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01
The basics
Yes. Congress created investment crowdfunding in Title III of the JOBS Act of 2012, which added Section 4(a)(6) to the Securities Act of 1933. The SEC’s rules for it, Regulation Crowdfunding (Reg CF, 17 CFR Part 227), have allowed offerings since May 16, 2016. They let a company sell securities online to anyone, accredited or not, through one SEC-registered funding portal or broker-dealer, with required disclosures and investment limits. States cannot require these offerings to register, but they can still act against fraud.
Anyone, within the limits below. You invest only on the platform of the funding portal (or broker-dealer) running the offering, and each offering runs on exactly one. Before accepting an investment, the portal must have you open an account, agree to receive documents electronically, review its educational materials, and confirm that you understand you can lose your entire investment. Each portal also sets its own account rules.
No. Reg CF is open to everyone, and accredited investors simply have no investment limit. For an individual, accredited generally means a net worth over $1 million, alone or with a spouse or spousal equivalent, not counting your primary residence. It can also mean income over $200,000, or over $300,000 with a spouse or spousal equivalent, in each of the last two years, with the same expected this year. A Series 7, 65, or 82 license in good standing also qualifies.
If you are accredited, there is no limit. If you are not, one limit covers everything you invest through Reg CF, across all offerings, in any 12-month period. If either your annual income or your net worth is less than $124,000, your limit is the greater of $2,500 or 5% of the greater of the two. If both are $124,000 or more, your limit is 10% of the greater of the two, up to $124,000. In one of the SEC’s own examples, income of $150,000 and a net worth of $80,000 give a limit of $7,500.
The same way as for accredited investor status. Net worth leaves out your primary residence and the debt secured by it, up to the home’s value. Debt above the home’s value counts against you, and so does any increase in home debt in the 60 days before you invest, unless it came from buying the home. You may use joint figures with your spouse, but then your combined Reg CF investments must stay within the limit for one person at that level. The SEC staff reads annual income as a calendar year, and the portal may rely on what you tell it unless it has reason to question your answers.
The law sets none. Each raise sets its own minimum, shown in its offering terms.
A firm registered with the SEC, and a member of FINRA, that runs Reg CF offerings online. The law defines it by what it may not do: give investment advice or recommendations, solicit purchases of the securities on its platform, pay anyone for solicitation or based on sales, or hold investors’ money or securities. Every Reg CF investment must be made on the platform of a registered funding portal or a registered broker-dealer.
The Financial Industry Regulatory Authority is a private not-for-profit organization responsible under federal law for supervising its member firms. It is registered with the SEC and works under the SEC’s supervision, but it is not part of the government. Every funding portal must be a FINRA member and follow FINRA’s Funding Portal Rules, which require its communications to be fair and balanced. Membership does not mean FINRA endorses a portal or any raise.
FINRA publishes a list of the funding portals it regulates, and it marks any that are suspended. Each portal’s registration is also on the SEC’s EDGAR system, and every Form C names the portal with its SEC file number.
No. The SEC does not rule on the merits of any Reg CF offering, or on whether its documents are accurate or complete. Every Form C must say so, including this legend: “These securities have not been recommended or approved by any federal or state securities commission or regulatory authority.”
02
Is Cosign a funding portal?
No. Cosign is not registered with the SEC as a funding portal or broker-dealer, and it is not a FINRA member. Today Cosign is a services company: it helps people form businesses and prepares raises, for flat fees. Cosign plans to apply to register as a funding portal, and it will not act as one before that registration is effective.
Any raise Cosign helps prepare runs on a partner funding portal that is registered with the SEC and is a member of FINRA. You open an account, invest, and cancel through the partner, on the partner’s website and under its rules. Any Cosign page about a raise names the partner, says it is registered with the SEC and a member of FINRA, and says that Cosign prepares raises for a flat fee and is not the intermediary.
Cosign helps the business get ready: forming the company, bookkeeping cleanup, and drafting the Form C and deal documents for the business and its advisers to review. Any required review or audit of the financial statements is done by an independent accountant, not by Cosign. The funding portal decides whether to host the raise, runs its own required checks, and handles the offering itself: investor accounts, investments, cancellations, and escrow. Cosign is not a law firm and does not give legal advice.
The business pays Cosign a flat fee for each service, agreed before the work starts. The fee does not depend on how much a raise brings in or whether it succeeds, and Cosign never takes a share of what a business raises. Anything Cosign publishes about a live raise says that the business pays Cosign a flat fee for raise preparation. The funding portal’s own fees are separate and are disclosed in the Form C.
No. Cosign takes no referral fees from funding portals and no payment tied to who invests or how much. It is never paid for anyone’s personal information, and federal rules also bar a funding portal from paying anyone for investors’ personal information.
Federal rules limit what can be said about a raise away from the funding portal. There, a notice that mentions the terms may include only a statement that the business is raising under Section 4(a)(6) through a named portal, with a link; the terms; and the business’s name, address, phone number, website, contact email, and a brief description. The terms mean the amount, the type of security, the price, the closing date, the use of proceeds, and progress toward the target. Cosign is paid by the business, so its posts about a raise keep to that format. The Form C and the public discussion live on the portal.
Cosign is not registered with the SEC or FINRA, because it does not act as a funding portal or broker. Like any company, it is bound by the federal antifraud rules in anything it says about securities, and by consumer protection law in the services it sells. The partner portals it works with are registered with the SEC and are FINRA members.
Cosign would then be a funding portal itself, open to examination by the SEC and FINRA and bound by the rules on this page. It could then charge fees tied to raises, and it would have to disclose how it is paid when you open an account, in each Form C, and on every transaction confirmation. The limits would stay: no advice, no recommendations, no soliciting, and no holding your money.
03
Raising
A company organized under the laws of a US state or territory, or the District of Columbia. The exemption is not available to companies that must file reports with the SEC as public companies, to investment companies and most private investment funds, to companies disqualified as bad actors, to companies behind on required Reg CF annual reports in the past two years, or to companies with no specific business plan, including shells planning to merge with an unidentified company. A creator raises through their own company, not as an individual. Cosign also applies the Standard, its published checklist, before it prepares a raise.
Up to $5,000,000 in any 12-month period, counting what it, its predecessors, and companies under common control have sold through Reg CF. The SEC staff measures that period on a rolling basis from each closing. Money raised under other exemptions does not count toward this limit. The $5,000,000 limit took effect on March 15, 2021, and the SEC’s 2022 inflation adjustment left it unchanged.
The offering statement a business files with the SEC before its Reg CF offering begins. It covers the business and its plan, its officers and directors, anyone owning 20% or more of its voting equity, the target amount and deadline, the price, the use of proceeds, the risks, the financial statements, and the funding portal’s fees. It is public on the SEC’s EDGAR system and on the portal, where no account is needed to read it. Material changes require an amendment, and after a sale the business must file an annual report within 120 days of each fiscal year end until its reporting duty ends.
It depends on the amount, counting what the business raised through Reg CF in the prior 12 months, and the maximum it will accept if that is more than the target. Up to $124,000: financial statements and key figures from its tax returns, certified by its principal executive officer. Over $124,000 and up to $618,000: financial statements reviewed by an independent public accountant. Over $618,000: audited financial statements, though a business raising through Reg CF for the first time may use reviewed statements up to $1,235,000. If statements with a higher level of assurance already exist, the business must provide those instead.
Reg CF is not available if the business, or certain people tied to it, has a disqualifying event within set look-back periods, such as a securities-related criminal conviction, a court injunction, a regulatory bar, or certain SEC orders. Covered people include its directors, officers, 20% owners, promoters, and anyone paid to solicit investors. The funding portal must run a background and securities enforcement check on the business and on each officer, director, and 20% owner. It must turn the raise away if it finds a disqualification or has reason to believe there is a risk of fraud. Cosign screens for the same events under the Standard before it prepares a raise.
Before filing a Form C, a business may ask the public whether there is interest in a possible offering. It may not ask for or accept money, or any commitment, binding or otherwise, until the Form C is filed, and every such message must say so. The business must file these testing-the-waters materials with its Form C, and the antifraud rules apply to them.
Because the law allows only an indication of interest at that stage. Any Cosign pledge screen for a real raise shows the three statements Rule 206 requires: “No money or other consideration is being solicited, and if sent in response, will not be accepted. No offer to buy the securities can be accepted and no part of the purchase price can be received until the offering statement is filed and only through an intermediary’s platform. A person’s indication of interest involves no obligation or commitment of any kind.”
No. You can withdraw a pledge at any time, and it never becomes an investment on its own. To invest, you make a separate investment commitment on the funding portal’s platform after the Form C is filed.
Yes, within limits. Away from the funding portal, any ad that mentions the terms must stay within the short notice described above and point to the portal. Anyone the business pays to promote the raise must use that same notice format away from the portal, and must disclose the pay with every post in the portal’s discussion channel.
The offering must be public on the portal for at least 21 days before any securities are sold. The business sets its deadline in the Form C. It may close early once it reaches its target, but only after those 21 days and with at least five business days’ notice to investors.
04
Your money
Read the Form C on the SEC’s EDGAR system or on the funding portal, where no account is needed. Ask questions in the portal’s public discussion channel, where the business must identify itself and anyone paid to promote the raise must say so in each post. Cosign does not answer investors’ questions about a live raise; the business answers them on the portal.
Directly to a qualified third party named by the funding portal: a bank, a credit union insured by the NCUA, or a registered broker-dealer that has agreed in writing to hold it for investors and the business. It is released to the business only after the raise reaches its target, the cancellation period ends, and at least 21 days have passed since the offering went public. Cosign never holds or touches it, and neither does the funding portal.
Every raise sets a target amount and a deadline in its Form C. If commitments do not reach the target by the deadline, no securities are sold, every commitment is cancelled, and the money is returned. Within five business days the portal must tell you why, state your refund amount, and direct the refund. A business may also accept more than its target, up to a maximum stated in the Form C.
Yes, for any reason, until 48 hours before the offering deadline. In the final 48 hours you cannot cancel, even if you invested during that window, unless there is a material change. If a business closes early, you can cancel until 48 hours before the new deadline.
If there is a material change to the terms or to the business’s information, the portal must notify you. You then have five business days to reconfirm. If you do not, your commitment is cancelled, and within five business days after that the portal must tell you and direct your refund. If the change comes within the last five business days of the offering, the deadline is extended so you still have five business days.
For one year after the securities are issued, you can transfer them only to the business, to an accredited investor, as part of an SEC-registered offering, to a family member, to a trust you control or one set up for a family member, or in connection with a death or divorce. After that year the Reg CF restriction ends, but other securities rules, the security’s own terms, and a lack of buyers can still make it hard to sell. Cosign does not run a resale market, and you may need to hold your investment indefinitely.
A Cosign Note is a revenue share note. The business pays holders a set percentage of its revenue, such as 4% of monthly sales, until total payments reach a cap, such as 1.5 times the amount invested. Payments rise and fall with sales and can stop entirely. The cap is a ceiling, not a promise: you may receive less than you invested, or nothing. A note gives you no ownership in the business, and its full terms, including what happens at maturity, are in the Form C.
A SAFE (Simple Agreement for Future Equity) gives you no shares today. It may convert into shares if a trigger named in the agreement happens, such as a later equity funding round or a sale of the company. If no trigger happens, it may never convert and may leave you with nothing. A SAFE usually makes no payments along the way, and terms vary, so read the agreement and the Form C.
You hold equity (shares, or units in an LLC), so you are an owner of the business. The business has the right, but not the duty, to buy your equity back after a minimum holding period, at the greater of a floor set in the terms or fair market value. You cannot require a buyback. If the business never uses that right and is never sold, you may have no way to sell your equity, and it may lose all its value.
You can lose your entire investment, so invest only what you can afford to lose. The SEC warns that investments in startups and early-stage ventures are speculative and that these businesses often fail. Distributions depend on issuer revenue and can stop. Pledges are withdrawable; sealed notes are illiquid. SAFEs and shares are hard to sell too, and later funding rounds can reduce your percentage of the business.
No. A Reg CF security is not a bank deposit, so the FDIC does not insure it. SIPC protects customers of failed SIPC-member brokerage firms against missing cash and securities, but it never covers a loss in value, and funding portals are not SIPC members. No government program protects a Reg CF investment against loss.
05
Taxes and data
If a business makes payments to you, it or its paying agent sends the IRS forms that apply, such as Form 1099-INT for interest of $10 or more. How each payment is taxed depends on the security and on your situation. Cosign does not give tax advice, so ask a tax professional.
Yes. The IRS counts the fair market value of goods or services you receive in a trade as income, for both people in the trade. Every Skill Sheet records that value for both sides, and each side gets a receipt. Trades are reported to the IRS on Form 1099-B where federal rules require it. Zero cash burn, fully reported.
The funding portal where you invest may verify your identity when you open an account, using its own procedures, to help prevent fraud and identity theft. It must also follow the SEC’s privacy rules for brokers. If Cosign verifies identity for its own services, the documents stay with a specialist verification vendor, and Cosign keeps only a reference to the result.
Only to work out your Reg CF investment limit. Today the funding portal collects them, not Cosign. If Cosign ever collects them, they will be encrypted, never displayed, never ranked, and never sold, and every access will be logged.
No. We never sell your data. If we ever share statistics with other companies, they will be aggregate, never about one person.
06
Rules we hold ourselves to
Cosign runs on 15 standing rules. These are the ones that touch you directly.
No. Investment money goes to the escrow agent the funding portal names, and payments for Cosign’s own services go through a payment processor. Cosign never keeps a balance for you.
No. Until Cosign is registered as a funding portal, it takes no fee of any kind tied to the size or success of a raise. It charges flat fees for its services instead.
No. Nobody at Cosign, and no Cosign software, including the Navigator, our AI front desk, gives investment, legal, or tax advice. Those questions go to accountable humans, such as a licensed professional you choose. Any list of raises Cosign shows is sorted by objective facts, such as newest or closing soonest, never by what anyone thinks is a good investment.
No. Cosign pays nothing for referring a backer, in cash, credits, fee discounts, or status, at any level. Introducing a business that wants to raise, or a client to a service provider, is ordinary marketing. If Cosign ever pays fees for referring clients to service providers, it will pay one level deep only, never on a referral’s own referrals.
They are calculated only from the business’s revenue from its customers. Money from a new raise is never used to make payments on an earlier one.
No. Service providers cannot pay for placement in the Grapevine, Cosign’s provider search. Status on Cosign, such as Weight or a Multiplier, cannot be bought and is never earned by bringing in other people. It comes only from a real track record.
No. What you receive comes only from the terms of the security you hold. Cosign shows spending only as collective, historical totals, never as a personal reward.
No. A raise is never bundled with a purchase, and buying a product never comes with a security attached.
No. Cosign has no points, credits, or tokens that work like money. A Skills trade is a direct agreement recorded on a Skill Sheet, and nothing in it can be spent anywhere else.
07
Paper Leagues and the waitlist
Practice. You make picks among creators and businesses, and picks are scored on tracked growth, with revenue verified where the business has connected it. No money is involved: the dollars are simulated, and the timestamps are real. Paper Leagues are open to ages 13 and up.
Only badges and your name on the season page. There is no entry fee and no cash prize, and nothing in a Paper League can be turned into money or into an investment.
A federal law, the Children’s Online Privacy Protection Act, sets special rules for collecting personal information from children under 13. Cosign does not knowingly collect personal information from anyone under 13. Investing happens only through a funding portal, which sets its own age and eligibility rules.
No. Your picks are your own, and Cosign does not suggest them. A Paper League never involves a security, and a high score is not a prediction of how any business will do.
A list of people who want to hear from us as Cosign opens. It asks for your email address, and optionally your first name, a handle, whether you want to back people, build something, or both, and a suggestion for our name. We use it to let people in as Cosign opens, in the order they signed up. Every email we send will include a one-click way off the list.
No. Joining is not an offer to sell, or a solicitation of an offer to buy, any security, and it is not a pledge. No money is asked for or accepted, and joining does not reserve a place in any raise.
08
Glossary
Regulation Crowdfunding (Reg CF). The SEC’s rules, at 17 CFR Part 227, for the crowdfunding exemption in Section 4(a)(6) of the Securities Act. A company can raise up to $5,000,000 in 12 months from the public through one registered intermediary.
Issuer. The business selling the securities.
Form C. The offering statement an issuer files with the SEC before a Reg CF offering begins. Amendments, progress updates, and annual reports use versions of the same form.
Funding portal. A firm registered with the SEC, and a member of FINRA, that runs Reg CF offerings online. It may not give investment advice, solicit investments, pay for solicitation or based on sales, or hold investors’ money.
FINRA. The Financial Industry Regulatory Authority, a private not-for-profit self-regulatory organization that works under SEC supervision and oversees broker-dealers and funding portals.
Accredited investor. A person or entity that meets the SEC’s income, net worth, or credential tests in 17 CFR 230.501(a). Reg CF investment limits do not apply to them.
Escrow. Money held by a qualified third party (a bank, an NCUA-insured credit union, or a registered broker-dealer) until an offering closes or is cancelled.
Testing the waters. Messages sent before a Form C is filed to ask whether there is interest in an offering. No money or commitment may be accepted.
SAFE. A Simple Agreement for Future Equity: a right to receive shares later if a trigger in the agreement occurs. It is not a share, and it may never convert.
Revenue share note. A note that pays holders a percentage of the issuer’s revenue until a cap is reached or the note ends. The Cosign Note is one.
The Buyback. Cosign’s name for equity that the issuer has the right to buy back on set terms. Legal documents call it a repurchase right.
Pledged. Cosign’s word for an indication of interest made before a Form C is filed. It binds no one and can be withdrawn at any time.
Sealed. Cosign’s word for an investment after the raise closes, the money leaves escrow, and the security is issued to you.