Crowdfund Investing For Dummies
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You may need to cancel a crowdfund investing project immediately post-funding, you may decide that you need to stop your campaign midstream. If that happens, here’s what you need to do:

  1. Find out the funding portal’s policies and procedures for removing a campaign prior to its completion.

    Follow all procedures as they’re outlined by the SEC.

  2. Before you remove the campaign, send a message to all your investors.

    Inform them that you’re canceling the campaign, that their entire investment will be returned, and how the refund will occur (such as via the escrow agent).

  3. Provide the name and contact information for the escrow agent.

    That way, investors can follow up if they have any questions.

  4. Make sure you have the contact information for every person who had decided to invest in your campaign.

    That way, after it has been removed, you can contact these supporters directly (by e-mail, phone, or social media) to make sure they know that your campaign has been canceled and to thank them profusely for their support. If you know that you’ll be able to restart the campaign in the future, go ahead and share that information.

  5. Make social media posts indicating that you’re no longer seeking funding.

    Be sure to thank everyone in your social networks for their support (whether moral or financial).

The SEC and the crowdfunding industry associations such as the Crowdfunding Professional Association (CfPA) and the Crowdfund Intermediary Regulatory Advocates (CFIRA) will be extremely focused on the issues of compliance with the laws and regulations regarding crowdfund investing. CfPA and CFIRA aim to ensure that online funding platforms comply with all SEC regulations.

Consult with your funding platform to ensure you comply with all steps required to close down your campaign, and maintain records of all your actions in case there are questions you need to respond to.

Raising money via this new tool is not to be treated lightly, nor are the regulations. Lots of people (including us) fought very hard to make this funding method available to entrepreneurs everywhere. Please do all that you can to ensure that future generations of entrepreneurs are able to continue using it!

About This Article

This article is from the book:

About the book authors:

Sherwood Neiss, Jason W. Best, and Zak Cassady-Dorion are the founders of Startup Exemption (developers of the crowdfund investing framework used in the 2012 JOBS Act). They deeply understand the process, rules, disclosures, and risks of capital formation from both the entrepreneur's and the investor's points of view.

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