I promised myself I wouldn't say "Wow" again, but I gotta say- this is getting exciting!  I'm just thrilled that so many of you are "getting" this dream of mine!  Not just the advisors, of course, and business partners, but YOU- the shareholder!  

As of this writing, we are at $327,376 from 690 investors! -in about a month! 

Wow. Oops, I did it again.  So, I've been doing my best to keep up with all the questions you all have been asking about Pencilish and how equity crowdfunding works (I think its been about 100 questions?) so please breeze through those as I'm fairly sure I already answered any question you may have.:) BUT- I have to say, I get it.  I didn't know anything about this new world of start up financing/investment until about 6 months ago.  I've been well educated by my partners, but I'm learning new stuff everyday!  SO, I went through the WeFunder FAQ and pulled out just a few of the answers to some of the most frequent questions you all have had.  Think of this as your CLIFF notes version/ introduction to WeFunder and Regulation CF investment BUT if you want to know more or don't see your answer here there is MUCH MORE information in the WeFunder FAQ.  I hope this helps and please share this with your friends that are quizzing YOU right now as you tell them how you invested in Pencilish Animation Studios! 

• What is Wefunder?

  We help everyone invest as little as $100 in the startups they love.

  You can think of us like “Kickstarter for investing”.

  Unlike Kickstarter, you are not buying a product or donating to an artist. Instead, you are investing in a business with the hope of earning a return.

  You decide which companies are worthy of funding. If the business does well, you may make money. If it doesn’t do well, you lose all your money.

  Either way, you join a community of other investors who seek to help the startup succeed. You sometimes get neat perks from the companies too.

• Is Wefunder regulated?

  Very much so! Our friends at the SEC and FINRA keep a close eye on us. Together, they wrote around 1,000 pages of regulations that we comply with.

• Where does my money go after I invest?

  Wefunder is prohibited by law from touching your money.

  When you invest, your funds are transferred to an escrow account, in custody of Boston Private Bank. If the fundraise succeeds, your money will be released to the startup. Otherwise, it will be refunded to you.

  • Can I easily resell my investment?

    It's safest to assume you cannot resell your investment to another investor. First, there is not yet a liquid secondary market like the New York Stock Exchange for private companies. Regulation Crowdfunding also specifically prohibits the resale of securities for one year, except to the issuer, an accredited investor, a family member, or their trust.

    -Will my percentage ownership be diluted?

    Yes. An equity stake will almost certainly be diluted.

    Successful startups host many rounds of financings, all the way to an IPO. For each financing, the startup issues additional stock to the new investors. As long as the value of the company increases with each funding round, this is healthy and normal. For example, the first investor in Facebook, Peter Thiel, originally purchased ~10% of the company for $500,000. By 2011, that stake was diluted down to under 3%, but estimated to be worth ~$2 billion.

    • What is a Lead Investor?

      The Lead Investor has vetted the startup and decided to invest on the same terms as those offered on Wefunder.  As of May 2020, WeFunder has made it mandatory to have a Lead Investor.

      More importantly, the Lead Investor directs the voting power of all Wefunder investors held by a Custodian. The Lead Investor fights for you and are incentivized to maximize the value of the company.

      When deciding whether to invest in a company, you should look at who the Lead Investor is, see how much they invested and why, and make your own decision on if you trust their judgement.

      • Do I have voting rights?

        All securities sold on Wefunder with a Lead Investor have voting rights unless explicitly stated otherwise.

        However, these voting rights are directed by the Lead Investor.

      INVESTMENT CONTRACT:

      What is a SAFE?

      First developed by Y Combinator in 2013, a SAFE grants an investor the right to obtain equity at a future date if the startup sells shares in a future financing. It has been historically used by top startups in Silicon Valley raising money from accredited angel investors. You should only invest in a SAFE if you believe that the startup can raise financing in the future from professional investors.

      SAFEs are used by early-stage startups because they delay the difficult task of figuring out how much a startup is worth. It is also a much cheaper and simpler contract than priced equity rounds, which may require months of negotiation and upwards of 30 pages of legalese costing tens of thousands of dollars.

      The number of shares you receive is determined at the next priced financing when professional investors – typically venture capitalists – set the price for preferred stock. Then, calculated by using the Valuation Cap and sometimes the Discount Rate, your SAFE often converts into shares at a lower price than the venture capitalists paid, since you invested earlier.

      The Valuation Cap is the most important term in this security. It puts a maximum price on the price of the stock - the lower the price, the more shares you will get. If you invest in a startup with a valuation cap of $8 million, and they later raise at a $20 million Pre-Money Valuation, the amount of stock you'll get will be priced off the $8 million number. But, if the next investors value the company at $4 million, that will be your price instead (perhaps further discounted by the Discount Rate).

      Unlike a Convertible Note, a SAFE is not a loan. As such, it does not accrue interest, have a maturity date, or have a legal obligation to be paid back. This makes it a simpler and cheaper way to finance a startup, and it typically better aligns with the intention of most early stage equity investors who never intended to be lenders (convertible notes are rarely if ever paid back in cash despite being a debt instrument – the startup just goes bankrupt).

      Onward and upward!  Join the Animation revolution- Invest in Pencilish Animation Studios!

      - Tom Bancroft, CEO