Before you invest

1. Investing is not donating

When you donate on Go Fund Yourself, you give money away and get nothing back. When you invest, you buy a security: a SAFE, shares, a convertible note or a revenue sharing note. It can end up worth more than you paid, or nothing at all.

2. You could lose everything

Most startups and small businesses fail or grow slower than planned. If a company runs out of money, investors are usually paid last, after lenders and suppliers.

3. Your money is tied up

By law, you usually can’t resell a crowdfunding investment for a year. After that, there is rarely anyone to sell it to. Expect to hold it for 5 to 10 years, or longer.

4. Your stake can shrink

When a company raises more money later, it issues new securities. That can shrink (dilute) your share of the company.

5. How you might make money

• SAFE: You get shares later, when the company raises a priced round or is sold. Your price is set by the valuation cap or the discount, whichever is better for you. If neither happens, you may get nothing back.
• Convertible note: A loan to the company that earns interest and turns into shares at a future priced round, using the valuation cap or discount. If it hasn’t converted by maturity, the company may repay it or convert it.
• Common stock: You own shares in the company from the day the round closes. You make money if the company is sold, goes public or pays dividends.
• Revenue share: The company pays investors a share of its revenue every quarter until they’ve received the repayment cap. Payments rise and fall with revenue and aren’t guaranteed.

6. Your rights

• Your money is held in escrow, not sent to the company, until the round closes.
• You can cancel for any reason until 48 hours before the deadline.
• If the company reports a material change, you must reconfirm, or your investment is cancelled and refunded.
• If a round misses its target, everyone gets their money back.
• Companies must post an annual report every year after they raise.

7. Yearly limits

Under Regulation Crowdfunding, if your income or net worth is under $124,000, you can invest the greater of $2,500 or 5% of the greater of the two each year. If both are $124,000 or more, you can invest 10% of the greater, up to $124,000. Accredited investors have no limit. The limit covers crowdfunding investments on every platform, not just this one.

8. Fees

Investors pay a 2% transaction fee, up to $20, on each investment. It’s refunded if you cancel in time or the round doesn’t close. Companies pay 7.5% of what they raise, only if their round succeeds.