- Products currently sold through 69 golf courses (400%+ trailing four month account growth)
- Advisors include Rick Nordvold (Ex-CFO, Golf Galaxy), Will Holdsworth (Ex-President, Muscle Milk), Joni Leimala (Ex-Chief Strategy Officer, GroupM)
- Spending on golf apparel in the U.S. is estimated to reach ~$2B by 2019
- IP includes a provisional patent application filed on the first traction point golf sandal
- Amount raised:
- Seed :
- Minimum Investment: US $500 per investor
- : Crowd Note
- US $2,500,000 :
- Side by Side Offering
At Swannies, we’re creating modern golf essentials to replace the stuffy, elitist perceptions of the game’s past. Our goal is to change the image of golf by building not just an apparel company but a lifestyle brand - a brand that understands and resonates with young golfers both on and off the course.
As many courses struggle with an aging group of regulars, golf is adapting to attract a younger clientele with the advent of Top Golf, the Golf Skate Caddy, and other fun ways to enjoy the game. The golf apparel industry, however, has been slow to catch on.* While millennials are playing more rounds of golf than any time in the last 20 years, many are put off by the high price tag and stale designs of existing golf brands.* There are 15.5 million casual golfers in the US, many of whom shy away from buying golf shoes and apparel because of their limited use and high price tag.*
Swannies is a lifestyle apparel brand for the young, casual golfer, providing a fresh alternative to traditional brands. We utilize our lifestyle branding, modern designs, and affordable prices to appeal to this group in a way that sets us apart from other companies. We strive to make the game more inviting and to be the go-to brand for the 12+ million millennials who are interested in golf but don’t have a company, in our opinion, that understands their needs.
*Disclaimer: These statements are based on management's personal observations, conversations, and experiences.
**Angel Investor Tax Credit**
Swannies is part of an angel investor tax credit program that offers any accredited investors of Swannies' investing over $10,000 a 25% year-end tax credit.*
*Disclaimer: To learn more about the Minnesota Tax Credit Program, please visit http://mn.gov/deed/business/financing-business/tax-credits/angel-tax-credit/for-investors.jsp. Rules, restrictions, and fees may apply. It is advised that you consult a tax professional.
Join us for an investor event with Swannies on Thursday, March 23rd, at 6:00 PM PST. RSVP required. To RSVP, please visit the following link: https://swannies.splashthat.com/.
Swannies creates lifestyle products, including the first of its kind soft spike golf sandal, for young and casual golfers at an affordable price. The Swannies brand and team -- being young, casual golfers ourselves -- appeals to this group from three key angles:
- Price - affordably-priced apparel throughout retail and wholesale channels. Our products are on average 40% cheaper than most of our major competitors'
- Style & Selection - modern lifestyle designs and clothing catered to be worn both on and off the course
- Branding - targeting younger, casual golfers that we believe are currently being unrepresented by any one specific brand
According to our knowledge, traditional brands such as Nike, Under Armour, and FootJoy cater towards middle-aged golfers at a high price point with stodgy designs. We do not believe they can effectively attract younger millennials without redefining their brand image and jeopardizing their existing customer base.
Swannies began – as all good things do – on a frigid spring round in northern Minnesota. By most sane people’s standards, it was too cold to be out on the links, much less in sandals.
As Matt trotted up to the first tee in his traditional outfit of a bulky sweater, jeans, and sandals, Sam inquired, “How come you don’t wear golf clothes anymore? You’d probably outdrive me one of these days if you wore a shred of normal golf gear...” Matt responded, “I don’t need golf gear to shoot lower than you, Swanny. Plus, I can’t find anything that fits my style and doesn’t break the bank these days.” Matt didn’t think anything of it until they walked off the 18th hole and Sam offered, “Let’s just create it then”.
Little did Sam know what he had started with that comment. The idea for the Swannies brand was born. The two quickly added a third team member, Adam, to help create their first product - the world’s first traction point golf sandal for wear on and off the course. Lifestyle golf apparel came soon after, and in the following months the team grew to six members to keep up with manufacturing, sales, order fulfillment, and design.
The team is a highly motivated group sharing a passion for golf, having grown up around the game as players, caddies, junior golf instructors, pro shop employees, and fans. Our innate passion and enthusiasm for the game resonates throughout the Swannies brand and products. We continue to be maniacally focused on making golf more inviting by focusing on genuine experiences that value life on and off the course.
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.
|Terms & Description|
|Investor Types||Accredited Only||Accredited and Non-accredited|
|Round size||US $500,000||US $500,000|
|Offering cap||N/A||US $500,000|
|US $0||US $45,100|
|Minimum investment||$20,000||US $500|
|US $100,000||US $100,000|
|US $2,500,000||US $2,500,000|
- Invest $2,000 - Experience a personal golf wardrobe makeover, courtesy of Swannies ($250 value in apparel)
- Invest $10,000 - Receive a new product from each quarterly collection release FOR LIFE
- Invest $25,000 - Join the Swannies Team on an all expenses paid RV trip to the 2018 Waste Management Phoenix Open in Arizona
- Invest $75,000+ - Travel to Whistling Straits for an all expenses paid golf trip package for two with the Swannies founders
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 Swannies's prior rounds by year.
Our financial statements can be found in the data room below.
We began operations in October 2014. During the periods ended December 31, 2015 and 2014, the Company only transacted business with individuals through various venues and therefore did not have any significant concentrations of revenue.
Based on our cash flow projection, we do not foresee a future need for financing. We anticipate that this round together with the proceeds from our concurrent 506(c) offering should get us through 2017 and profits will fund us after such time based on our projections. If working capital money is needed to fund inventory, we will likely go the route of a working capital loan. We do not have a bank line of credit currently, but will apply for a working capital loan if needed.
Results of Operations
We sustained net losses of $38,794 and $866 for the periods ended December 31, 2015 and 2014, respectively, resulting in accumulated deficits of $39,660 and $866 as of December 31, 2015 and 2014, respectively. As of December 31, 2015, we had recorded a customer deposit liability of $12,000 due to the fact that we had received cash from our Kickstarter campaign but had not yet shipped product. As of June 10, 2016, we delivered to all Kickstarter purchasers and we recorded the funds received as revenue.
We have seen golf course account growth over the past four months going from 15 to 55 courses. We hope this growth will continue as we travel to new urban areas across the country. We have also seen an increase in online revenue month over month that should continue as the brand becomes more recognized nationally.
For the period January 1, 2016 through November 1, 2016, our gross revenue was approximately $70,125 and our gross profit was approximately $33,525. After subtracting expenses, our earnings before interest, tax, depreciation and amortization was approximately $12,601.
Gross margins are currently about 45% based on a high volume of wholesale accounts where margins are about 40% and a lower volume of e-commerce transactions where margins are about 60%. We anticipate gross margins improving to 50-55% in 2017 and up to 55-60% in 2018, based on an increase in retail sales where margins are better, as well as lowered inventory costs as we use economies of scale to buy in bulk and bring custom embroidery in-house which has been 5-10% of current margins.
Liquidity and Capital Resources; Future Trends
As of December 31, 2015, we had $1,989 in cash and equivalents and $10,640 in inventory. As of November 1, 2016 we had approximately $14,000 in cash, $12,000 in accounts receivable, and $14,000 in sandal and apparel inventory.
Our monthly burn rate is currently $2,500 mainly consisting of $2,000 in loan payments per month. The other money comes from operating expenses (gmail, website, etc.) and paying part-time employees for fulfilment and design work. $1,350 of that burn rate will end in October 2015 once one loan is paid off. However, we anticipate that the burn rate will increase roughly $6,000 per month due to salaries for Adam Iversen, Matthew Stang, and sales persons.
We may rent office space, if it makes sense, for approximately $500 - $1,000 a month, but believe that there should be no material change in overhead costs. Most work is done remotely on the road, so the company is of the opinion that office space probably still doesn’t make sense in 2017. The only capital expenditure we are planning to make is roughly $3,000 worth of machinery to do in-house custom designs and embroidery for wholesale accounts instead of having that done by another company.
In January 2016, we borrowed $4,998 and $30,023 at an interest rate of 7.75% from WomenVenture, a micro lender in Minneapolis, Minnesota. We are currently paying monthly instalments of $100.71 and $604.96 respectively on these loans. The principal balances and all accrued but unpaid interest thereon are due and payable in full on April 20, 2021. The promissory notes are subject to the terms and conditions of a credit agreement, which contains positive and negative covenants. We also executed a Collateral Verification stating that the collateral listed in the loan application as collateral for the loans had an estimated value of $32,000. The proceeds of these loans were used for start-up capital required to buy the production molds to make our sandals and the first batch of 1,000 sandals. Proceeds were also used for development of the apparel side of the brand.
In September 2016, we borrowed $15,310 at an interest rate of 7.75% from WomenVenture. We are currently paying monthly instalments of $1,336 on this loan. The principal balances and all accrued but unpaid interest thereon are due and payable in full on October 20, 2017. The loan is subject to late charges of $25 per month for any payment not received within ten business days of the due date. The promissory notes are subject to the terms and conditions of a credit agreement, which contains positive and negative covenants. We also executed a Collateral Verification stating that the collateral listed in the loan application as collateral for the loans had an estimated value of $32,000. The proceeds of this loan are currently being used to fund inventory required to fulfill purchase orders from golf course accounts for 2017.
Recent Offerings of Securities
We have made the following issuances of securities within the last three years:
- On November 18, 2016, we granted 757,500 Class C Founder Units to Matthew Stang in reliance on Section 4(a)(2) of the Securities Act, for consideration of $21,167 and the performance of long-term company objectives.
- On November 18, 2016, we granted 330,300 Class C Founder Units to Samuel Swanson in reliance on Section 4(a)(2) of the Securities Act, for consideration of $3,400 and the performance of long-term company objectives.
- On November 18, 2016, we granted 370,300 Class C Founder Units to Adam Iversen in reliance on Section 4(a)(2) of the Securities Act, for the performance of long-term company objectives.
- On November 18, 2016, we granted 182,500 Class D Performance Units to Joe Hau in reliance on Section 4(a)(2) of the Securities Act, for consideration of $4,450 and the performance of long-term company objectives.
- On November 18, 2016, we granted 192,500 Class D Performance Units to Mike Hau in reliance on Section 4(a)(2) of the Securities Act, for consideration of $2,853 and the performance of long-term company objectives.
- In 2015, we sold 40,000 Class B Preferred Units to Paul Stang and Sue Stang in reliance on Section 4(a)(2) of the Securities Act, for consideration of $10,000.
- In 2015, we sold 30,000 Class B Preferred Units to Doc Stang and Gen Stang in reliance on Section 4(a)(2) of the Securities Act, for consideration of $7,500.
- In 2015, we sold 20,000 Class B Preferred Units to Ben Berger in reliance on Section 4(a)(2) of the Securities Act, for consideration of $5,000.
- In 2015, we sold 12,000 Class B Preferred Units to Mary Kittelson in reliance on Section 4(a)(2) of the Securities Act, for consideration of $3,000.
- In 2015, we sold 8,000 Class B Preferred Units to Phyllis Dandelet in reliance on Section 4(a)(2) of the Securities Act, for consideration of $2,000.
- In 2015, we issued 20,000 Class B Preferred Units to Kevin Unterreiner in reliance on Section 4(a)(2) of the Securities Act, in exchange for services.
- In 2015, we issued 37,500 Class B Preferred Units to Joni Leimala in reliance on Section 4(a)(2) of the Securities Act, in exchange for advisor services.
We used these proceeds from each of these offerings for general business purposes.
We have not undertaken a valuation of the company.
Swannies has begun to establish itself as the millennial golf brand - something that we believe our competitors and the golf industry as a whole have had trouble doing.
Market Trends and Growth Drivers
The following trends support growth in our targeted golf market:
Golf apparel spending growth: The golf apparel industry is expected to grow by 4.33% CAGR to $1.7 billion by 2019 in the US alone.
Increasing millennial participation: There are nearly 7 million golfers in the US aged 18-34, playing over 100 million rounds annually, more than any time in the past 20 years. As new golf formats become more inviting to young, casual golfers, the game is expecting growth from the additional 12 million millennials that express interest in golf yet do not consider themselves golfers.
Global expansion of the game: Globally, an estimated 80 million golfers play on close to 40,000 courses. There are 100 countries with active golf course projects, with 30% of the growth occurring in Asia.
Golf apparel is dominated by about a dozen major players, including the likes of Nike, Under Armour, FootJoy, Adidas, and Travis Matthew. These companies are great at marketing to older golfers and generally cater to a demographic that is not price sensitive (e.g. $75/polo).*
Our target customer group is not and cannot be effectively reached by established brands who aren’t willing to abandon their existing customer base to attract millennial golfers. We will utilize our lifestyle branding, modern designs, and affordable prices to uniquely target this highly valuable group.
*Disclaimer: These statements are based on management opinion, observations, and experiences.
We are selling convertible notes that will convert into shares or result in payment in limited circumstances, and in certain circumstances only at the option of the company. These notes do not have a maturity date and only convert or result in payment in limited circumstances. 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 (and only a financing using preferred shares will count for this purpose), the conversion price will be set for conversion into non-voting shares of a to-be-determined class of preferred stock. Investors in the Regulation CF offering will be considered non-major investors under the terms of the notes offered. Only major investors will have their notes converted at this time. Notes held by non-major investors will only convert at the sole discretion of the company or in the event of subsequent corporate transaction. Further, the notes convert at a discount of 20% or based on a valuation cap, meaning investors would be rewarded for taking on early risk compared to later investors. But you won’t know how much your investment is worth until that happens. The outside investors at the time conversion, if any, might value the company at an amount well below $2.5 million valuation cap, so you should not view the $2.5 million as being an indication of the company’s value. Further, the interest on the notes is accrued interest, therefore you will not be paid interest payments on these notes. If you choose to invest, you should be prepared that your notes will never convert and will have no value.
It is unclear how the Crowd Notes would be interpreted by a court if we were forced into litigation. We are using Crowd Notes in this offering. Crowd Notes are designed to offer equity in the company at a future date when specified conditions occur. However, it is unclear how a court in Minnesota would interpret the provisions of the Crowd Note in relation to our organization as a limited liability company. Should we be forced to litigate the terms of the Crowd Note, it is possible that a court would not interpret the note as we do, thereby impacting the terms of the investment and possibly providing greater rights to some investors and lesser rights to others.
We have not assessed the tax implications of using the Crowd Note. The Crowd Note is a type of debt security that does not include a set maturity date. As such, there has been inconsistent treatment under state and federal tax law as to whether the Crowd Note can be considered a debt of the company, or the issuance of equity. Investors should consult their tax advisers.
We have elected to be taxed as a partnership. We are organized as a limited liability company and have elected to be taxed as a partnership rather than a corporation. This means that the tax liabilities of the company pass through to the members rather than being taxed at the entity level. In the case that Crowd Notes were determined by a court to be equity of companies whose investors are treated as members you may also incur tax liabilities that are passed through to members.
We will eventually be required to reorganize the company as a corporation to convert the notes in this offering. We are currently organized as a Swannies Footwear LLC in Minnesota. Minnesota is our home jurisdiction. However, the Crowd Notes in this offering work best for Delaware corporations, and we may decide to reorganize as a Delaware corporation prior to the conversion of the notes, whether it is due to a subsequent equity financing, acquisition of the company, or maturity of the Crowd Notes.
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 under the terms of the notes offered, and therefore you will receive shares of a Shadow Series with certain limited rights. Shadow Series shareholders may receive a different liquidation preference, may not have voting rights, and will receive quarterly business updates by the company but may be limited in other information and inspection rights.
This is an early stage company. It has limited history, clients, and revenues. If you are investing in this company, it’s because you think this is a good idea, that the founders can execute it better than their competition, that they can price inventory right and sell it to enough people that the company will succeed. You are taking all these things on faith, because it’s impossible to know what will happen. We are dependent upon additional capital resources for the continuation of our planned principal operations and are subject to significant risks and uncertainties, including failing to secure funding to operationalize our planned operations or failing to profitably operate the business.
We have a small management team. We depend on the skills and experience of a small management team. If the company is not able to call upon any of these people for any reason, its operations and development could be harmed.
We will need more people to join our company. We will need additional employees, mostly sales and design personnel. There are no guarantees that our personal golf networks and the connections we have developed over the past year will enable us to find the right people to bring onto our team. We may not be able to find hungry and independently motivated sales representatives who can create their own schedule and be willing to travel across the country. We may not be able to find design personnel from our target markets. We plan to pay sales reps on commission, but our ability to raise sufficient capital may have an impact on our ability to attract and hire the right talent.
The company may need more money. The company might not sell enough Crowd Notes both in the Regulation CF offering and our concurrent 506(c) offering to meet its operating needs and fulfill its plans. If that happens, the company plans to take out a working capital loan against its accounts receivable at the time. If it is not able to do that, it may cease operating and you will get nothing. Even if it sells all the Crowd Notes it is offering now, it will probably need to raise more funds in the future, and if it can’t get them, it will fail. Even if it does make a successful offering in the future, the terms of that offering might result in your investment in the company being worth less, because later investors might get better terms.
We are likely to operate at a loss for some time. We have had limited revenue producing activities, and we anticipate that we will initially sustain operating losses. Our ability to become profitable depends on success in selling our apparel to golf courses, golf teams, and other retail outlets, as well as our ability to form strategic partnerships. There can be no assurance that this will occur. Unanticipated problems and expenses are often encountered in offering new products, which may impact whether we are successful. There can be no assurance that we will ever become profitable. If we sustain losses over an extended period of time, we may be unable to continue in business.
The company will depend on revenue from its golf apparel. The company will only succeed (and you will only make money) if there is sufficient demand for this golf apparel, people think it’s better than the competition’s apparel, and the company has priced the apparel at a level that allows the company to make a profit and still attract business. The company is vulnerable in general to any developments that affect the golf industry as a whole, and particularly vulnerable to any developments that affect the clubs with which it does business.
Our cash flow is seasonal and provides a cash gap of up to seven months. We may have cash flow issues due to business seasonality. For our wholesale accounts, we book orders anywhere from 1-6 months in advance and pay for the inventory periodically throughout that time frame. We do not receive payment until one month after shipment of goods, providing a cash gap of up to seven months.
We may face problems associated with inventory control. The company currently has a limited amount of inventory, on purpose, so that its cash is not tied up in inventory that does not sell. We plan to expand our apparel offerings, but do not want to put ourselves in a situation where we have a ton of inventory on hand that will not sell. As a result, we may have higher demand for our products than we are able to meet.
The company is controlled by its officers and directors. Matthew Stang, Adam Iversen, and Samuel Swanson currently hold the majority of the company’s voting stock, and at the conclusion of this offering will continue to hold the majority of the company’s voting rights. They hold Class C Founder Units, which have the right to elect two Founder Governors and two Independent Governors. Class A Preferred Units have the right to elect one Class A Governor, but Class A Preferred Units have not yet been issued. Investors in Crowd Notes may not have the ability to control a vote by the unitholders or the Board.
Weather and natural disasters may disrupt the industry. Golf is an outdoor sport, and therefore the company’s ability to sell its products is partially dependent upon the weather. Rain, lightning, or other weather may adversely impact demand for our products. Seasonal weather conditions may shorten the golf season. Additionally, extreme weather conditions such as hurricanes and floods, or natural events such as earthquakes may affect operations at golf courses with which we do business.
The trends that we are anticipating in the golf industry may not happen. The golf industry in general may decrease in size. Golf apparel spending may not grow. Millennial participation in golf may not increase. We may not be able to adapt to changes in the industry as quickly as we anticipate.
Unauthorized access to the company’s records, systems, and technology will expose the company to litigation, reputational, and financial risk. The company uses third party e-commerce platforms and cloud-based systems to store customer information. The company’s records, systems, and technology are vulnerable to computer viruses, physical or electronic break-ins and similar disruptions, which could lead to interruptions and delays in the services and operations, and loss, misuse, or theft of data. Additionally, problems faced by third party providers of the company’s e-commerce platforms and cloud-based systems could harm the company. The company’s insurance may not cover some or all of these risks.
We may not receive patent protection for our filed patent application. We filed a nonprovisional patent application in June 2016 that has not yet been published, titled GOLF SANDAL. Publication of the patent application will occur in approximately 18 months following the application date. There is no guarantee that we will receive a patent on the concept of the Golf Sandal.
We have a number of competitors more established than we are. There are other companies providing products similar to ours. Some of these companies are large established companies with resources far superior to ours. Accordingly, they may be able to develop products better than ours and may succeed in convincing clients to purchase them faster.
Our financial review includes a “going concern” note. Our ability to continue as a going concern for the next twelve months is dependent upon our ability to generate sufficient cash flows from operations to meet our obligations and/or to obtain additional capital financing from our members and/or third parties. No assurance can be given that we will be successful in these efforts. These factors, among others, raise substantial doubt about our ability to continue as a going concern for a reasonable period of time.
We have outstanding loans. We have entered into two small business loan agreements to finance new sandal molds and various inventory-related costs. Swannies owes monthly payments on these loans through April 2021. Company inventory has been collateralized against the loans, and the loans are subject to positive and negative covenants.
You can’t easily resell the securities. There are restrictions on how you can resell your securities for the next year. More importantly, there is no market for these securities, and there might never be one. It’s unlikely that the company will ever go public or get acquired by a bigger company. That means the money you paid for these securities could be tied up for a long time.
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 shares, 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 Swannies. Once Swannies accepts your investment, and certain regulatory procedures are completed, your money will be transferred from the escrow account to Swannies in exchange for your shares. At that point, you will be a proud owner in Swannies.
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.
The Crowd Note is a security which allows crowd investors to largely realize the same economic benefit traditional investors have historically received when investing in startups. For a convertible note round, investors under $20,000 will have their investment convert into preferred equity at liquidity event, locking in a share price at a discount to the next priced round, and will have an interest rate on their investment. Investors investing $20,000 and over will convert into preferred equity at the subsequent priced round at a discount to that priced round and will have an interest rate on their investment. For a priced round, investors under $20,000 will have their investment convert into preferred equity at a liquidity event, locking in the share price of the current round.
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, Swannies 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 shares 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 shares. Right now Swannies does not plan to list these shares on a national exchange or another secondary market. At some point Swannies 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 Swannies either lists their shares 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 Swannies'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 Swannies's Form C. The Form C includes important details about Swannies'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 shares have been issued. If you have already funded your investment, your funds will be promptly refunded to you upon cancellation. To cancel your investment, let SeedInvest know by emailing email@example.com. Please include your name, the company's name, the amount, the investment number, and the date your made your investment.
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 shares 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 email us at firstname.lastname@example.org. Please include your name, the company's name, the amount, the investment number, and the date your made your investment.