- Backed by Stage One Ventures among other investors
- Intro-Blue’s model predicted investors' purchase decisions with more than 60% precision
- Merger with Blueshift Research brings 20+ investor customers to platform
- Founders bring 50 years of combined capital markets experience
- Up-selling premium services to customers less than 6 months into relationship and beginning to gain traction with corporations, brokers, investors, and research providers
- Total Amount Raised: US $301,500
- Total Round Size: US $2,000,000
- Series A :
- Minimum Investment: US $1,000 per investor
- : Crowd Note
- US $7,000,000 :
- Side by Side Offering
Traditional methods used by public companies to access institutional investors have bloated costs. Investors pay brokers more than $2B annually for facilitating corporate access. Corporate executives spend 10% to 20% of their time meeting with investors, many of whom are incompatible. This process becomes a waste of time and money for both investors and corporations. MiFID II regulations aim to protect the common investor from overpaying, mandating that brokers can no longer charge to facilitate corporate access. But this solution exacerbates the problem as brokers no longer serve as a filter and corporate executives continue meeting with incompatible investors.
- Corporations: Access events are expensive and time-consuming, and often lack purpose.
- Investors: Overloaded with too many event invitations, meetings are accepted without interest or preparation.
- Broker/Independent Research Providers: Meetings are booked to get a commission, and with little concern for compatibility.
Intro-Blue’s machine learning prediction engine targets the most likely institutional buyers and sellers of a stock in the next 90 days and offers independent research to promote efficiency and transparency throughout the corporate access and investment process.
Intro-Blue’s services facilitate higher-quality meetings by helping prepare both investors and corporate executives. We do this by offering centralized access to critical materials including video, models, commissioned research, and agenda materials.
The result is converting meetings with investors into actual investors, improving ROI on corporate access.
Higher meeting conversion = more investors, longer investor retention, and optimized investor position size.
Intro-Blue offers two product lines:
Intro-act: Machine learning-driven corporate access that connects investors and corporations through intelligent targeting and primary research, and identifies the most likely buyers and sellers of a stock in the next 90 days.Blueshift Research: Subscription research service for institutional investors and custom research for investors and corporations.
Our prediction engine is an ensemble of two machine learning methodologies. First, the core model is an aggregation of 5,000 unique machines, each tuned to replicate the trading behaviors of an individual institutional investor. Second, our all-funds model trains on activities simultaneously over the last several quarters and characterizes each investor’s sensitivity to ~600 factors on a sector basis.
Intro-act’s proprietary model assumes that fund managers make trading decisions in a predictable way based on data that fall into five categories: Macroeconomic, Technical, Valuation, Sentimental, and Fundamental.
Intro-act’s technology is related to 1) Data - proprietary data from corporate access events, 2) Domain Expertise - organizing and clustering of data sets, and 3) Analytics - layering different types of algorithms in an ensemble.
Intro-Blue combines recurring revenue subscription models with transactional upsells.
For Corporations: Intro-act is a price leader with an entry-level solution starting at $500/month. Higher service tiers are up to $2,500/month. Upsell services include videos, models, research, and peer benchmarking; we expect average Intro-act corporate customers to spend $20,000/year. Blueshift Research's Custom Reports for corporations range from $10,000 to $50,000.
For Research Providers: Subscription model starts at $250/month for access to predicted leads and analytics. Upsell includes support through sales channel partners (brokers) and a custom research procurement process with a ~25% commission take.
For Institutional Investors: Blueshift Research subscription is $5,000/month. Blueshift Research's Custom Reports for investors range from $10,000 to $50,000. Monetization of investors on Intro-act is in development. This will include research, access event preparation tools, peer analytics, and alpha signal generation.
For Brokerage Firms: Subscription model starts at $4,000/month for predicted leads and analytics.
INTRO-BLUE TARGET CUSTOMERS
- Corporate investor relations
- Brokerage corporate access, trading desks
- IR service firms
- Institutional investors
- Registered investment advisors
- Independent research providers
Intro-act has predictive accuracy at over 60% and a low standard deviation. Over 600 factors of influence in a 5-layer hierarchy are used to explain why an investor is compatible to make an investment, rather than relying solely on investor characteristics (AUM, style, etc.). Intro-act is embedded in the investor access process, rather than a standalone analytics tool. This will gain clients “soft-data” insights from each successive investor access event. Intro-act machine learning has a 3-year track record tracking 4,000 investors and 3,300 companies.
Blueshift Research and Intro-act are used at the time of the trade when information is at a premium. Blueshift Research clients are top-tier investors who also can purchase Intro-act services.
The combination of Intro-act and Blueshift provides the advantage of bringing content and domain expertise to our targeting and prediction engine with a vast potential audience of corporations, investors, brokers, research providers, and investor relations service firms.
Intro-Blue’s founders have over 50 years of experience (DLJ, Fidelity, First Call, OTR, Thompson Reuters) in capital markets, corporate access, and building investment research businesses. In 2016, co-founder Peter Wright and two Boston University professors investigated ways to apply machine learning to test whether all an investor needs to predict directionality of a stock is perfect knowledge of all buyers and all sellers, along with their size and influence. Initial testing showed that a specific investor’s next trade of a given stock might be easier to predict than the price trend of that same stock.
Wright brought the idea to Bill Jenks, CEO of Blueshift Research, a primary research firm. They realized that a regulatory change (MiFID II) compels corporate investor relations to become increasingly responsible for servicing and growing their investor pool but with fewer resources. Intro-Blue was created to help corporations fill this void. We use machine learning to predict investor behavior, analyze factors influencing investment decisions, and provide independent research services for investors and corporate IR officers.
Intro-Blue is a virtual company located throughout the U.S. and India.
The specific individual that we will sell to is the Investor Relations Officer (IRO). According to a survey from BNY Mellon, the IRO typically manages a budget of $330K/Yr (Small cap) to $816K/Yr (Large cap). Targeting is a top priority of spending across capitalization levels.
Please outline the regulatory landscape of your market, any regulations you must comply with, and how you comply with those regulations, if applicable.
- Investor access will be procured by investors directly (pulled), rather than brokers (pushed) —thus, IROs need to invest in targeting capabilities.
- Investors will get reduced access to decision support materials (research), especially on lesser-known stocks – thus, corporates will need to commission and sponsor more research (independent research will flourish).
- Investor access will be a critical driver of stock value as not all corporates will evolve at the same pace.
The barriers to entry for competitors of Intro-act include deep industry knowledge from both sell-side (distribution) and buy-side (consumption) of access meetings. As an early mover, Intro-act benefits from a richer analytics backbone to guide targeting. Additionally, relationships with smaller regional brokers and IR consultancies will put Intro-act at an advantage relative to competitors at winning investor access marketing mandates.
- We use more than 600 factors in a five-layer hierarchy to explain why an investor is compatible to make an investment, rather than relying solely on investor characteristics (AUM, style, etc.).
- Intro-act is embedded in the investor access process, rather than a stand-alone analytics tool. This will gain us “soft-data” insights from each successive investor access event.
Other non-direct, but adjacent competitors include:
- Surveillance Data (Q4, Nasdaq, Broadridge): Products are expensive and not predictive, rather explanatory of recent buyers – attributes latest block trades.
- CRM Systems (iPreo, Thomson Reuters, Nasdaq IR): Contact details and generic biographical “tags” – i.e. an analyst that covers small-cap technology stocks is “compatible” with a small cap software company.
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 $51,500 (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.
All non-Major Purchasers will be subject to an Investment Proxy Agreement (“IPA”). The IPA will authorize an investment Manager 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 Company's offering materials for additional details.
Intro Blue's founders have invested a non-controlling amount into Stage 1 Ventures, which invested $250k into this round, and such amount is counted towards the target minimum raise amount.
Early Bird Perks:Invest by February 1,11:59 p.m. ET and receive the next tier up from your investment perks (e.g. invest $10,000 and receive the $25,000-level perks). First 25 investors will receive the $10,000 perk if they do not qualify for a higher tier.
- $10,000 Investment: Get 2 complimentary Blueshift Research reports.
- $25,000 Investment: Get 2 complimentary Blueshift Research reports, plus an additional Custom Report on a company of your choice.
- $50,000 Investment: Get 2 complimentary Blueshift Research reports, plus 6 months of complimentary access to our prediction engine that offers insight into the supply/demand of each stock in the Russell 3000 Index. This is especially useful for brokers looking to fill the other side of an order.
- $100,000 Investment: Accredited investors who commit to a minimum of $100,000 will have 1-year of access to Blueshift Research and Intro-act content, along with our prediction engine, which offers insight into the supply/demand of each stock in the Russell 3000 Index.
- $250,000 Investment: Same benefits as the $100,000-investor, plus an invitation to dinner with the founders in Boston (airfare within the continental U.S. included) and an active role in the next product development.
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 Intro-Blue, LLC's prior rounds by year.
Intro‐Blue LLC (“the Company”) is a limited liability company organized under the laws of the State of Delaware, and headquartered in Needham, Massachusetts. The Company matches corporate executives with institutional investors most likely to buy or sell their stock in the next 90 days. Intro‐Blue combines an artificial intelligence (AI) platform with an independent primary research platform to prepare investors and corporates for productive meetings. Intro‐ Blue offers two product lines Intro‐Act and Blueshift Research. Intro‐Act is a machine learning‐drive corporate access connecting investors and corporations through intelligent targeting and primary research and identifying the most likely buyers and sellers of a stock in the next 60 days. Blueshift Research is a subscription research service for institutional investor and custom research for investors and corporations.
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 [CASH] in cash on hand as of [CASH DATE] 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.
There are multiple sides to corporate/investor access and research that total over $20B.
- Corporations spend more than $5B on investor relations. This market has grown ~5% Y/Y historically, but we believe this will likely accelerate due to MiFID II. The average IR budget for a U.S. public company is $650K/Year with 24% for outsourced services.
- Investors pay brokers more than $2B for corporate access. Investors’ commissions are in decline, but allocation to corporate access is stable with the average corporate access meeting costing $2K.
- Investors pay ~$15B for research services. Budgets are continuing to shift away from traditional brokers toward independent providers like Blueshift Research that participate in the curated Intro-act marketplace which centralizes access for meeting preparation.
Our TAM includes 49,000 actively traded companies, of which 9,000 are U.S. Our SAM in the U.S. includes ~6,000 companies, which are institutional grade. Within this, our initial target market is ~3,000 of these institutional companies that have the following characteristics: capital seekers that could benefit from direct transactions, such as an ATM (at the market); that need better investor attention; and that offer a transformational story.
Intro-act's competitive landscape is largely based on 2 core competencies: 1) accurately targeting the right person and 2) preparing investors to ask the right question.
- Brokers: strong research/weaker targeting
- IR Consultants: no research/targeting competence, but tends to focus on relationships vs. compatibility
- Meeting Procurement Platforms: no targeting or research
- CRM Providers: data provider with filters to "target"
- Surveillance Data: products are expensive and not predictive, are explanatory of recent buyers
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 tools and services. The sales process involves educating customers about the Company’s tools and services, participating in extended tools and services evaluations and configuring the tools and services to customer-specific needs. The length of the sales cycle, from initial contact with a customer to the execution of a purchase order, is generally 2 to 5 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.
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.
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.
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.
The Company may be unable to maintain, promote, and grow its brand through marketing and communications strategies. It may prove difficult for the Company to dramatically increase the number of customers that it serves or to establish itself as a well-known brand in the competitive FinTech space. Additionally, the product may be in a market where customers will not have brand loyalty.
The CEO and President are paid high salaries. The Company’s CEO and President are paid salaries that are high relative to the stage of the Company’s business, and personnel costs represent a significant portion of the Company’s operating expenses. High executive compensation results in a higher overall salary burn, which in turn shortens the runway for achieving desired traction and company milestones. High executive compensation can leave a negative impression with new or potential investors who may believe that conservatively compensated founder-CEOs are more focused on driving towards the long-term success of the business. It may therefore negatively impact the ability of the Company to raise funds.
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 FinTech 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.
The Company relies heavily on their technology and intellectual property, but they may be unable to adequately or cost-effectively protect or enforce their intellectual property rights, thereby weakening their competitive position and increasing operating costs. To protect their rights in our services and technology, they rely on a combination of copyright and trademark laws, patents, trade secrets, confidentiality agreements with employees and third parties, and protective contractual provisions. They also rely on laws pertaining to trademarks and domain names to protect the value of their corporate brands and reputation. Despite their efforts to protect their proprietary rights, unauthorized parties may copy aspects of their services or technology, obtain and use information, marks, or technology that they regard as proprietary, or otherwise violate or infringe their intellectual property rights. In addition, it is possible that others could independently develop substantially equivalent intellectual property. If they do not effectively protect their intellectual property, or if others independently develop substantially equivalent intellectual property, their competitive position could be weakened.
Effectively policing the unauthorized use of their services and technology is time-consuming and costly, and the steps taken by them may not prevent misappropriation of their technology or other proprietary assets. The efforts they have taken to protect our proprietary rights may not be sufficient or effective, and unauthorized parties may copy aspects of their services, use similar marks or domain names, or obtain and use information, marks, or technology that they regard as proprietary. They may have to litigate to enforce their intellectual property rights, to protect their trade secrets, or to determine the validity and scope of others’ proprietary rights, which are sometimes not clear or may change. Litigation can be time consuming and expensive, and the outcome can be difficult to predict.
We plan to implement new lines of business or offer new products and services within existing lines of business. There are substantial risks and uncertainties associated with these efforts, particularly in instances where the markets are not fully developed. In developing and marketing new lines of business and/or new products and services, we may invest significant time and resources. Initial timetables for the introduction and development of new lines of business and/or new products or services may not be achieved and price and profitability targets may not prove feasible. We may not be successful in introducing new products and services in response to industry trends or developments in technology, or those new products may not achieve market acceptance. As a result, we could lose business, be forced to price products and services on less advantageous terms to retain or attract clients, or be subject to cost increases. As a result, our business, financial condition or results of operations may be adversely affected.
Through our operations, we collect and store certain personal information that our customers provide to purchase products or services, enroll in promotional programs, register on our website, or otherwise communicate and interact with us. We may share information about such persons with vendors that assist with certain aspects of our business. Security could be compromised and confidential customer or business information misappropriated. Loss of customer or business information could disrupt our operations, damage our reputation, and expose us to claims from customers, financial institutions, payment card associations and other persons, any of which could have an adverse effect on our business, financial condition and results of operations. In addition, compliance with tougher privacy and information security laws and standards may result in significant expense due to increased investment in technology and the development of new operational processes.
We are subject to many U.S. federal and state laws and regulations, including those related to privacy, rights of publicity, 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.
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 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 Company has not filed a Form D for its prior offerings. The SEC rules require a Form D to be filed by companies within 15 days after the first sale of securities in the offering relying on Regulation D. Failing to register with the SEC or get an exemption may lead to fines, the right of investors to get their investments back, and even criminal charges. There is a risk that a late penalty could apply.
The Company had not yet formed a Board when they raised previous rounds. Although the Company is not legally required to have a board to conduct operations, boards play a critical role in effective risk oversight. They have since put a board in place.
The Company has outstanding liabilities. The Company has entered into loans, payable on demand, for $150,000, including a related party issued a promissory note to Bill Jenks, for $100,000. The lump sum is payable on demand and bears interest at 2%. During 2016, members of the Company advanced funds to to be used in operations. These advances, totaling $8,180 have no specific terms and are payable upon demand. The Company has expressed that the funds from this round will not be used to payoff this debt.
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.
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 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 a $7,000,000 valuation cap. If the notes convert due to a qualified equity financing, the notes will convert at a discount of 20, or based on a $7,000,000 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 the $7,000,000 valuation cap, so you should not view the $7,000,000 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 investment management 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 investment management 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 33% of the Company’s voting securities. 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.
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 Intro-Blue, LLC. Once Intro-Blue, LLC accepts your investment, and certain regulatory procedures are completed, your money will be transferred from the escrow account to Intro-Blue, LLC in exchange for your securities. At that point, you will be a proud owner in Intro-Blue, LLC.
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, Intro-Blue, LLC 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 Intro-Blue, LLC does not plan to list these securities on a national exchange or another secondary market. At some point Intro-Blue, LLC 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 Intro-Blue, LLC 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 Intro-Blue, LLC'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 Intro-Blue, LLC's Form C. The Form C includes important details about Intro-Blue, LLC'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.