- Venture
truCrowd Review
TruCrowd offers equity crowdfunding to startups and opportunities to invest for novice investors, and educational content to assist each side in building their profiles. Prospective investors should note that as of September 2021, TruCrowd and its CEO are the subject of SEC charges for two fraudulent offerings.
truCrowd
- Investment Types: Venture
- Sectors: Advertising and Entertainment
- Minimum Investment: $100
- Open to all investors
Pros
- Detailed investor presentations, with easy to find Q&A history
- Good investor education material
- Services available across the entire US, catering to various property types.
- Low investment minimums
- Wide selection of investments
Cons
- Key executives subject to SEC enforcement for fraudulent offerings
- Clunky website
- No curation or due diligence of offerings (beyond minimum background checks and anti-fraud checks)
- Valuations set entirely by company raising money
- Startup investments are already inherently risky and illiquid, and additional uncertainty around cannabis industry adds to that risk
Overview
This truCrowd Review will help you learn more about truCrowd's investment offerings, including how the alternative investments on truCrowd are structured, and what your potential returns might be. You can read more about the criteria we use to review investment platforms here.
Update: In September 2021, the SEC charged TruCrowd and several individuals (including TruCrowd’s CEO) with “conducting a fraudulent scheme to sell nearly $2 million of unregistered securities through two crowdfunding offerings”. Prospective investors should be very cautious about investing in offerings from TruCrowd.
TruCrowd is a highly accessible Reg CF equity crowdfunding platform, open to both accredited and non-accredited investors.
There are a wide variety of deals available on the platform (including one for fellow Reg CF platform StartEngine), with documentation explaining what each company is about and what they are seeking to do for potential investors to peruse. The real differentiating aspect of TruCrowd vis-à-vis similar platforms is what it offers to educate novice investors. There is a section of the website devoted to Q&A about simple aspects of equity crowdfunding and investing in general, and a downloadable PDF pamphlet of educational materials that conveys information that more experienced or wealthier investors would already know but may be news to novices.
The selection is broad, but investors should know curation is very limited, so investment quality can vary widely among available offerings.
Types of investments truCrowd offers
TruCrowd platform offers investments in a variety of industries, including technology, entertainment, food, and transportation. For example, at the time of this writing, there was a deal available for funding an app marketed to companies that deal in consumer goods to keep inventory records on the cloud; another app intended to offer one-to-one advising from financial advisors to consumers; and another offering custom travel solutions.
What do you get when investing with truCrowd?
Investors may acquire equity or SAFEs through TruCrowd. SAFEs (simple agreements for future equity) are not an equity stake or common stock. If you invest in a company that does go public you will receive the stock certificates directly and may permitted to sell your shares. Different offerings might offer returns through dividends or other means, but this is not guaranteed and TruCrowd states on its website that dividends from its offerings are rare.
How does truCrowd make money?
TruCrowd does not charge investors any fees. Instead, companies who fundraise through TruCrowd pay a fixed $3,500 fee upfront and an 8% commission on funds raised as a “success fee.”
Breadth of offerings on truCrowd
The theme of this platform is that there is typically a wide variety of investments available, with significant variance in funding goals, required minimum investment, and industry. At the time of this writing there were deals available from many states including New York, Florida, California, and Illinois, and industries included technology, entertainment, food, and transportation. Each company sets its own minimum investment amount, and some choose to set it at $250 or $500 rather than at $100.
Regulatory framework
TruCrowd offerings are all under Reg CF due to its offering investments to non-accredited investors. With respect to due diligence, TruCrowd provides what is required but not much more. All of the companies have to file an annual report with the SEC that investors can presumably access, and TruCrowd facilitates the mandatory due diligence process and charges companies $70 per “bad actor” check required. A registered SEC agent handles transfers of shares in the companies. Other than meeting these minimum requirements, TruCrowd expects investors to do their own due diligence, although it does offer some educational content about how to do this on its website.
This review was first published on 13 April 2020, and last updated on 22 September 2021.
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