iNVESTOR FAQS - Frequently asked questions
What is equity crowdfunding?
Equity crowdfunding is similar in function to a regular crowdfund where a company uses a donation, pre-order or rewards model to raise capital from the ‘crowd’. The key difference is that with equity crowdfunding, rather than pre-selling a product, the businesses are selling ownership in the company - to share in any profits and success of the company as it grows. It's similar to buying stock in a publicly-traded company on the stock exchange.
FCSB's partnership with Backers combines equity crowdfunding with blockchain technology. Backers uses blockchain (Ethereum) technology along with traditional private equity to issue tradable security tokens under a regulated dealer (108 Securities).
Who can invest?
There are different regulatory guidelines and restrictions on the geography of equity crowdfund investors for Canada and beyond. For FCSB's first equity crowdfund, we are using the Ontario Securities Commission NI 45-108 equity crowdfunding exemption to sell shares in our first round to anyone 18 years of age or older with a valid Ontario address.
How much can I invest?
Investment caps for equity crowdfunds are outlined by the Ontario Securities Commission.
A non-accredited investor can contribute up to $2500 in a single crowdfund round and $10 000 annually.
An accredited investor can contribute up to $25 000 in a single equity crowdfund and $50 000 annually.
An investor is deemed accredited based on annual income ($200,000 individually or $300,000 with spouse) or net financial assets ($1 million excluding home) or net assets ($5 million).
How do I make returns?
The rights to distributions for investors are outlined within our offering document and shareholders agreement. For FCSB's first equity crowdfund offering, investors are buying into our operating company and all of its revenue streams and future activities.
Forest City SynBio plans to create an investment fund that will be a subsidiary of the operating company & will take a 10-15% equity stake in each startup that participates in FCSB's Accelerator program. Traditionally, an accelerator fund would issue dividends to its investors based on one of three (liquidity) events occurring with a company that the fund invested in:
1) The company is acquired by another company, at which point you would sell your shares;
2) The company goes public on a stock exchange, at which point you may sell your shares on the open market;
3) The company generates excess cash and decides to issue dividends to their shareholders.
Crowdfund investors will also have the opportunity to sell their shares on a secondary market that is currently under development by Backers.
How does the Backers secondary market work?
Backers will be publishing a digital securities exchange in the next 6-12 months to allow shareholders to sell their shares to interested buyers on a secondary market. This means that you can sell your shares in FCSB before a liquidity event (described above) through this exchange at whatever the fair market value of the shares is at the present time. Alternatively, you can continue to hold your shares securely in the digital wallet provided to you by Backers to benefit from long-term returns on your investment.
How long will it be until I see returns?
Biotechnology startups take time to develop. The startups coming through Forest City SynBio's doors will be at a very early stage, and you can expect to wait at least 5-10 years before they successfully take their product to market. They may experience a liquidity event sooner than that (eg if a larger company acquires them or they list on a public market) but in general biotechnology investing is a long game.
Investors who do not wish to wait 5-10 years for substantial returns from a liquidity or profitability event can sell their shares on the secondary market to be made available by Backers in the next 6-12 months (above).
How do I Invest?
The overall process takes about 5-10 minutes. Keep in mind this is a regulated process by the Ontario Securities Commission. All information required to become a shareholder of FCSB is necessary for the protection of the company and each investor.
Review the materials on FCSB's crowdfund portal which will be hosted on Backers.ca. There will be an offering document, shareholders agreement, subscription agreement, pitch deck, and pitch video.
Create a Backers.ca account.
Verify your identity by providing a photo of yourself (eg using your webcam or phone) & a picture of a piece of ID (eg driver's license or passport).
Purchase Backers credits that you can redeem for FCSB shares.
This step will have you log in directly to your personal banking website where you will authorize the transaction with your transit, institution, & account numbers.
Back on the Backers site, select the crowdfund you would like to participate in (ie click the 'invest now' button on FCSB's page)
Once you sign the subscription agreement and shareholders agreement & complete your transaction, your funds will be transferred to a secure trust account, you will be issued a digital wallet containing a record of your transaction.
After the crowdfunding round is closed, FCSB will submit the list of investors to the Ontario Securities Commission, & shares will be officially issued. You will receive a confirmation & your shares will be deposited in your digital wallet in the form of securities tokens.
Will I get updates on Forest City SynBio's progress?
We will be as transparent as possible about our company's progress and intend to provide investors with regular updates. As an added level of security, FCSB will also provide our investors with our annual audited financial statements.
Our social media channels are also a great way to stay in the loop: