Who can be an Investor? Am I eligible to invest on SmartCapital?
Currently, anyone in the United States, accredited or non-accredited, can invest in SmartCapital funds. We anticipate enabling international investors to invest in SmartCapital funds by the time the funds launch.
How can both accredited and non-accredited investors invest?
SmartCapital relies on Regulation A of Title IV (or “Regulation A+”) of the JOBS Act. A Regulation A+ offering allows private companies to raise up to $50 Million from the public. Like an IPO, Regulation A+ allows companies to offer shares to the general public and not just accredited investors.
What is the difference between an Accredited Investor and a Non-Accredited Investor?
An accredited is an investor with a special status under financial regulation laws. Generally, accredited investors include high-net-worth individuals, banks, financial institutions and other large corporations, who have access to complex and higher-risk investments such as venture capital, hedge funds and angel investments. The intent of the classification is to protect non-accredited investors, who may be less capable of recovering from loss due to risky investments.
In the United States, to be considered an accredited investor, one must have a net worth of at least $1,000,000, excluding the value of one's primary residence, or have income at least $200,000 each year for the last two years (or $300,000 combined income if married) and have the expectation to make the same amount this year.
Is there a maximum investment amount?
If you’re an non-accredited investor, then can invest a maximum of the greater of 10% of their net worth or 10% of their net income in a Reg A+ offering (per offering). If you’re an accredited investor, there is no maximum investment limit.
Is there a minimum investment amount?
Yes. The minimum investment is $1000 per fund. Furthermore, the minimum investment for your investment to be taxed as capital gains is $10,000. If you invest less than $10,000, your investment will be taxed as income.
How often will I receive distributions?
We do not expect to declare any distributions until the proceeds from our public offering are invested and generating cash flow from distributions of Venture Capital Fund or other assets. Once we begin to make distributions, we expect that SmartCapital Management will declare and make them on a quarterly basis, or less frequently as determined by the SmartCapital Management, in arrears. Any distributions we make will be at the discretion of SmartCapital Management, and will be based on, among other factors, our present and reasonably projected future cash flow, U.S. federal income and excise taxes on our undistributed taxable income and gains. SmartCapital Management will set the rate of distributions as is appropriate, and may change significantly over time. SmartCapital Funds, which invest in Venture Capital Fund shares, should not be considered as a source of steady returns. Please see the specific fund offering circular, and specifically the “Description of Our Common Shares — Distributions” and “U.S. Federal Income Tax Considerations” section for more details (www.SmartCapitalX.com/oc).
Any distributions that we make will directly impact our NAV, by reducing the amount of our assets. Over the course of your investment, your distributions plus the change in NAV per share (either positive or negative) will produce your total return.
What is the SmartCapital fund waitlist?
SmartCapital Platform may “Waitlist” investors who, after qualification of the Company Offering by the Staff but before closure of the investment process for such Company Offering, have expressed a desire to invest in the Company Offering. SmartCapital Offerings are reliant upon Regulation A, which allows qualified purchases to invest up to fifty million ($50,000,000) in any twelve month period under a Tier 2 Offering pursuant to Rule 251. Some fund offerings may have lower maximum investment subscriptions set by the SmartCapital Managers. Because SmartCapital allows unlimited redemption during the “Introductory Period”, it is possible for shares to become free during the introductory period, reducing the aggregate investment below the maximum investment allowable for the Offering. The expressed interest of investment including the waitlist may exceed the maximum investment allowable for the Fund. The total actual investment may NOT exceed the maximum investment allowable for the Fund.
If and when shares are made available through redemption during the Introductory Period, these shares will be offered to Waitlist Investors on a first-come-first-serve basis. Such a “waitlist” will be created and maintained in order to ensure that investors who have expressed interest early on will have an opportunity to invest in SmartCapital Funds. SmartCapital Management will set a deadline for Waitlist Investors to complete the various steps that constitute an investment in the Offering. The Waitlist Investor’s status on the Waitlist is rendered forfeit if the investor fails to complete the investment prior to the deadline. SmartCapital Management may then allow other Waitlist investors to invest.
Waitlist investors may from time to time not be granted redemption during the Introductory Period due to insufficient time between investment and the close of the Introductory Period. For this reason, Waitlist Investors are required to acknowledge this limitation during the investment process.
How is investing in a SmartCapital fund different than investing in a typical VC fund?
With typical VC funds, investors provide venture capitalists money to invest at their discretion over a period of a few years. The investor has no choice in what they invest in and how much money is invested in each company. With SmartCapital, once a fund is fully subscribed, all of the companies are invested in at the same time in one day. The companies and investment amounts in each company is known to investors before they invest.
Are SmartCapital funds risky?
Yes. We consider SmartCapital funds as high-risk-high-reward long-term investments. If we are unable to effectively manage the impact of these risks, we may not meet our investment objectives, and therefore, you should purchase these securities only if you can afford a complete loss of your investment.