Text
FAQ
Where am I?
33needs enables everyone to invest in social enterprises (AKA,
companies solving the world’s biggest needs). The internet shifts
power from institutions to you. 33needs is pioneering the idea of
“people-powered investing.” We’re flipping the standard funding model on its head. At our core,
we’re a deeply social experience to finance impact. We make investing
a social (and emotional) experience. Think about how the Obama
campaign flipped the standard campaign fundraising model on its head
through harnessing small repeatable donations from the crowd. Where is 33needs?
We’re based in Los Angeles, CA and Washington, DC. What kinds of companies list on 33needs?
Companies solving the world’s biggest needs, also known as social
enterprises. Overview of the 6 “Big Need” challenges our social
enterprises are solving: 1. The Planet - How can we help promote a cleaner and more sustainable
global ecosystem? 2. Education - How can we help more people get more access to better education? 3. Community - How can we help connect people, build communities and
protect unique cultures? 4. Heath - How can we help individuals lead longer, healthier lives? 5. Opportunity - How can we help people better provide for themselves
and their families? 6. Sustainable food - How can we provide for a growing population in a
sustainable way? Why will social entrepreneurs want to use 33needs vs. other
microfinance options?
A few reasons. First, most of the social enterprises are raising
between $15,000 - $20,000. The average size of a microfinance loan is
$522.8 globally, according to MIX Market, a research group
specializing in microfinance. Secondly, microfinance just isn’t widely
available in developed economies (e.g., US, England, Australia) where
60% of our social enterprises are based. Thirdly, the web-based and
social network elements (e.g., investment teams, blog widgets, etc.)
of 33needs drive lots of interest in their products and users to their
sites. How does 33needs work?
Check out our How It Works section here for a comprehensive overview. In short: A 37-year-old man in Los Angeles, CA could invest as little
as $10 in Husk Power Systems, a social enterprise providing low-cost
energy services to rural India. A 19-year-old woman in Mumbai could
invest $20 in Voxiva, a social enterprise using cell phone technology
to improve health-care delivery in developing countries. The investor (called a “Backer”) receives a % return based on company
revenue. The company receives seed capital. 33needs receives 5% of the
total funding target. The world gets just a little stronger. Who is responsible for making sure social entrepreneurs deliver what
they promise?
33needs acts as a platform, like eBay for example, and the social
entrepreneurs are responsible for fulfilling their responsibilities.
If a social entrepreneur does hold up his or her end of the bargain,
we will make a good faith effort to reconcile the situation and
provide you with transparent information as to what is happening,
however we will not act as an enforcer or bill collector. So, is this a loan? Do I own equity once I invest? What do you call
this kind of investment?
This is neither a loan nor an equity stake. It is a revenue share
agreement. Our platform allows investors (aka, everyone) to fund
companies and generate returns based on their revenue, rather than via
debt or equity. For some, it’s a more flexible, entrepreneur-friendly
way to fund growth. How does this compare to a loan?
A loan has a fixed rate of return over some period of time, so lenders
know what they will be getting back. Because no one can know for sure
what a business’ revenue will be one, two, or five years out, social
entrepreneurs and investors are committing to a different kind of
contract; one with a dynamic potential upside. Both investors and
social entrepreneurs using 33needs are taking on a different kind of
risk - but both have the potential to participate in the rewards too. How does this compare to equity?
An equity investment in a social enterprise basically means that an
investor has purchased ownership in a private (unlisted) company. In
public companies, holding equity basically means that an investor owns
stock. When you make an investment through 33needs, unlike equity
investments, you are not taking any ownership or control in the
company. Some of the other advantages of revenue sharing are that it’s
a simple deal structure that is easy to understand for all investors,
and they stay engaged through frequent payouts and business updates. How does 33needs screen social entrepreneurs?
To date, 33needs has received 679 applications from social
entrepreneurs around the world. We have a 4-person investment
committee comprised of attorneys and investment professionals that
review, interview, and social enterprises. What if other expenses come up and the company can’t afford to pay
back the promised % of revenue?
They are engaging in a legal contract to pay investors as specified.
It is a breech of contract and against the law to not follow through
on this contract for any reason. The only payments that would be
senior (i.e. more important and paid out first) to this are secured
bank loans or contracts that the entrepreneur engaged in prior to
33needs. Wait, isn’t there another site like this already?
Nope. We’re the only place where social enterprises can raise
investment funding from everyone. How does this whole thing work, legally speaking?
When you invest on 33needs you are not purchasing a security. If the
investor’s core motivation is not an expected financial return, but
impact or consumption, the securities laws do not always apply.
Additionally, the investments do not share many of the common elements
of stock. We’ve been working with law professors at the University of
Michigan, the University of Denver, Harvard Law, Pittsburgh Law, and
others to create a structure that satisfies investor, startup, and
regulatory interests. Why would I want to invest in a social enterprise’s fundraising round
if my primary purpose is social impact, as opposed to a financial
return?
Many people invest because business is a powerful force for change in
the world. Business, more than nonprofits, in some cases, is a more
sustainable approach to solving hunger, poverty, educational access,
etc. In addition, many social entrepreneurs include creative benefits
(such as discounts, special offers, and exclusive access) which
combined with the financial rewards, can add up to a great investment. Is there a time limit to raise the money?
Yes, the social entrepreneurs have between 30-60 days (their choice)
to reach their goal during each Fundraising Round. What if the company doesn’t meet their fundraising goal?
If they do not meet their fundraising goal, you will not be charged
for any of the money that’s been pledged. For example, if they are
trying to raise $100K and receive pledges for $50K by day 30, none of
those pledges will transfer into investments and they will get $0. All
or nothing. Can a social enterprise raise more than their fundraising goal?
A company can only make as much as is specified by their fundraising
goal. If they want, they can publish another raise, but that wouldn’t
affect your investment. What if the business doesn’t make as much revenue as they promised,
and I don’t make all of my money back?
You are taking the risk that they may or may not earn adequate revenue
to repay you and other investors in full; there are no guarantees. All
they can do is be honest and realistic about their revenue forecasts.
All of the social entrepreneurs are encouraged to engage and update
their investors along the way (ask for feedback, share updates, give
rewards, etc.) and make sure that they enjoy the journey as much as
the end result. What if the business wants to stop paying investors earlier than
they’ve promised? (It might be for a good reason, like another, bigger
social enterprise is buying their business.) 33needs’s terms allow
social entrepreneurs to exit a commitment early by repaying investors
double their original investment and fulfilling all the additional
benefits promised. Can investors go after the personal assets of the entrepreneur if they
can’t pay them back what they were expecting?
No. The investment contract is between the social enterprise and the
investors. We require that every business be incorporated as a limited
liability entity (LLC, LLP, C-corp, S-corp), which means that personal
assets are legally separated from business assets. What if the business doesn’t make any money at all, what do I get?
Investors get a percentage of the business revenue - if the business
makes $0 in revenue, there is nothing to distribute. How exactly is the Revenue Share paid out to Investors?
Revenue Share is paid out quarterly for the number of years that the
businesses specify. Normally, they choose the first day of the first
quarter of your fiscal year (up to 12 months out from the date that
they publish the raise.) The entrepreneur will log onto 33needs within
one week of the start of each quarter to enter their revenue and we
will draw out the appropriate amount from his or her account. If the
entrepreneur does not enter a number, we will draw from his or her
account based on estimated quarterly revenues. Every year at tax time, businesses will upload their tax return to the
site to show their actual reported annual revenues to your investors.
The only important field is “Gross Sales Receipts” (i.e., Revenue) and
you will be able to verify that they paid back investors the
appropriate amount. Do potential investors need to be “accredited” or “sophisticated” to
use 33needs?
No. Investors do not need to be accredited or sophisticated (both of
these are legal terms that imply a certain level of net worth, and
investing experience, respectively). Can accredited investors use 33needs?
Yes. Accredited investors will be treated just like unaccredited
investors on the platform. We make no distinction. Do investors need to be a certain age?
Investors who participate can be any age. Do investors need to be in the U.S.?
No. Not at all. Is there a limit on the number of investors who can participate?
No. An unlimited number of people can invest in a business. Can investors invite their friends to be investors too?
Anyone can invest, anyone can view the fundraising website, and anyone
can spread the word to get others involved as investors. What if I’m not in a position to invest?
There are many ways to support businesses outside of making an
investment. For starters, you can share the raise on Facebook, Twitter
or other Social Media sites. You can tell other friends who you think
may be interested in the social enterprise. Spreading the word about a
social enterprise can be just as helpful as actually investing. You may also consider asking the entrepreneur how else you can help.
For example, in many cases it is helpful if you write a testimonial
about the team or business that the entrepreneur can share to attract
other potential investors. When you look at the business’s intended
use of funds from the Raise, you may find that you can make an in-kind
donation (capital equipment, marketing skills, etc.) that would help
that accomplish their goals without cash. How much does it cost to use 33needs?
33needs does not charge investors. 33needs charges 5% of the
fundraising goal to the entrepreneur. Can I invest more than once for the same business? Multiple Businesses?
You are welcome to adjust your investment to a higher amount during
the raise period, before the raise has closed. You can invest in as
many businesses as you like. Biggest difference between Kiva and 33needs?
33needs enables people to invest (as opposed to donate) in social
enterprises solving global challenges (as opposed to smaller, but very
important, income-generating enterprises).
33needs enables everyone to invest in social enterprises (AKA,
companies solving the world’s biggest needs). The internet shifts
power from institutions to you. 33needs is pioneering the idea of
“people-powered investing.” We’re flipping the standard funding model on its head. At our core,
we’re a deeply social experience to finance impact. We make investing
a social (and emotional) experience. Think about how the Obama
campaign flipped the standard campaign fundraising model on its head
through harnessing small repeatable donations from the crowd. Where is 33needs?
We’re based in Los Angeles, CA and Washington, DC. What kinds of companies list on 33needs?
Companies solving the world’s biggest needs, also known as social
enterprises. Overview of the 6 “Big Need” challenges our social
enterprises are solving: 1. The Planet - How can we help promote a cleaner and more sustainable
global ecosystem? 2. Education - How can we help more people get more access to better education? 3. Community - How can we help connect people, build communities and
protect unique cultures? 4. Heath - How can we help individuals lead longer, healthier lives? 5. Opportunity - How can we help people better provide for themselves
and their families? 6. Sustainable food - How can we provide for a growing population in a
sustainable way? Why will social entrepreneurs want to use 33needs vs. other
microfinance options?
A few reasons. First, most of the social enterprises are raising
between $15,000 - $20,000. The average size of a microfinance loan is
$522.8 globally, according to MIX Market, a research group
specializing in microfinance. Secondly, microfinance just isn’t widely
available in developed economies (e.g., US, England, Australia) where
60% of our social enterprises are based. Thirdly, the web-based and
social network elements (e.g., investment teams, blog widgets, etc.)
of 33needs drive lots of interest in their products and users to their
sites. How does 33needs work?
Check out our How It Works section here for a comprehensive overview. In short: A 37-year-old man in Los Angeles, CA could invest as little
as $10 in Husk Power Systems, a social enterprise providing low-cost
energy services to rural India. A 19-year-old woman in Mumbai could
invest $20 in Voxiva, a social enterprise using cell phone technology
to improve health-care delivery in developing countries. The investor (called a “Backer”) receives a % return based on company
revenue. The company receives seed capital. 33needs receives 5% of the
total funding target. The world gets just a little stronger. Who is responsible for making sure social entrepreneurs deliver what
they promise?
33needs acts as a platform, like eBay for example, and the social
entrepreneurs are responsible for fulfilling their responsibilities.
If a social entrepreneur does hold up his or her end of the bargain,
we will make a good faith effort to reconcile the situation and
provide you with transparent information as to what is happening,
however we will not act as an enforcer or bill collector. So, is this a loan? Do I own equity once I invest? What do you call
this kind of investment?
This is neither a loan nor an equity stake. It is a revenue share
agreement. Our platform allows investors (aka, everyone) to fund
companies and generate returns based on their revenue, rather than via
debt or equity. For some, it’s a more flexible, entrepreneur-friendly
way to fund growth. How does this compare to a loan?
A loan has a fixed rate of return over some period of time, so lenders
know what they will be getting back. Because no one can know for sure
what a business’ revenue will be one, two, or five years out, social
entrepreneurs and investors are committing to a different kind of
contract; one with a dynamic potential upside. Both investors and
social entrepreneurs using 33needs are taking on a different kind of
risk - but both have the potential to participate in the rewards too. How does this compare to equity?
An equity investment in a social enterprise basically means that an
investor has purchased ownership in a private (unlisted) company. In
public companies, holding equity basically means that an investor owns
stock. When you make an investment through 33needs, unlike equity
investments, you are not taking any ownership or control in the
company. Some of the other advantages of revenue sharing are that it’s
a simple deal structure that is easy to understand for all investors,
and they stay engaged through frequent payouts and business updates. How does 33needs screen social entrepreneurs?
To date, 33needs has received 679 applications from social
entrepreneurs around the world. We have a 4-person investment
committee comprised of attorneys and investment professionals that
review, interview, and social enterprises. What if other expenses come up and the company can’t afford to pay
back the promised % of revenue?
They are engaging in a legal contract to pay investors as specified.
It is a breech of contract and against the law to not follow through
on this contract for any reason. The only payments that would be
senior (i.e. more important and paid out first) to this are secured
bank loans or contracts that the entrepreneur engaged in prior to
33needs. Wait, isn’t there another site like this already?
Nope. We’re the only place where social enterprises can raise
investment funding from everyone. How does this whole thing work, legally speaking?
When you invest on 33needs you are not purchasing a security. If the
investor’s core motivation is not an expected financial return, but
impact or consumption, the securities laws do not always apply.
Additionally, the investments do not share many of the common elements
of stock. We’ve been working with law professors at the University of
Michigan, the University of Denver, Harvard Law, Pittsburgh Law, and
others to create a structure that satisfies investor, startup, and
regulatory interests. Why would I want to invest in a social enterprise’s fundraising round
if my primary purpose is social impact, as opposed to a financial
return?
Many people invest because business is a powerful force for change in
the world. Business, more than nonprofits, in some cases, is a more
sustainable approach to solving hunger, poverty, educational access,
etc. In addition, many social entrepreneurs include creative benefits
(such as discounts, special offers, and exclusive access) which
combined with the financial rewards, can add up to a great investment. Is there a time limit to raise the money?
Yes, the social entrepreneurs have between 30-60 days (their choice)
to reach their goal during each Fundraising Round. What if the company doesn’t meet their fundraising goal?
If they do not meet their fundraising goal, you will not be charged
for any of the money that’s been pledged. For example, if they are
trying to raise $100K and receive pledges for $50K by day 30, none of
those pledges will transfer into investments and they will get $0. All
or nothing. Can a social enterprise raise more than their fundraising goal?
A company can only make as much as is specified by their fundraising
goal. If they want, they can publish another raise, but that wouldn’t
affect your investment. What if the business doesn’t make as much revenue as they promised,
and I don’t make all of my money back?
You are taking the risk that they may or may not earn adequate revenue
to repay you and other investors in full; there are no guarantees. All
they can do is be honest and realistic about their revenue forecasts.
All of the social entrepreneurs are encouraged to engage and update
their investors along the way (ask for feedback, share updates, give
rewards, etc.) and make sure that they enjoy the journey as much as
the end result. What if the business wants to stop paying investors earlier than
they’ve promised? (It might be for a good reason, like another, bigger
social enterprise is buying their business.) 33needs’s terms allow
social entrepreneurs to exit a commitment early by repaying investors
double their original investment and fulfilling all the additional
benefits promised. Can investors go after the personal assets of the entrepreneur if they
can’t pay them back what they were expecting?
No. The investment contract is between the social enterprise and the
investors. We require that every business be incorporated as a limited
liability entity (LLC, LLP, C-corp, S-corp), which means that personal
assets are legally separated from business assets. What if the business doesn’t make any money at all, what do I get?
Investors get a percentage of the business revenue - if the business
makes $0 in revenue, there is nothing to distribute. How exactly is the Revenue Share paid out to Investors?
Revenue Share is paid out quarterly for the number of years that the
businesses specify. Normally, they choose the first day of the first
quarter of your fiscal year (up to 12 months out from the date that
they publish the raise.) The entrepreneur will log onto 33needs within
one week of the start of each quarter to enter their revenue and we
will draw out the appropriate amount from his or her account. If the
entrepreneur does not enter a number, we will draw from his or her
account based on estimated quarterly revenues. Every year at tax time, businesses will upload their tax return to the
site to show their actual reported annual revenues to your investors.
The only important field is “Gross Sales Receipts” (i.e., Revenue) and
you will be able to verify that they paid back investors the
appropriate amount. Do potential investors need to be “accredited” or “sophisticated” to
use 33needs?
No. Investors do not need to be accredited or sophisticated (both of
these are legal terms that imply a certain level of net worth, and
investing experience, respectively). Can accredited investors use 33needs?
Yes. Accredited investors will be treated just like unaccredited
investors on the platform. We make no distinction. Do investors need to be a certain age?
Investors who participate can be any age. Do investors need to be in the U.S.?
No. Not at all. Is there a limit on the number of investors who can participate?
No. An unlimited number of people can invest in a business. Can investors invite their friends to be investors too?
Anyone can invest, anyone can view the fundraising website, and anyone
can spread the word to get others involved as investors. What if I’m not in a position to invest?
There are many ways to support businesses outside of making an
investment. For starters, you can share the raise on Facebook, Twitter
or other Social Media sites. You can tell other friends who you think
may be interested in the social enterprise. Spreading the word about a
social enterprise can be just as helpful as actually investing. You may also consider asking the entrepreneur how else you can help.
For example, in many cases it is helpful if you write a testimonial
about the team or business that the entrepreneur can share to attract
other potential investors. When you look at the business’s intended
use of funds from the Raise, you may find that you can make an in-kind
donation (capital equipment, marketing skills, etc.) that would help
that accomplish their goals without cash. How much does it cost to use 33needs?
33needs does not charge investors. 33needs charges 5% of the
fundraising goal to the entrepreneur. Can I invest more than once for the same business? Multiple Businesses?
You are welcome to adjust your investment to a higher amount during
the raise period, before the raise has closed. You can invest in as
many businesses as you like. Biggest difference between Kiva and 33needs?
33needs enables people to invest (as opposed to donate) in social
enterprises solving global challenges (as opposed to smaller, but very
important, income-generating enterprises).
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