Frequently Asked Questions (FAQs)

Incolo helps founders scale off product-market fit, develop compelling positioning, train on how to go after funding opportunities, and cultivate a community of partners and other entrepreneurs to help them thrive.

Founders Seeking Investment FAQs

What are the most common questions founders should ask before pursuing investors?

What is Investment Crowdfunding?

What is Investment Crowdfunding?

Investment crowding is a funding vehicle to raise capital from community, customers, professional investors, and other supporters of businesses. Similarly to an investor working directly with a founder to invest, investment crowdfunding elevates that relationship by using the power of technology for investors to transparently view different business online in one location and determine what businesses they want to invest in based on a compelling business case. Investment crowdfunding offers the flexibility to democratize investing by using any securities exemption strategy (accredited or non-accredited investors) to facilitate the raise process in a way that is efficient and effective for both founders and the investors.

Is investment crowdfunding similar to Kickstarter and Indiegogo? Is it a nonprofit that gives grants to companies?

How does investment crowdfunding work? Is similar to Kickstarter and Indiegogo? Is it a nonprofit that gives grants to companies?

It’s not, but it is similar to Kickstarter because it provides an online platform for people to choose to put money in businesses. However unlike with Kickstarter where a person would get just a reward, perk or gift for contributing to an early stage B2C company campaign, investment crowdfunding allows both B2B and B2C companies to seek investors for their company.  In a Rev Share, the company is paying investors off top line revenue.  In an equity offering your community of investors have stake in your company.

Investment crowdfunding is not a nonprofit that provides grants or donations.

What are the benefits of investment crowdfunding?

What are the benefits of investment crowdfunding? Friendly founder terms, a larger community of financially invested agents to help a founder’s startup grow, and more.  Founders find vision aligned capital. They can create equity and/or debt offerings, and work with advisors to determine the terms of the offering.

Incolo readiness offerings and partnership with multiple leading national and regional investment platforms helps guide founders while leaving them in control.

What does it take to launch an investment raise on platform?

What does it take to launch an investment raise on platform?

Whether a founder is raising privately or publicly, foundationally, it’s about compelling business positioning. 

Funding follows

  • a compelling story with solid traction points for the stage of the startup
  • good outreach tactics and using a CRM to help manage investor flow, and
  • positioning the startup’s sound operational focus for how investors can help the company grow


Reg CF “testing-the-waters” rules rolled out on March 15, 2021 and have made it much easier to see who may invest and support the business beyond the investment.

How much capital has been raised through investment crowdfunding?

How much capital has been raised through investment crowdfunding?

Over $1B as of May 2021

  • The $1B includes Reg CF, Reg A+, and Reg D 506(c)
  • (As of April 2020) Over $368M has been raised from mostly non-accredited investors leveraging Regulation Crowdfunding (Ref CF) since 2016.
  • From 2016-2018: $107.9M raised
  • $121.3M raised in 2019, a 62% increase over 2018 ($75.8M)

Does Incolo only support investment crowdfunding for North Carolina investors and businesses?

Does Incolo only support investment crowdfunding North Carolina investors and startups?

No. While most of our founders are based in North Carolina, we also support startups with major impact on North Carolina or those with potential to grow through our partner channels.  Founders can seek investors across the country. We believe having a regional focus enhances the capital raising experience so community can come together to support businesses they know, love and trust. 

What is an accredited investor?

What is an accredited investor?

An accredited investor is usually defined as a person who has $1M in net assets (not including their primary residence), or a gross income for each of the last two financial years of at least $200K, or $300K if married and reasonably expects to continue to have that income. Details can be found here.  There are other definitions based on knowledge that were rolled out in late 2020.

New laws in 2016 for Reg CF supports investment being open to non-accredited investors in addition to accredited investors.  On March 15, 2021 these expanded to allow businesses to raise up to $5M from anyone. Example of Reg CF raises, Backstage, BatteryXchange, The Albemarle Hotel

What types of raises are available? Is it for accredited only?

What types of raises are available? Is it for accredited only?

It is for both accredited and non-accredited investors. Businesses can perform a private ‘traditional’ raise to ‘strategic’ or a known group of accredited investors.  This is done very effectively through online syndicates.  Businesses can also perform a public raise allowing anyone to participate.  Businesses can even perform a side-by-side (aka “Concurrent”) offering where a founder can strategically group accredited and non-accredited investors into separate exemptions, allowing founders to potentially raise more funding. 

A variety of traditional and new offering exemptions can be used by a business.


  • 504 – Private Accredited and Non-Accredited
  • 506(b) – Private Accredited


506(c) – Public Accredited

  • Regulation Crowdfunding (aka Reg CF) – Public for anyone to participate
  • NC PACES – NC Businesses only and public for any NC resident to participate
  • Reg A+ aka Online Public Offering (OPO) – Public for anyone to participate


Is investment crowdfunding only for certain stage startups or certain industries? Can it be used along with other capital options?

Is investment crowdfunding only for certain stage startups or certain industries? Can it be used along with other capital options?

Investment crowdfunding is a complementary funding vehicle. It can be used for new and established businesses. A variety of companies in a variety of industries (including B2B and B2C) have used investment crowdfunding to achieve their raise goals. It can also be a strategic approach in parallel or serially with other capital options depending on your business model and capital goals.

What is the typical investment crowdfunding raise amount? Any limits?

What is the typical investment crowdfunding raise amount? Any limits?

Based on results across the industry, typical raises are $100K minimum, $250K on average and can go into the millions based on the exemption chosen.

Exemption fundraising limits are as follows

  • 504 – usually up to $10M per year
  • 506(b) – no cap
  • 506(c) – no cap
  • Reg CF – up to $5M per year
  • NC PACES – up to $2M per year
  • Reg A+ – up to $75M

Equity or Debt Offering Types can be used.

When can I let potential investors know my campaign is going to launch?

When can I let potential investors know my Reg CF campaign is going to launch?

Reg CF – now you can advertise right away under a “testing-the-waters” (TTW) provision, but you do have to include some information to let people know you cannot collect money yet.  Post raise, there are some limitations on what you can communicate off platform.  Check out this article for more information.


What can I say after launch on Reg CF?

After the Form C has been filed, off platform you can share communication that:

  • Don’t mention “terms of the offering”; and
  • Just contains “tombstone” information.


“Terms” in this context are:

  • The amount of securities offered,
  • The nature of the securities (for example, debt or equity, common or preferred, and so forth),
  • The price of the securities, and
  • The closing date of the offering period.


Note: This is not intended to be legal advice or comprehensive in how to solicit your crowd of potential investors for all use cases.  Therefore, here are some securities attorneys you can choose to engage with if you don’t have your own.

Are there investor minimums to get started?

Are there investor minimums to get started?

It depends on the business raising and the type of raise they are conducting.

Minimum investment sizes can be as low as $100 and are usually no higher than $1K for public rounds.

Minimum investment sizes for accredited investor offerings (Syndicated rounds, private rounds, public accredited-only rounds) usually start at $1K.

The minimum investment amount for investment crowdfunding offerings is usually much lower than traditional angel investor offerings. This allows new and seasoned investors to diversify their investments across more offerings to reduce risk.

How do I make money and when do I get my money back?

How do I make money and when do I get my money back?

It depends on the offering. If a business offers a Revenue Share or Dividends, an investor could potentially see money being returned within 3 months.

If a business offers a convertible note, SAFE, or another equity instrument, returns don’t occur until there is some type of exit event (e.g. an Online Public Offering (OPO) or Initial Public Offering (IPO)). OPOs might occur within 3-4 years. IPOs typically take at least 7 years and may never occur.  Investing in startups is risky.  Never invest more than you are willing to loose.  

What type of returns can I expect?

What type of returns can I expect?

Assuming the business being invested in is successful, then the return depends on the terms that they offered. Some examples might be:

  • If it’s a Main Street business offering a Revenue Share loan, returns of 1.5x to 3x for the period of the loan are typical offerings.
  • If it’s Stock with a dividend, an investor may see 6-12% annualized returns after profitability is achieved.
  • If an investor invested in a high growth startup, returns might be 5X, 10X, 20X or in extreme cases 1,000X+ (e.g. every $1K invested in Uber in the 1st round was worth an estimated $1.5M on exit)


Rev Share Example: If a businesses offers a 1.5X Revenue Share, projected revenues may be based on taking 5 cents on every $1 in revenue over 5 years.  If revenues are lower than projected, it’s paid back slower.  If they are higher than projected, it’s paid back sooner. A person investing $100 would expect to be repaid $150 by the end of the 5 years.  Unlike a fixed % loan, businesses pay out less during seasonality of lower revenue.

Equity Example: An investor invests $100 in a potential high growth company at a $3M valuation cap on a convertible note (we’ll assume no interest or discount rate to keep this example simple).  The payout is based on upon an ‘exit’ event (usually 5-10 years from the time of the offering). The company exits in 7 years at a value of $60M.  Assuming no dilution post conversion, the $2,000 is returned to the investor, $60M / $3M * $100

Many other scenarios and results are possible. Always carefully review and understand the terms of the offering, as this greatly impacts the potential return.  In all cases, the business must be successful in order for it to see a return. If the business fails, which most do, an investor could loose part if not all of his/her investment. An investor should never invest more than he/she can afford to loose.

Other COVID-19 Specific FAQs to Help Prepare for a Raise


Past Success

While the stock market was collapsing, the investment crowdfunding markets showed their best quarter in Q1 ever… even in the midst of COVID-19.  This seems to show that the community of individuals who want to invest locally and take a chance on businesses they love, know and trust can still be viable are very active.  We don’t know if this will continue to keep up, but for now, it’s still potentially a source of significant capital.

Localstake is a broker dealer with deep expertise in supporting investment offerings for small businesses.  They’ve worked with hundreds of retail businesses to help assess, plan and execute capital raises turning customers, fans and supporters into of funding.  CrowdfundNC’s partnership with Localstake, combined with CrowdfundNC’s Launch Readiness assets for raise preparation aims to accelerate the opportunity to funding for our North Carolina business community.  This enables them to seek funding from ANYONE who wants to invest.  If your business has a community who loves, knows and trusts you, this program can help!

Is this Kickstarter, GoFundMe or a Grant?

No, but it’s similar.  Investment Crowdfunding allows individuals to literally share in future revenues or profits of your company.  More on this.

Is this limited to food and beverage business owners?

All types of businesses (with limited exception) are welcome to apply to raise capital.  However, this COVID discounted fee initiative is geared towards revenue generating businesses who had operations significantly impacted by the shutdowns.  Specifically it is designed for existing food, beverage, and boutique businesses.

How much can my company raise?

Unlimited technically.  There are various ways to do this, but on a Reg CF (anyone can invest) offering, your business can raise up to $1.07M.  Raises larger than $250K will take longer to prepare due to some regulatory requirements, but we have all of the partner resources your company needs to prepare.  Also businesses raising more than than $250K may not qualify for the discounted COVID fee structure.

As a registered Broker Dealer, Localstake can underwrite any securities exemptions, so whether you’re raising $50K, $500K or even $2M+, you’re covered.

Past Successes, including ones over $1.07M

How long would it take to get an investment campaign up and running for more than $107K?

If raising more than $250K on a Reg CF, the primary difference is that the SEC requires that a company has independently reviewed financials.  If you don’t have someone to do this, Localstake has providers they’ve worked with who can perform this for as low as $1,200 (assuming the financials are in good working order already).   If a company has performed a Reg CF before AND wants to raise > $535K up to $1.07M audited financials are required. 

How much will my raise cost?

If you qualify for Localstake’s COVID-19 assistance revenue share program, all you will pay is a 5% on the total funds raised, paid to Localstake upon successful close. All upfront fees are waived. Businesses that don’t qualify or want to raise funds through other structures can still apply to raise, but may be subject to fees up to the standard fee structure determined on a case by case basis.  

What are some of the reasons my business would not qualify for the discounted fees, but can still raise in this way?

CrowdfundNC and Localstake are doing what we can to support all entrepreneurs during this time.  Localstake’s discounted fee COVID initiative prioritizes the capacity of the team towards companies who had existing revenue generating operations before COVID and have been substantially affected by the shutdowns.  The COVID assistance revenue share program is designed primarily for businesses who typically have around a full year of historical revenue, not available to startups. The business must provide historical financials for 2019, and 2018 if available. Localstake will also want to understand the overall impact that COVID has had on your business in 2020. There is no minimum revenue threshold, but your historical revenues will have a major impact on the amount of capital you are able to raise. Companies in any industry may apply, but this program is generally geared towards businesses in the retail and food and beverage spaces.

What are other ways that may help increase my raise’s potential chances of success, but cost money?

Increase the potential success of your raise with a dedicated marketing effort.  Some companies may find it beneficial to leverage paid social media marketing and other services.

Other Fees

For raises above $107K that leverage Reg CF (anyone can invest), the SEC requires independently reviewed financials.  If you don’t have someone to do this, Localstake has providers they’ve worked with who can perform this for as low as $X (assuming the financials are in good working order already).  If a company has performed a Reg CF before AND wants to raise > $535K up to $1.07M audited financials are required.  

Other offerings beside Reg CF, eg. Reg D 506(b) do not have this requirement but may have other requirements to get started, such as investor accreditation status.

When Do I Pay Investors Back?

It depends on whether you choose to offer debt or equity.  More on returns.

When Can I Let Fans know the Investment Campaign’s Going to Launch?

See FAQs: When can I let potential investors know my campaign is going to launch?

What if my business is not allowed to operate by law during this time?

We understand some businesses are not allowed to operate during this time, so this does not necessarily prevent you from being approved to launch your campaign.  In this case, consider telling your crowd how you’ll use these funds to help you grow and return their investment post COVID.

How Do I Motivate Investors?

Whether you offer Debt or Equity, it’s important to prepare an investor marketing plan which includes what you will ask your investor base to do beyond invest $ in you.  Not all of your investors will participate in these requests, but the ones that do can help democratize your sales and marketing efforts.  Remember, as investors, they don’t just get a perk…they are financially vested in your success as a business.

What Do Other Founders do to Help Improve Their Chances of Success?

The information you provide to Localstake NC to make sure all i’s are dotted and t’s are crossed from a regulatory perspective can also be positioned to tell a compelling story to a potential investor for why they may want to consider investing in you.

Founders who need additional help with this can leverage CrowdfundNC’s Launch Readiness services. Founders have the option to seek 1 on 1 help with us or in collaboration with other founders in CrowdfundNC’s Launch Readiness cohorts.

Before signing up though, let’s provide some examples of investor positioning you may want to consider on your own.


How do I position recently rocky financials to investors?

How did COVID impact your business and how will you be resilient moving forward?  Painting a picture of how funding helps your financial growth is very important.  Let’s talk about dotting i’s crossing t’s first.  Your business is required to provide 2019 Financial Statements and (if available), 2018 and a general overview of performance / impact from COVID in 2020. 

If your business uses Quickbooks Online you can connect your account to Localstake within your profile for Localstake to review.  Also Localstake may also require you to connect your businesses bank account for verification. At a minimum, by Reg CF guidelines your business is required to supply GAAP formatted statement.


Potential Investor Positioning 

Investors invest because there is a potential financial return. Otherwise you’re just asking for donations.  Put yourself in your potential investors’ shoes and think through how your business + investment offering offers them a return.

  • Prior to COVID, we were growing at X% MoM and as of the end of Feb revenues [decreased, stayed flat, etc.].  
  • However in March we were able to [something you did that helped revenues and makes you viable].
  • With funding we anticipate we can [something you can do] to still grow revenue during COVID and plan to provide [what opportunity will you provide investors to potentially accelerate their return post COVID] post COVID.


How do I tell about my amazing team?

Background & Credit Checks are required to be performed on all Directors, Officers, Principals, and any 20% or more owner.


Potential Investor Positioning

Our team members have helped us pivot during COVID by [something they did].  We plan to leverage funds we raise to [something to protect your team/accelerate growth that involves your team]. 


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