Overview:
Vicinity is a platform that joins together financial capital with social vicinity. Vicinity capital is a funding portal that offers investments under the regulations of crowdfunding. It helps local startups and small businesses in raising capital and growing their business. At the same empowers investors to invest in opportunities about which they have complete information.
This platform started with an issue that why people only invest through a dehumanized type of robotic transactions miles away from them. Why not invest within their vicinity and closer to their home.
Vicinity capital is dedicated to connecting local businesses with local investors. It proceeds through a FINRA-regulated online funding portal with educational and networking opportunities. Startups and businesses can utilize this platform in the promotion of their financing campaigns however investors can avail live offers and invest in them with just a button click.
The minimum investment amount in vicinity capital is $100 so everyone can invest. Apart from educational resources this platform also features local businesses on their invest local podcast to highlight the impact which they have on their communities. The ultimate idea of this platform is to act as a bridge between startups, business owners and the lenders and stakeholders within a community.
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Service |
Vicinity Capital |
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Founded |
2019 |
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Investment type |
Small Investments and crowdfunding |
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Sectors | Recycling, brewery, restaurant, entrepreneurship, kitchen designing, printing, and clubs |
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Minimum investment |
$100 |
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Audience | Local investors, startups, and small businesses |
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Investors fees |
Yes |
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Due diligence process |
Pre-diligence |
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Securities offered | Vicinity capital proceeds through the regulation Crowdfunding or Title III of the 2012 Jobs Act which is also known as “Reg CF”. This new law came in 2016 and allowed every 18 year or older than that individual to invest in private companies via a regulated intermediary. Vicinity capital strictly follows the set of rules and regulations set by FINRA and SEC for Reg CF.
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Investors resources | Website, blog, and social media. |
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Pros | · Low minimum investment amount of $100 · Low percentage commission or fees. Just 1% · Value-based investment · Potential return · Easy procedure |
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Cons | · New and small size small platform · Availability of only small investment offerings · Charge exact 8% of the total fundings from the issuer · Mainly focus on individual-based investment |
Types of investment offered by vicinity capital:
Term loan:
Most of us are familiar with a term loan. It’s a loan with regular payments, done annually, quarterly. Also with a maturity date and an annual interest rate. There will be some additional terms such as a grace period after the crowdfunding deadline. A payment deferral so that a payment can be delayed to allow the business to recover from the tough time without being in default. The subordination is if there is a senior lender such as a bank and if the loan is secured by any assets of the business.
Revenue sharing:
Revenue share is also a type of loan in which will be paid back from a predefined percentage of revenues of the business. It is a flexible option that allows any business to repay more or less towards the payoff amount, depending on the sale and growth. If the sales are great you’ll get paid back in less time. Payments will be done annually or quarterly according to a set percentage of revenues. The repayment amount will be a multiple of fundraising. It can be 1.25x to 3x. As an example, if you invest $1000 in any company which specified repayment amount at 2x then the amount which they will pay you will be $2000. If the percentage is set at 5% with a quarterly payment it means that set aside 5% of the revenues each quarterly to pay back their investors. From that amount, you’ll get your share. Your portion will be calculated from your investment divided by the total amount raised. Here are some related terms.
Gross revenue:
It’s the total amount which any business generates.
Net revenue:
It’s the capital left behind after the cutting down returns or shipping costs from the gross revenue.
Key features of vicinity capital:
Preferred stock:
Vicinity capital has prioritized common stock over common stock to divide payments and distribute the assets of any company. Preferred stock can have the characters of either debt security or common stock. However, the preferred stock gets paid before the common stock. Still, it only is repaid on liquidation if there is money left after the paying of the company’s debt. Under certain circumstances, preferred stock can be converted into common stock. But it’s a risky thing. In such a situation preferred stock might lose some value and the investor may lose half or full of its investment.
Debt security:
These are primarily loans for the company and the major risks which they went through without any guarantee of interest payments and the possibility of issuer default. If any business liquidates its assets, debt holders have a priority claim for those assets before the equity shareholders. Debt security on vicinity capital is often secured by the property. This will be as it is in the offering material of the issuer.
Simple agreement for future equity:
SAFE is not stock in the company but rather an agreement between issuer and investor which might be converted to stocks only if the trigger events occur. These trigger events aren’t guaranteed so they should only be looked at as possibilities. The verbiage and terms of SAFE may vary. So it’s important to understand the terms and conditions under which SAFE will convert and also be aware of the risk it might not be converted. SAFEs doesn’t depict the current equity stakes of the company so it won’t provide you voting rights similar to common stocks.
The convertible note:
This type of investment suits more technology startups because it allows the investors to lend initially to the company and receive the shares later if a new investor plans to invest. The type of convertible note offered mostly on this platform may limit the circumstances through which any part of the loan is repaid. The note might only convert if the planned events happen in the future. Till then the investor will not be able to know how much his/her investment is worth.
What you will get if you invest in vicinity capital?
Vicinity capital is an ideal platform for the investment of any volume in many ways. This platform believes in the economic multiplier effect where a single dollar spent at a locally owned business will generate more than 3 times the direct economic impact as compared to the same dollar spent at a corporate-owned peer. There are many advantages which this platform brings to the table. The first major convenience is the low minimum investment amount which is just $100. People which don’t have a great deal of capital to invest can also invest through this platform. The other big advantage is the locality. As the name indicates vicinity, this platform will help you to find and invest in the opportunities near your home or residence. This is one of the few investment platforms which allows unaccredited investors to such huge amounts. Although the platform is new still the chances of growth are bright.
How does vicinity capital make money?
Initially, the platform doesn’t charge anything but takes a 1% service fee when the investor gets paid back from the issuer. The issuer will be charged a fixed 8% of the total funding amount.
Potential returns and cashflow:
The issuer and the investor can decide the terms and conditions of things like profit margins, potential returns, cash flow, and the repaying duration and scheduling. The platform will have no issues unless the deal is within the standards and regulations. As an upcoming investor or an issuer, you’ll be assured that on this platform no one can cheat or run away from the deal once it’s finalized.
The breadth of offerings:
As per the previous stats on the website, most of the investments on this platform are done brewery, recycling, food and hospitality, entrepreneurship, kitchen designing, printing, and clubs.
Regulatory framework and due diligence:
Every issuer or investment seeker needs to complete a Title III Regulation Crowdfunding securities. Every offering needs to file annually with SEC a form C-AR and financial statements. All of these procedures should be done within 120 days after the end of the fiscal year of the issuer covered by such filing. It’s a must for every issuer to display its form C-AR and financial statements on its website. That link must be provided along with the date by which such a report will be available on the website of the issuer. Form C-AR contains an updated disclosure substantially similar to the one which is provided in the initial form C of the issuer. Information of issuers like size, location, employees, principal business, plan of operations, and the risk of investment in the issuer securities should also be displayed on form C-AR. However offering-specific disclosure doesn’t need to be disclosed in this form C-AR.
Conclusion:
Vicinity global is an investment platform equally suitable for small and multimillionaire investments. You can invest even if you don’t fulfill their criterion for accreditation. Unlike other investment platforms, this organization doesn’t charge anything at the start of the deal. They charge the investor when he/she receives the first payback from the issuer. They have some well-established companies seeking investment opportunities that assure growth and profit. Put your money in any of the offerings on this platform and live a dreamed life.