On this page, you will find comprehensive information about what crowdfunding is, who we recommend it to, how it works and you can also click through to the first task of the campaign launch process for you to decide about the launch of your campaign.

 At the bottom of the page, we included a few more useful articles from which you can learn about the valuation of startups and more about crowdfunding, and proceed to the Q&A as well.

Studying the below information does not substitude studying the General Terms of Use. The next step would be for you to proceed to the registration form.

What is Investment Crowdfunding?

Investment crowdfunding is an innovative, digital, platform-based campaign: an open, public call for prospective investors. The campaign can be advertised through social media to involve family, friends, followers (FFF’s), clients, and the community to convert them into investors, in exchange for transferable securities (dematerialised shares, convertible loans, loans). Investment sizes can be as low as 10 €, and can be collected from even thousands of FFF’s, alias crowd. The crowd can revoke its intention to invest until the 4th day after the last day of the Campaign, or, after closing, it can sell the shares via notifying the platform operator about the sell order, that will then be displayed at the portal. The investors ’s rights are detailed entirely in the Key Investors Information Sheet (KIIS), as regulated by ECSPR.

The Crowdfunding Service Provider is a licensed corporation that serves with an activity licensed under the ECSPR regulation, providing regulated services to registered, contracted, vetted, and approved Campaign Owners, and to institutional and private investors who are registered, identified, and authenticated on the platform.

Who Can Launch a Crowdfunding Campaign?

Equity crowdfunding campaigns are suitable for financing both B2B and B2C business models as well as real estate developments. The introduction of lending-based crowdfunding will be the next step for us, allowing for the formation of a credit portfolio.

The success of raising capital through crowdfunding largely depends on the true motivation of the founders and its team-mates. They all need to engage their own audience, their families, friends followers (FFF), partners, clients. Only entrepreneurs who truly want to and are willing to overcome obstacles can responsively consider launching a campaign. The Campaign is tailored to the needs of startups and SME’s, however, it is a team play in accordance that has rules, laws, best practices, it has its requirements and costs, and certainly require the Founders to be able to pitch, and engage its FFF.

How Does Crowdfunding Work?

Based on international best practices and relevant regulations, TokePortal.com signs a a Collaboration and Campaign Launch Agreement (CLA) with the Prospective Campaign Owner, detailing the tasks of the campaign launch and execution. This is followed by a detailed preliminary audit and evaluation (scoring) process, or Campaign Review, examining the business’s suitability for investment with the involvement of experts and mentors. During this, Campaign Documents can be prepared.

After successful evaluation and preparation, the Campaign Owner launches the pre-registration, and upon successful pre-registration, the Campaign itself.

After a successful Campaign Closing, business and legal due diligence begins, along with examining the fulfillment of the Disbursement conditions as included in the KIIS,  followed by the legal process necessary for capital increase; the Campaign readiness of the Campaign Owner largely determines when they can access the capital, which can only be used for the development goals advertised in the Campaign. Post-Campaign duties last through three years, during which the Campaign Owner publishes short but comprehensive reports quarterly to TokePortal and to its own Investors.  Investors will be able to trade shares through the platform.

From April, 2024 on, Campaigns can advertised to EU investors and can collect funds up to € 5M p.a.

Read about crowdfunding success stories in the blog post linked below.

What Are the Costs of Launching a Campaign and Raising Capital on TokePortal Platform?

TokePortal charges for either a success-based fee of 6.99% of the capital raised in the Campaign, plus so-called Carry fees or, a fixed fee. The costs of due diligence and capital raising are payable only in case of a successful campaign. The Campaign Owner pays a low fixed fee to TokePortal and their own marketing costs, about 2000 € in total.

How to Launch a Campaign?

The following showcased steps of the campaign launch process are shown in the following flow chart. Within 12-18 weeks, for as little as around € 2000 in total, Campaign Owners can take a chance on €5 M!

 

For definitions, visit the Glossary (Annex 1 of the GTC).

Raise the necessary capital from your followers and community! With crowdfunding, you can attract capital within 12-18 weeks, now up to €5,000,000 annually.

Starting from just €2,000!

(This is the amount you should budget for.)

The Campaign Launch Process

The Campaign Launch Process in detail

Submission of Application Online

Submit a short application online and sign the Non-Disclosure Agreement (click the image)

Registration on the Platform

Registration includes the prospective Campaign Owner’s team’s KYC test and profile creation. After registration, your future campaign manager will organize the online introduction pitch. Only users with verified profile can access the documents. (Profiles can be deleted anytime.)

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Personal or Online Introductory Pitch

During an in-person or online introductory pitch, crowdfundability or investment-readiness is previewed by the TokePortal team. The Campaign Launch and Cooperation Agreement (CLA) is presented).

Signing of the Campaign Launch and Cooperation Agreement

Deciding between the fixed fee and the success fee-based structure (6,99% success fee and 3% carry free until the end of the Campaign Period, as detailed in the Pricing Policy (PP). 20 hours of TokePortal’s work until Campaign Launch, and 10 hours after Campaing Closing is included in the price. Further hours are charged with a discount price of EUR 50/hour.

Weekly Meetings

Scheduling weekly meetings (until Campaign Closing) with the dedicated Campaign Manager. Memos are to be prepared/accepted by the Campaign Owner the same day. Monthly, a Certificate of Completed Services (COS) is issued. These include the number of hours incurred after signing the NDA and the contractual as well as pre-agreed ad-hoc costs. The COSs are issued quarterly for 3 years following the Campaign Closing.

Peer Group Analysis

Comparison with relevant international peers (crowdfunding campaigns) for the purpose of validating the enterprise value (pre-money valuation) and for learning purposes.

Scoaring

Included in the CLA fee, the Pre-campaign audit service is carried out by contracted Partners and Mentors of TokePortal that are introduced to the prospective Campaing owners.

The audit is carried out in the following 5 steps, until the completion of the Scorecard. The scorecard can include red flags, and recommendations that the Campaign Owner shall respond on, and take action in order to improve the value proposition until the Campaign Launch, or, at the latest, until the Closing, but before Reimbursement. It is highly recommended that Campaign Owners regularly consult with the advisers throughout the Campaign.

  • Legal DD: Criteria check – Incompatibility, “red flags”, necessity of SPV, basic due diligence is carried out. At Campaign Closing, a full-scope diligence is carried out, and in case of the red-flag-free report, the collected capital can be released from the Custodian account. Within a year after the Closing, another legal audit is carried out.

  • HR: The suitability of the team and the founders are leaders is reviewed. Within a year after the Closing, the HR strategy is reviewed.

  • Business and financial plan: Business model, risks, financial plan / pre-money valuation check is completed.

  • Online marketing suitability: Assessment of online marketing capabilities, checking online presence, activity, and reputation. An efficient online marketing strategy must be designed  and carried out.

IT: For tech projects, a thorough documentation-based check is completed

Preparation of the Campaign Management Plan (CMP)

The Campaign Management Plan (CMP) to be completed by the Campaign Owner encompasses marketing communication, FFF mobilization, and planning of investor meetings.

Publication of the Pre-Registration Page

Publication of a pre-registration page, that must achieve at least 500-1000 views per week), with a Campaign-related, dedicated email address.

Pre-Registration Phase (3-6 Weeks)

During pre-registration, within 3 weeks, indications of interest must be collected to reach to the Minimum Capital. Consultations with mentors should be conducted and the search for a lead investor should begin.

Finalizing the Campaign Structure

Before the Campaign Launch, the Campaign owner  (whether an SPV is needed or not, financing goals, etc.)

Meeting with Relevant Mentors

Meeting with relevant mentors is not only adviseable, but compulsory and free. Choose your favourite mentors from Mentorplatform.hu. Start to look for a potential lead investor as well.

Creation of an SPV

If the legal form of the Campaign Owner is not suitable for the issuance of transferable securities (shares, convertible bonds), then an SPV will be interposed according to the relevant laws.

Marketing Activities

According to the Marketing Communications Plan, proactive, campaign-focused communication and collaboration with TokePortal are key factors to a successful campaign. Marketing activities social media and internet-based lead campaigns, and include webinars, newsletters, pitch events, etc.

Completition of the Campaign Documentation incl. KIIS

Preparation of campaign documentation: the KIIS (the ECSPR equivalent of a Term Sheet) and additional marketing materials (presentation material, one-pager, business plan, campaign video, perks) shall be completed during the Pre-registration period.

Opening a Custodian Account

The Campaign Owner opens a Custodian Account at the partner bank of TokePortal, with viewing access and approval rights for TokePortal. Bank authorization letters are to be submitted.

Creating a Stripe Account

The Campaign Owner opens their own Stripe account, which is linked to the Campaign Page.

Approval of the Campaign Page

The Campaign Page is created and uploaded by the Campaign Owner and approved by TokePortal. If the documentation is complete, with special regard to the competition of the  KIIS, Following this, the Campaign is launched by the Campaign Owner in Closed Phase. The launch of the Open Phase also requires approval from TokePortal. The Campaign either expires or is closed by TokePortal but it can be extended twice, with good reason.

Online Investor Meetings

Using the links provided by TokePortal, recorded Investor Meetings are held every three weeks. Content and communication thereof is planned precisely content and afterwards a summary. This newsletter, along with the weekly newsletter, converts the most.

Storytelling

According to research, prospective Investors are convinced with a of 7-10 marketing actions or impulses. Therefore, the Campaign Owner’s storytelling must continuously build momentum. Mentors can help with this as well.

Lead Investor

The Campaign Owner must find a Lead investor to represent the crowd in the Post-transaction decision making. The proposed person or persons shall invest at least 15% of the minimum capital “to have skin in the game”, and to be approved by TokePortal. A tripartite agreement sets forth the rights and obligations in line with the KIIS.  The Lead Investor acts on behalf of the other investors, representing them in the decision-making process of the Campaign Owner. The open phase can only be initiated in the case of a signed agreement (or in case of verifiably advanced lead investor negotiations).

Non-Public (Closed) Phase - 2-3 Weeks

In the closed phase, only pre-registered users can invest. Early investors are the most valuable in the campaign, thus they receive special discounts at this time.

The closed phase can be launched when

  • the pre-registration landing page reaches a minimum of 500-1000 visitors per week,

  • the pre-registered capital reaches the Minimum Target Capital and

  • consultations have been held with at least 3 mentors, (etc.)

  • COS’s are signed and bills (if any) are paid.

Open Phase (4-6 Weeks)

Provided the Campaign Owner dedicatedly performed the pre-launch tasks very well (as set forth in the CMP), then the Open (public) phase they ‘just’ needs to be push through to the finish. Thus, preparation is the most important. During the weekly meetings, all help is offered by TokePortal to review and update the campaign. Continouos and conscious marketing activity is absolutely important.

After reaching 50% completion, the Campaign Owner shall start with the preparation for the legal and business Due Diligence in order to secure the funding as soon as possible.

Closing (3-6 Weeks)

After a Successful Campaign Closing (ideally earlier), the due diligence process begins, conducted by the lawyer and the financial expert of TokePortal, along with the preparation of Transaction documents required for submitting the capital increase at the Company Court where the Campaign  owner’s registered office, and begin to prepare the issuance of shares. This phase – with proper preparation – can also be very quick.

TokePortal compiles and shares investor data with the Campaign Owner. With this, TokePortal has fulfilled its contractual obligations.

Campaign Owner has fulfilled its Campaign-related obligations with submitting

  • the Shareholders’ Registry after having allocated all shares to the Investors

  • Concurrently with the submission of the share register, the Campaign Owner also reports the status of the fulfillment of the incentives and gifts promised in the Campaign.

Payment of Success Fee

Success Fee (6,99%) is payable within 15 days following the Last Day of the Campaign, based upon the indicated capital at the end of the Last Campaign Day. (The reason for this deadline is that the fulfillment of the Disbursement Conditions – which are contained in the KIIS and CLA – largely depend on the Campaign Owner.)

Issuance of Shares

After the Court of Registration registers the increase in capital, the transaction lawyer initiates the share issuance procedure. At this point, all conditions for Disbursement are met (on a DVP basis, i.e., delivery versus payment) and the capital is released from the Custodian account to the current account of the Campaign Owner.

Future sell or buy orders of the shares can be submitted to TokePortal, that will display it on the platform and connects prospective buyers and sellers via email, who can complete an OTC transaction.

Post-Campaign Tasks and Activities

After the Disbursement, TokePortal continues a quarterly overview of communication with investors for another 3 years, in accordance with its investor protection duties, in the interest of both the invesors and the Campaign Owner. This maintains investor trust and can even facilitate the launch of a subsequent campaign. Depending upon the capital collected,

  • maximum 2 post-audits are conducted as indicated above at Scoring,

  • within a month of each quarter, the Campaign Owner compiles a simple report in a pre-submitted newsletter about the advancements of the forecasted business development compared to the Campaign Documentation, including a general ledger extract.

  • GTC and the Complaint Policy handles events of unfulfillment or complaints.

Articles about crowdfunding, the campaign, company valuation, and regulations, such as:

  1. https://www.seedrs.com/insights/investing-features-insight/tips-equity-crowdfunding-success

  2. https://www.seedrs.com/academy/startup-valuation-calculator

  3. https://www.startengine.com/blog/equity-crowdfunding-strategies-for-startups/

  4. https://academy.musaffa.com/success-stories-in-equity-crowdfunding/

  5. https://tokeblog.hu/en/everything-you-need-to-know-about-startup-valuation-methods-1/

  6. https://tokeblog.hu/en/the-new-era-in-european-capital-markets/

  7. https://tokeblog.hu/elet-az-ipo-elott/

 

For further questions, contact us at hello@tokeportal.com or through the platform chat