Due Diligence

Increase investor confidence and set yourself up for success

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FrontFundr

Our Due Diligence team performs a thorough review of all the companies we list on our platform. This not only creates confidence among our investors, it also ensures entrepreneurs are well equipped for a capital raise.

The Due Diligence Process

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Document Collection

We collect materials that support your business aspirations and past performance.

Analysis and Inquiry

We identify and discuss potential risk areas that would be of material interest to potential investors.

IRC Review

Our Investment Review Committee performs a final review on the company with the entrepreneur and key management.

Offering Documents

We work with you to ensure you have investment documents ready for the capital raise.

How to Handle 50+ Shareholders

As the name implies, crowdfunding is all about raising smaller amounts of money from a larger group of people. One area of concern for many entrepreneurs looking to raise funds is that having a large group of shareholders will result in a lot more admin work and bureaucracy. But in reality, if you go over 50 shareholders there isn’t much change or anything to worry about. The only real difference is that companies with more than 50 shareholders can no longer require on the "private issuer" exemption - this means that you will have to complete Form 45-106 F1 - Report of Exempt Distribution when you distribute securities. For your raises with FrontFundr, we can prepare and file this document for you. This leaves you free to focus on your funding efforts!

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Voting Trust Agreement (VTA)

A Voting Trust Agreement (VTA) is a pooling agreement designed to help manage a larger number of shareholders and to streamline your corporate governance. With a VTA new investors agree to assign some of their voting rights to a trustee (typically the Founder or CEO of the business) who casts votes for them when required.

The advantages of a VTA

  1. For your company it helps streamline processes and provides more freedom to undertake the day-to-day demands of running a business.
  2. For any future investors you plan to engage - such as VC firms - it eliminates any concerns they may have about having to deal with a large number of investors on your cap table. 
  3. And for existing investors it means they are able to enjoy all the benefits of being a part-owner in a company without having to deal with any day-to-day corporate management requirements of the company (which they entrust to the trustee). 
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Investment Review Committee (IRC)

An IRC includes members of FrontFundr’s Due Diligence team, key members of the senior management team, and outside investment professionals, who together review a business looking to raise funds on the FrontFundr platform.

Each company is required to complete IRC approval. The company’s management team also takes part in this meeting, and is expected to answer any questions from the committee and address any concerns they may have.

Ready to Raise?

 

Are you looking for capital to grow your business? Do you have a legion of loyal customers you could turn into brand ambassadors? Why not take our readiness survey and see if crowdfunding is a good fit for you!

 

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