Minimum, Maximum, Overfunding - What Does It All Mean?

When you first click onto an equity crowdfunding deal room it all might look a bit foreign at first. Perhaps you’ve engaged in traditional forms of crowdfunding before, but even then the implications of certain terms differ quite significantly when equity is involved. Here’s a quick breakdown of three key terms right at the top of equity crowdfunding deal rooms.

Minimum Raise

The minimum raise amount is set by the company and Equitise as the minimum required amount of committed funds for the campaign to be considered successful. Generally, this is an amount sufficient enough for the company to walk away from the offer and focus on growth and scaling outlined in the offer document. The important thing to keep in mind with the minimum is that if the offer fails to hit this target, the deal fails. When a deal fails, all funds committed by investors are returned without charge. We find that investment levels tend to increase as the minimum is approached, as some investors hold off until the raise is looking likely to be successful. If enough investors do this it can really impact the raise which means they miss out on investing in a company they were interested in and the company misses out on much needed funding. We therefore always encourage our investors to invest early to give the business the best shot as succeeding!

Maximum Raise

The maximum raise amount is the absolute limit on how much the company wishes to raise in the offer. This means that the moment a maximum limit is hit, the offer immediately closes as successful, and no more can be invested. Another reason for investors to get in early. In the past when a company has hit its maximum, for weeks after a deal has closed early we see dozens of investors trying to click the invest button and contact us about investing. So, invest early to make sure you don’t miss out!

Overfunding

The final term that comes in between minimum and maximum limits is overfunding. This means that the offer has hit its minimum target (100%) and is now successful, but is still accepting investments up to the maximum, hence why it’s overfunding. There’s sometimes a bit of confusion around this term being negative. In reality, it’s the opposite as it shows there is real excitement around an offer we love overfunding!

If you have any other questions about equity crowdfunding lingo, check out our CSF Glossary for a breakdown of the most common terms here

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