Newchip - FAQ

FAQ

Similar to how Kayak and Priceline consolidate flights from numerous airlines into a marketplace, at Newchip we consolidate investment opportunities from investment platforms around the nation into a single marketplace.

Our goal is to help you cut through the noise to find investments you can believe in, and our dashboard makes it simple to track and manage those investments over time.

We’re launching new features and integrations each month, and are currently in the process of building a secondary marketplace to provide liquidity outside of IPOs.

Everyone has their personal motivations for investing in startups but the majority of our users do so to support founders and companies they believe in. Startup investing like any other type of investment, carries risk and potential for reward, but it should be a part of a diverse portfolio

No! We do not directly fund startups nor are transactions completed on Newchip. We offer investors a one-stop-shop to view and compare startup offerings from over 50+ portal platforms. Investment transactions are completed on our partner portals. We’re building several integrations and a one-click registration to simplify this process.

If you are an entrepreneur or startup looking to “Raise Funds”, we do have an application process that will automatically connect you to the best platform for your needs. If approved by them, we will list your deal on Newchip to our investors.

When you find a company you’re interested in, you will click through to the portal that lists that specific offering. There you will be prompted to complete the investment process directly with them. Once you’re done, simply return to your Newchip portfolio and add the new investment to keep track. We’ll be automating this process in the coming months to make it seamless to transfer payment information as well as investment data.

Anyone over the age of 18 can now invest in what are called Open Public Offerings (OPO). There are two types of OPO deals, Small OPO deals under Regulation CF and Large OPO deals under Regulation A+. There are investment limits based on your annual income as well as there are some deals still only available to accredited investors. Currently, Small OPO deals are limited to U.S. investors only. Large OPO deals depend on company preferences and can be opened up to international investors. Check specific deal information to determine eligibility.

See “Investment Caps” for more information.

The majority of Americans have been legally restricted from investing in private equity for the past 100 years (startups, small businesses, and pre-IPO companies).

The government considers you to be an accredited investor if you have a net worth (not including their primary residence) of $1 million dollars or make over $250,000 per year ($300,000 if married).

New U.S. regulatory changes now allow everyday Americans to invest up to 10% of their income per year alongside accredited investors in startups and private equity via Regulation Crowdfunding (Small OPO) and Regulation A+ (Large OPO).

U.S. regulators are considering instituting Sophisticated Investor rules (currently exist in Europe) which allow non-accredited investors with enough experience and sophistication to invest more than 10% of their incomes.

Investors do not pay any fees to Newchip. There may be fees associated with certain offerings on portal platforms. Fee disclosure information is available on each offering before making an investment decision.

Current regulations restrict resales of Reg CF securities for one year after the purchase of the security. After that, certain trades are possible through the issuer, an accredited investor, family, or their trust. In the future, Newchip plans to launch a secondary marketplace bulletin board system to facilitate the sales of shares to other investors.

All investments are refunded. Startups must reach their goal to accept funds, making every investor the “last check.” This solves one of the major problems in traditional fundraising. You may also cancel your investment commitment up until closing.

Your trust in us and the security of your information is core to our business and a top priority at Newchip. We adhere to best practices such as browser encryption, store all of our data on servers in secure facilities, and implement systematic processes and procedures for securing and storing data. Communication on the platform is encrypted via SSL during transit and bank level encryption is utilized for sensitive information.

Newchip is a marketplace that consolidates many of the offerings nationally for Reg CF and Reg A+. We refer you to most of the Reg CF portals and you view, research and purchase your investment on their web/app platform. After you invest directly on many investment portals, return to Newchip and add the new holding to your portfolio to track and manage.

You can start with as little as $100, but for the maximum amount you can check on the offering when viewing on the portal platform. Remember you must stay within the annual investment limits set by your income/net worth when you registered with Newchip and the portals.

The investment process is different for everyone, depending on their personal investing profile, but it can generally be described as follows:

  1. You create an account at Newchip.
  2. Answer the questions about income and net worth.
  3. You identify a potential investment opportunity and click through to the respective portal to review the offering, accompanying documents, and if you are comfortable with the investment terms, you can follow the portal’s checkout process to complete the transaction.
  4. Once you confirm your investment on the portal platform, the funds will be transferred to an escrow account for holding until the fundraising is closed.
  5. Once the fundraising round closes, you will receive confirmation of success and acceptance of your subscription. In the case of an unsuccessful round or a cancelled investment by yourself, the proposed transaction will be cancelled and the escrow agent will return the funds from the escrow back into your bank account.
  6. Once you’ve invested, return to Newchip and add your new investment, track and manage your portfolio. (We’re in the process of automating this feature!)

That depends on your interests and search history. We take care to introduce you to offerings that appeal to your interests in specific industry categories of investments. We do not make specific security recommendations unless you indicate a desire to see specific offerings.

This form of investment is popular with technology startups because it allows investors to initially lend money to the company and later receive shares if new professional investors decide to invest. The sort of convertible note that is most often offered may limit the circumstances in which any part of the loan is repaid, and the note may only convert when specified events (such as a preferred stock offering of a specific amount) happens in the future. You will not know how much your investment is “worth” until that time, which may never happen. You should treat this sort of convertible note as having the same risks as common stock.

Common Stock: Conveys a portion of the ownership interest in the company to the holder of the security. Stockholders are usually entitled to receive dividends when and if declared, vote on corporate matters, and receive information about the company, including financial statements. This is the riskiest type of equity security since common stock is last in line to be paid if a company fails. You should read about the risks of early-stage investing and pay special attention to the fact that your investment will only make money if the company’s business succeeds. Common Stock is a long-term investment.

Preferred Stock: Stock that has priority over common stock as to dividend payments and/or the distribution of the assets of the company. Preferred stock can have the characteristics of either common stock or debt securities. While preferred stock gets paid ahead of common stock, it will still only be repaid on liquidation if there is money left over after the company’s debts are paid. In certain circumstances (such as an initial public offering or a corporate takeover) the preferred stock might be convertible into common stock (the riskiest class of equity).

One of the investment products we present on Newchip is a revenue sharing loan. Each month, the business shares with you and other investors a percentage of the business’s gross monthly revenues. That’s why it’s called “revenue sharing.” The way it works is like this:

  1. You invest in a revenue sharing loan issued by a business.
  2. The business agrees to pay you monthly until a predetermined total amount is paid.

A Safe is an investment contract between an investor and a start up company; the instrument promises the possibility of a future equity stake, if certain trigger events occur. There is no guarantee that these triggering events will occur. Each company can customize their Safe, therefore terms may vary.

When you invest with a Safe, you become an investor, but not an actual shareholder of stock, unless the company elects to convert the Safe into company stock. Since there is a fixed conversion price, you will always receive the same economic outcome (regardless of whether the company elects to convert) if and when there is a liquidity event.

Almost all the offerings advertised on our Site are for “startup” or “early-stage” companies. Although these companies might, as a group, provide the best opportunity for large gains, they present the greatest risks. Early-stage companies often have inadequate resources, unproven products and business models, little or no market penetration, little or no access to capital, very limited management experience or skill, and a host of other impediments to success. It is likely that many of the companies advertised on our site will fail.

The companies listed on Newchip are typically privately held companies, and their shares are not traded on a public stock exchange. As a result, the shares cannot be easily traded or sold. As an investor in a private company, you typically receive a return on your investment under the following two scenarios:

  • The company gets acquired by another company.
  • The company goes public (undergoes an initial public offering on the NASDAQ, NYSE, or another exchange).

In those instances, you receive your pro-rata share of the distributions that occur. It can take 5-7 years (or longer) to see a distribution, as it takes years to build successful companies. In many cases, there will not be any distribution as a result of business failure. 

Diversification means you invest in a handful of investments instead of just one big investment. For example, if you have $1,000 you can safely invest in startups, it’ll be less risky to make ten $100 investments instead of a single $1,000 investment. Remember, you should never invest more than you can afford to lose and startup investing should only be part of a diverse portfolio of investment assets.

We cannot give tax advice, and we encourage you to talk with your accountant or tax advisor before making an investment.

Platforms generally accept all verifiable investments, though there may be restrictions set forth by the company or on investing in certain circumstances depending on the jurisdiction in which you live in and its local laws.

You can typically change your mind and cancel an investment before the fundraise closes, even if you’ve signed the investment contract. That being said, you would want to check with the respective portal where you originally invested through to follow their instructions.

It doesn't happen often but it is a possibility. It can be cancelled if your funds are still in escrow. Just like you, founders also have the same cancellation rights and, just like you, they don't need to have a reason to do so. One real world example though would be if they find out you work for one of their competitors. After the fundraising round has officially closed and the funds have been accepted in the escrow account, your investment cannot be cancelled.