is a merger, buyout or other corporate transaction that occurs before a qualified equity financing, investors will receive a payment of the greater of two times their purchase price or the amount of preferred shares they would have been able to purchase using the applicable valuation cap. If there is a qualified equity financing (an initial public offering registered under the 1933 Act or a financing using preferred shares), the notes will convert into a yet to-be-determined class of preferred stock. If the notes convert because they have reached their maturity date, the notes will convert based on the applicable valuation cap. If the notes convert due to a qualified equity financing, the notes will convert at a discount of 20%, or based on the applicable valuation cap. This means that investors would be rewarded for taking on early risk compared to later investors. Outside investors at the time of conversion, if any, might value the Company at an amount well below any of the valuation caps, so you should not view any of the valuation caps as being an indication of the Company’s value.
We have not assessed the tax implications of using the Crowd Note. The Crowd Note is a type of debt security. As such, there has been inconsistent treatment under state and federal tax law as to whether securities like the Crowd Note can be considered a debt of the Company, or the issuance of equity. Investors should consult their tax advisers.
The Crowd Note contains dispute resolution provisions which limit your ability to bring class action lawsuits or seek remedy on a class basis. By purchasing a Crowd Note this Offering, you agree to be bound by the dispute resolution provisions found in Section 6 of the Crowd Note. Those provisions apply to claims regarding this Offering, the Crowd Notes and possibly the securities into which the Crowd Note are convertible. Under those provisions, disputes under the Crowd Note will be resolved in arbitration conducted in Delaware. Further, those provisions may limit your ability to bring class action lawsuits or similarly seek remedy on a class basis.
You may have limited rights. The Company has not yet authorized preferred stock, and there is no way to know what voting rights those securities will have. In addition, as an investor in the Regulation CF offering you will be considered a Non-Major Investor (as defined below) under the terms of the notes offered, and therefore, you have more limited information rights.
You will be bound by an investor proxy agreement which limits your voting rights. As a result of purchasing the notes, all Non-Major Investors (including all investors investing under Regulation CF) will be bound by an investor proxy agreement. This agreement will limit your voting rights and at a later time may require you to convert your future preferred shares into common shares without your consent. Non-Major Investors will be bound by this agreement, unless Non-Major Investors holding a majority of the principal amount outstanding of the Crowd Notes (or majority of the shares of the preferred equity the notes will convert into) held by Non-Major Investors vote to terminate the agreement.
A majority of the Company is owned by a small number of owners. Prior to the Offering, the Company’s current owners of 20% or more of the Company’s outstanding voting securities beneficially own up to 21% of the Company’s securities. Additionally, the two founders Andrea Marotti and Emanuele Ponzo own two Class A Super Voting Shares. See details in Ownership Section. Subject to any fiduciary duties owed to our other owners or investors under Delaware law, these owners may be able to exercise significant influence over matters requiring owner approval, including the election of directors or managers and approval of significant Company transactions, and will have significant control over the Company’s management and policies. Some of these persons may have interests that are different from yours. For example, these owners may support proposals and actions with which you may disagree. The concentration of ownership could delay or prevent a change in control of the Company or otherwise discourage a potential acquirer from attempting to obtain control of the Company, which in turn could reduce the price potential investors are willing to pay for the Company. In addition, these owners could use their voting influence to maintain the Company’s existing management, delay or prevent changes in control of the Company, or support or reject other management and board proposals that are subject to owner approval.
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.
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 Crateful. Once Crateful accepts your investment, and certain regulatory procedures are completed, your money will be transferred from the escrow account to Crateful in exchange for your securities. At that point, you will be a proud owner in Crateful.
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 government-issued identification
- 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, Crateful has set a minimum investment amount of US $500.
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 Crateful does not plan to list these securities on a national exchange or another secondary market. At some point Crateful 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 Crateful 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 Crateful'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 Crateful's Form C. The Form C includes important details about Crateful'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 portfolio page
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 portfolio page.