What is CrowdOut Capital?
CrowdOut Capital LLC, and its affiliates, provide an online marketplace lending platform that middle market companies use to raise capital.
How does CrowdOut make money?
When CrowdOut makes a loan to a company, we collect an origination fee that is typically 1% to 3% of the loan amount. When investors receive interest on their loans, we collect a servicing fee that is 10% of the interest received. Our financial outcome is tied to yours: this arrangement incentivizes CrowdOut to make loans that continue paying interest.
What is a marketplace lending platform?
Our marketplace lending platform is an online marketplace for companies seeking capital and for accredited investors. CrowdOut uses proprietary screening criteria and data analytics to assess companies before underwriting loans. Once approved, loans are posted to the marketplace platform. Investors use the platform to research loans and invest by funding a portion of the loan.
Loans to borrowing companies are divided into many segments referred to as Notes. Investors purchase Notes in $1,000 increments (minimum 25 notes, at CrowdOut’s discretion), which entitle the investor to a portion of the loan’s principal and interest payments.
What type of company does CrowdOut loan to?
CrowdOut loans to companies that are in a strong financial position in strong industries. Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) is an indicator of a company’s financial performance: we focus on profitable, middle market companies with EBITDA of $2 million or more.
What is a middle market company?
A middle market company is a company with annual revenue of around $10 million to $500 million.
Where can I receive more detailed information?
Please see our Private Placement Memorandum, Note Purchase Agreement and their related documents for more details. They can be found on the Documents section of each investment opportunity.
Am I debited immediately when I contribute to a project?
No. When you contribute to a project, we simply process payment authorization. The money will be transferred to the project manager’s account if and only if the project succeeds in meeting its financial goal. You will be notified via email in all cases.
Can I update/cancel my investment after the offering has ended?
Unfortunately, once the offering has ended and the funds have been transferred it’s out of our hands.
Do I have to be an accredited investor to invest in CrowdOut loans?
Yes, among other requirements (see PPM for details). To qualify as an accredited investor, you must meet at least one of the following criteria:
How can I pay?
We process our investments through ACH transfers. When investing in a project, you will be asked for your bank account information (Bank Name, Routing Number and Account Number), which we securely store. From there, we will withdraw your pledged amount once the project you invested in successfully completed.
How do I receive payments?
We process our investments through ACH transfers. When investing in a project, you will be asked for your bank account information (Bank Name, Routing Number and Account Number), which we securely store. When we receive interest and principal payments, we will directly transfer the payments to your account.
How do I invest?
On the specific investment’s page, click the button ‘Request Access’, to view a investment’s details. On the next screen, you will be able to invest by simply entering your investment amount. The next page will provide transaction instructions for you to transfer your funds. Once completed, you will be directed back to this platform and receive a confirmation email.
How much does it cost to contribute to a project on this platform?
Registering on the website and contributing to projects is completely free. Fees vary please contact support for more information.
I changed my mind, can I update/cancel my investment?
Yes, if you decide to cancel before the investment period has closed. However, if you have decided after the investment period has closed or funds have been transferred, you may not be able to cancel or update your investment. Please send us a message using the contact form if you have any questions.
Is there an investment minimum?
Yes. The minimum investment is twenty five (25) Notes, at CrowdOut’s discretion. Notes are sold in $1,000 increments.
Is this a safe investment?
There is no guarantee with these – or any – investments. We do everything we can to mitigate risk. THIS OFFERING IS HIGHLY SPECULATIVE AND INVOLVES A HIGH DEGREE OF RISK. THE NOTES ARE UNSECURED, LIMITED OBLIGATIONS OF THE COMPANY AND HAVE NOT BEEN APPROVED OR DISAPPROVED BY, AND THEY WILL NOT BE INSURED BY, ANY GOVERNMENTAL AGENCY. INVESTING IN THE NOTES SHOULD BE CONSIDERED ONLY BY PERSONS WHO CAN AFFORD THE LOSS OF THEIR ENTIRE INVESTMENT. PLEASE CAREFULLY REVIEW THE RISK FACTORS SET FORTH IN THE SECTION ENTITLED “RISK FACTORS AND CERTAIN CONFLICTS OF INTEREST” IN OFFERING MEMORANDUM. See our Offering Memorandum for a more detailed discussion of the risks associated with this investment.
Any data or analytical materials are provided by CrowdOut for informational purposes only. Business performance may differ significantly from historical performance or market data. Estimates and projections are based upon data provided by recipient and/or other sources that we deem to be reliable but we do not guarantee that such sources are complete, accurate, or free of errors or omissions. Any conclusions or estimates presented in the Offering Memorandum may become inaccurate over time. Unless expressly agreed to in writing, CrowdOut has no obligation to update any of the statements or analysis presented. These materials are provided pursuant to any definitive agreement you may have with CrowdOut or its affiliates. Subject to such agreement, if any, these materials are provided “as is” and without guarantees, assurances, or warranties of any kind, express or implied. CrowdOut does not provide and these materials do not constitute legal advice, tax advice, or accounting advice.
The purchase of Notes and similar transactions give rise to substantial risk and may not be suitable for all investors. No assurance can be made regarding the future performance of any investment, that Notes purchased will perform in line with historical investments, or that specific investment categories will be available or suitable for purchase by particular investors. Loans can and do default, which may result in significant losses, including the loss of all principal invested. Investors in Notes should be financially sophisticated and prepared for significant losses. Investors may or may not be able to invest in Notes that meet their desired characteristics. Loans are also subject to certain legal and regulatory risks that may render them unenforceable. Any graph, chart, formula, or other device represented or described in the Offering Memorandum should not be used exclusively and must be interpreted by an experienced and sophisticated investor in order to effectively assist in any investment decision. These materials are not an offer to sell, nor a solicitation of an offer to buy, any securities.
CrowdOut does not provide legal advice, tax advice, or accounting advice. Before making any investment or executing any transaction, you should consult with your legal, tax, and accounting advisors with respect to the suitability, value, and risk of such investment or transaction.
These materials are proprietary and confidential and may not be copied, distributed, or shared with any third party without the prior written consent of CrowdOut.
What happens if an investment doesn’t reach its funding goal?
Then your funds will be returned to you.
When do I get my principal back?
Your principal is returned when the loan matures (most loans mature in three to five years) or when the borrower pays the loan in full. Companies can prepay (that is, fully repay) a loan at any time, thereby shortening the length of the investment. The summary materials for each loan detail the length of the loan.
When I purchase Notes, am I loaning directly to a company?
No. Loans to borrowing companies are divided into many segments referred to as Notes. Investors purchase Notes for a loan in $1,000 increments (minimum 25 notes, as Management’s discretion), which entitle the investor to a portion of the loan’s principal and interest payments. Borrowing companies make interest and principal payments to CrowdOut, and CrowdOut then pays investors according to the terms of the Note.
When I purchase Notes to invest in a loan, is it a private offering?
Yes. We rely upon Rule 506(b) of Regulation D to issue Notes.
When my company received an investment from CrowdOut, do I have to work with individual investors?
No. Your company will work directly with CrowdOut. CrowdOut’s investors purchase Borrower Payment Dependent Notes (BPDN) directly from CrowdOut. Borrowing companies make interest and principal payments to CrowdOut, and CrowdOut then pays investors according to the terms of their Note.
What will the interest rate be for my company’s loan?
Loans have different interest rates based upon a variety of factors, including the length of your loan and the loan rating. Interest rates and all other loan terms are specified in the Underwriting Committee’s term sheet. Contact us for more information.
How much does it cost to raise funds?
CrowdOut will work with you to determine the right capital structure for your business. The cost is dependent on a number of factors and can be discussed with the CrowdOut team.