Frequently Asked Questions
Propel(x) is an angel investment platform for deep technology companies. To date, we have helped 40+ companies raise over $9M in funding from our community of accredited angel and institutional investors.
Currently, only Accredited Investors can invest on Propel(x).
Propel(x) takes reasonable steps to verify the accredited investor status of each prospective investor that signs up on the website. This may include a combination of checking publicly available information and gathering specific documentation from such investor as applicable. If we are unable to confirm that an investor is an accredited investor, his/her Propel(x) account will be promptly deactivated.
Under the SEC’s Rule 501, a person can qualify as an accredited investor either of two ways:
- By having an individual net worth or joint net worth with a spouse exceeding $1 million at the time of the investment, excluding the value of a primary residence (and any related indebtedness); or
- By having an individual annual income exceeding $200,000 in each of the two most recent years, or a joint annual income with a spouse exceeding $300,000 for those years, and a reasonable expectation of the same income level in the current year.
In addition, certain organizations/institutions qualify as accredited investors. A more complete definition is available on the SEC website here.
On non-brokered offerings (marked as "Deal Type: Non-Brokered"), investors invest as part of a Syndicate. The Syndicate pays 15% of the realized profit as 'carry'.
On brokered offerings (marked as "Deal Type: Brokered"), investors can choose to invest either directly (if the investment amount meets a minimum set by the startup) or can invest as part of a Syndicate. Both options have a 2% upfront platform fee. The Syndicate pays 10% carry upon exit. Startups raising on Propel(x) pay a success fee to Propel(x). The success fee is 5% for startups that raise more than $200,000 and 8% for startups that raise less than $200,000. Propel(x) will cover all fundraising-related costs, such as syndicate formation, Broker Review, Escrow Account and Investor Verification.
There is no management fee for all offerings on Propel(x).
Yes, Propel(x) lists private securities offered by North Capital Private Securities (NCPS). These securities are marked “Deal Type: Brokered” on the Investment Opportunities page. The benefits of brokered deals are:
- Investors have a new option to invest directly, in addition to the current option of investing through a syndicate. The minimum direct investment amount will be set by the Startup.
- NCPS will perform additional due diligence on the offering, focusing on business, financial and organizational viability of the Startup. Only investments that pass this "Broker Review" and that have received sufficient investor interest will close. A summary of the outcomes will be made available to interested investors to inform their investment decision.
- Direct investor interest and Syndicate investor interest count towards a shared threshold, reducing the time needed to form Syndicates.
Yes absolutely! Getting your questions answered as you evaluate a startup is critical before making an investment. We encourage you to conduct your own diligence.
Additionally, we are here to help. Propel(x) has built a platform to facilitate shared deal evaluation among investors. For the startups that interest you, you can:
- Explore information available in the startup profile--this includes a description of the startup, their pitch video, team members, deal terms, and calendar events.
- Delve deeper by requesting access to restricted startup content such as their investor deck, financial and intellectual property related documents, and webcast videos. The startup will typically grant you access within 24 hours.
- Take part in the deal evaluation process via Q&A with external experts, startup management, their customers and scientific advisors, as well as external experts.
Please use this platform to supplement any diligence you conduct on your own. Let us know how we can improve!
Propel(x) has created a shared deal evaluation process to supplement your own diligence. This allows investors to engage in Q&A directly with startup management, customers, scientific advisors, and external expert contributors.
We are the only platform that actively involves external experts to contribute evaluation insights. Any investor can also refer expert(s) from their own network - you not only become an active contributor to the evaluation process, you can also benefit from other investors’ networks. Additionally, Propel(x) has a growing roster of acclaimed industry thought leaders as expert resources for all investors.
Here is how the process works: you can find specific dates for each phase in the Evaluation Timeline or the Calendar Section of each startup profile
- Phase I: Ask Questions (7 days) In this phase, investors can submit questions intended for management, customers, scientific advisors, and external experts. Investors can also refer their own experts. You can take these actions under the "Evaluation" tab or in the Deal Profile sidebar.
- Phase II: Collect Responses (10-14 days): Propel(x) sends the questions collected in Phase I to relevant respondents, i.e. Management questions go to the startup CEO, Expert questions go to external experts and so on. In this phase, respondents will be busy answering your questions. You will be able to view submitted questions under the "Evaluation" tab, but cannot add more questions.
- Phase III: View Results (until the deal closes): This is the phase where you can review the comprehensive results (Q&A, market size estimates, competitors named) from the evaluation process. Results can be viewed under the “Results” tab.
Propel(x) will facilitate sharing of updates from the startup on at least a quarterly basis to investors who invest either directly into the company or into a Propel(x) syndicate for the company.
You may exit your investment by selling your stake - in case the startup is acquired or goes public. In most cases, as per the SEC’s Rule 144, you may also exit your investment by selling your stock privately to another Accredited Investor, so long as you have held your stock for at least a year and are not an “affiliate” of the company (i.e., you are neither an officer of the company nor a shareholder with a greater than 10% stake in the company).
Please keep in mind that Investments in startups are highly illiquid and those investors who cannot hold an investment for the long term (at least 5-7 years) should not invest.
Startups set the minimum direct investment check size that they will take from individual investors. Investors can invest as little as $3,000 into companies through Propel(x) Syndicates. We do not set maximum investment limits.
Pitch deck, financial and IP related documents, webcast videos (investor calls or startup webinars) are under “lock and key” as part of each startup profile. To access this restricted content, you will need the startup’s approval first, which is typically given within 24 hours. The reason for restricted access is to help startups protect the details of their deep-technology from potential competitors -- this is also why we ask for your LinkedIn URL.
Investors can freely explore other information available in the startup’s profile, such as startup description, their pitch video, team members, startup terms, and calendar events prior to receiving approval from the startup.
Propel(x) follows a set of qualifying criteria to curate startups showcased to investors. Please refer to 'What are Propel(x)’s criteria for publishing a startup?' in the Startup Topics section below
- Propel(x) approves a deal for listing and starts the Indication of Interest Phase
- Propel(x) then announces the deal to the entire investor base
- Startups share a pre-recorded webcast with investors.
- Every startup goes through an Evaluation process.
- Propel(x) collects indications of interest concurrently until it hits a threshold of $35K in direct investments, or $100K in total investments (direct & syndicate) to trigger Broker Review.
- NCPS conducts a Broker Review on the startup. Propel(x) will only open the deal for investments if this review is successfully completed.
- Propel(x) opens the deal for direct (and syndicate investments if the syndicate threshold has already been met) and will continue to send out deal-specific information to interested investors and via our weekly newsletter.
- Investors can make commitments and sign documents online – as low as $3,000 per investor.
- Propel(x) aggregates all investor commitments lower than the direct investment minimum check size - as set by the startup - and invests as a single investor in the startup.
- The pooled investment vehicle is triggered when combined direct and syndicate commitments hit $100,000.
- Flow of funds: Propel(x) collects investor funds in an escrow account and passes them to the company.
- Propel(x) will invoice the startup for a percentage success fee, conditional upon the amount raised.
- Propel(x) Syndicates are pooled investment vehicles which collect funds from several investors into a single Limited Liability Company (Investor Syndicate). The Syndicate then invests as a single entity into a single startup.
- Investors that want to invest less than the direct investment threshold set by the startups can make a syndicate investment. Investors can commit as little as $3000 into each Syndicate.
- A Propel(x) Syndicate will be created after at least $100,000 in combined direct and syndicate investment interest is collected from investors. Propel(x) will continue to collect additional interest until the deal closes on the platform. Once the deal closes online, Propel(x) will complete all paperwork, confirm investment amounts with investors and close the deal.
Investors sign documents to invest in a special-purpose vehicle ("syndicate") instead of the company's purchase agreement. For your ease of reviewing, we have separated the syndicate governance documents and subscription agreement from the signature page and relevant tax documents. Please note that the subscription agreement is only legally binding if the Broker Review process has been successfully completed. We encourage interested investors to carefully review these in the Deal Profile | Documents section before starting the investment process. You can also download an example of each below:
The consolidated signature packet is what you will actually be signing via DocuSign at the time of your investment. It includes the following sections:
- Signature page to the syndicate subscription agreement
- Subscriber information and accredited investor status questionnaire
- IRS forms including W-9 (for U.S. investors), W-8 BEN (for international individual investors), and W-8 BEN-E (for international entity investors)
Startups benefit by expanding their investor base to include investors who want to invest smaller amounts. At the same time, since the Syndicates invests as a single investor, startups need not worry about having numerous small investors on their cap table.
Investors benefit by increased diversification across numerous startups. Since Syndicates allow investment minimums as low as $3,000, investors can expand a given amount of capital across a portfolio of multiple startups. In addition, Propel(x) Syndicates will be managed by Propel(x) - so investors are assured of timely communications and updates from startups received via Propel(x).
The Syndicates are intended to be passive investment vehicles. The Syndicates will in most cases accept the terms offered by lead investors and will, in most cases, waive voting rights.
No, as with all private investments, the Syndicates are not liquid investments. As with direct investing, investors should expect to have their capital tied up for several years.
Propel(x) covers the costs for the formation and administration of the Syndicate throughout the lifetime of the syndicate.
Each syndicate is managed by Assure Fund Management and advised by Propel(x) Advisors, a wholly-owned subsidiary of Propel(x) Inc.
Propel(x) Advisors or any successor manager will continue to operate the Syndicate in the event of Propel(x) Inc.'s bankruptcy, liquidation, dissolution, reorganization, or sale.
Yes, offerings on Propel(x) are conducted under Regulation D, promulgated under the Securities and Exchange Act of 1933, as amended. Regulation D governs private placement exemptions, to allow companies to raise capital through the sale of equity or debt securities without having to register their securities with the SEC.
We work with startups that make use of either Rule 506(b) or Rule 506(c) exemptions. See https://www.sec.gov/answers/rule506.htm for more detail.
Under Rule 506(b):
- A company cannot use general solicitation or advertising to market the investment.
- A company may sell its securities to an unlimited number of "accredited investors" and up to 35 non-accredited investors who meet sophistication requirements.
- Self-certification of accredited investor status via a questionnaire is used in general, as the 506(b) exemption does not specify an accreditation process to verify the Investor's accreditation status.
Under Rule 506(c):
- A company CAN use general solicitation and advertising to market the investment (i.e., visitors to the Propel(x) landing page can view high-level information about the offering without needing to sign up or sign in)
- However, all purchasers in the offering must undergo additional steps to verify their accredited investor status (i.e., providing W-2s, tax returns, bank and brokerage statements, credit reports, etc.) before making an investment
Entrepreneurs begin the process via the List a Startup link from the main navigation bar of our home page and follow 3 simple steps:
- Sign up for a Propel(x) startup account: If you register via LinkedIn, you can immediately begin the listing process. You’ll need to verify your email address first if you register with email.
- Complete your company information: Enter the name of your startup, and proceed to filling in basic information like the company logo, website, location, and team members. This is also where we ask you about your deep technology, accelerator affiliations, and previous fundraising. By this point, you can access your newly added startup from the dropdown menu under your user name on our main navigation menu. Download our startup checklist to help you organize and prepare.
- Complete your deal profile: Once you have completed all required fields, a fundraising tab will become unlocked for you to add a new deal. Enter the name of your new round, and proceed to uploading deal-specific details such as your pitch text, pitch deck, deal documents, and terms. You can click the ‘Investor View’ button to preview how your deal profile will appear to Propel(x) users. Note that the key company information (e.g. company logo and team members) you have previously filled out will also be used to populate the deal profile. Once you are happy with your deal profile, click “Submit for Review.” You will be notified on screen of any missing required information. You must complete those fields before your can submit again.
Make adjustments: the deal profiles are reviewed by Propel(x) and NCPS, our broker-dealer partner. We will need you to address any feedback before we can approve your deal for publication.
Our goal is to showcase all startups that meet our qualifying criteria and who are currently fundraising. Once we receive your deal profile submission, we will carefully review your company information (team, description of the technology etc.) and deal specifics (pitch, terms, supporting documents, etc.) against the below criteria:
- Your startup falls within the realm of ‘deep technology’ - which we define as companies founded on a scientific discovery or meaningful engineering innovation.
- Your startup is a C-Corp or an equivalent organization status in any country of incorporation.
- Your startup has outright ownership of the IP or an exclusive worldwide license for the IP, in case the IP is owned by a 3rd party.
- Your startup has a prototype or significant experimental data to support the scientific/technological core of the company.
- Your startup has a full-time CEO.
- Your startup has least one legitimate investor who has committed more than $25,000 in your current round, and who has already signed a purchase agreement with the startup. We define legitimate investor as an experienced angel or an incubator/institutional investor who is unrelated to the startup founders and has a portfolio of at least two prior investments.
- Your startup is connected to reputable incubators, research institutions, national labs or other networks that will give startups the support system and networks to succeed.
- Neither your startup nor any of its officers, directors, or any covered person is subject to any of the “Bad Actor” disqualifications described in Rule 506(d)(1)(i) to (viii) under the Securities Act.
- Your startup has never been party to any legal disputes.
Propel(x) will contact you should we have any additional questions during our review.
Propel(x) charges a 5% success fee for companies that raise greater than $200,000 through the platform. For companies that raise less than $200,000, Propel(x) will charge an 8% success fee. Propel(x) will cover all fundraising related costs, such as syndicate formation, Broker Review, Escrow Account and Investor Verification.
Yes. Once our team has approved your deal profile for publication, you can update your company information as the situation arises. For example, investors want to know if you hire a brand new CTO during your fundraise! Most deal-specific information can also be updated (e.g., you can upload a revised pitch deck, add a new webcast, or reschedule an event).
Please be aware, however, that all changes to your deal profile or documents need to be approved by NCPS, our broker-dealer partner. Therefore, changes cannot be directly made through your Propel(x) Startup account but need to be requested. Please contact your deal manager if you want to make a change to your profile.
All updates after your deal becomes live will be captured in an activity log visible to all investors visiting your deal profile. While new information is always of interest to investors, frequent changes to key information can lead to confusion and are not advised.
Only one live deal is allowed per startup at any given time. You can start a new round from the Fundraising tab once your current round closes.
Yes, each Entrepreneur User can list multiple startups.
Only accredited investors that are registered at Propel(x) will have access to your deal profile. Propel(x) has restricted the access to the documents and webcasts that you’ve uploaded and to the evaluation information. We will ask you to approve the investors that want access to the restricted deal content.
Generally, indemnification provisions in contracts are typical and provide that if one party breaches the agreement or engages in negligent or willful misconduct related to the relationship, that breaching party will compensate the non-breaching party for the damages caused. For example, if a company raising money on Propel(x) misappropriated a 3rd party’s trademark and posted it on Propel(x) and that 3rd party sued Propel(x), the company would have to defend Propel(x) and pay any damages as a result.
We make extra efforts to protect startups’ information as below:
- Startups information (presentations, investor calls, all other documents) are privileged access. Startups can approve or reject investor access.
- Startups can approve or reject any experts that are referred. Only experts approved by startups will be able to participate.
- Startups can offer a counter comment to all expert answers.
- For starters, please read how our Evaluation process works.
- This process is based on best practices followed by the most reputable angel groups. It is very important for startups to help investors understand their company and get them comfortable with investing. Our ‘Evaluation’ process is designed to help investors interact with the company, understand the risks, and ultimately make an informed investment decision.
- We also understand that startups want to protect sensitive information. To this end, we have enabled startups to approve who can access their investor materials and Evaluation results. Startups also control which experts can respond to investor questions.
Under Regulation D, an issuer is obligated to have a reasonable belief, to take reasonable steps to verify, that an investor is an accredited investor. So long as those items are satisfied at the time of the sale, then subsequent proof that the investor is actually not an accredited investor will not cause a securities violation.
Propel(x) will work with you to reach a mutually agreeable solution. We will generally ask that you allow those investors who have already committed to invest to participate, but we may agree to give up any remaining allocation to outside investors.
A huge part of what we do here at Propel(x) is to demystify cutting edge science and technology for potential investors, so that they can make better informed investment decisions. This is where experts come in to lend their expertise to a specific investment opportunity by answering investor questions on a startup’s core science/technology, market opportunity, and competitive landscape. We believe opinions from independent evaluators provide a complementary view to the “insider story” from startup management, their customers and scientific advisors.
Startups do have the final say on which experts are sufficiently qualified to participate in their evaluation process. Only startup-vetted experts will be invited to an evaluation. Please refer to the question How does the Propel(x) Deal Evaluation Process work? in the first section of our FAQ for a more comprehensive overview.
We are constantly looking for contributors willing to share insights in our deal evaluations. We welcome experts that meet the following criteria:
- Hold an advanced degree from a well-regarded institution or program in one of the following fields: Biopharma, Medical Devices, Medical Diagnostics, Synthetic Biology Computational Sciences, A.I. / Machine Learning, Data Science, Energy Clean Technologies, Materials, Chemicals, Other deep technology areas, Policy as related to Science & Technology, Law
- Are a seasoned industry practitioner with either Business or R&D experience and possess a firm grasp of emerging trends in your field
- Are well versed in commercializing and managing innovations
- Are a deep technology enthusiast with thought leadership on the latest scientific discoveries or technological breakthroughs
- Most importantly, are passionate about technologies that matter and are excited to see ideas and entrepreneurship come together to create lasting impact
We currently do not offer monetary compensation to experts, but are exploring various incentive schemes in the near term. Stay tuned! In the meanwhile, read on for what’s in it for you:
- Expand your knowledge - Stay on the cutting edge of technologies in your field. If you are invited to participate in a deal evaluation, Propel(x) will share relevant information about the startup and their science & technology.
- Expand your network - After the evaluation is complete, Propel(x) will make a personal introduction among all the evaluation contributors - experts, customers and advisors. We want to help you grow your professional network in a field you are passionate about.
- Expand your influence - Propel(x) has a fast-growing network of cutting edge startups as well as experts who are thought leaders and influencers in their fields. Our startups are always looking for Advisors and Directors. If you would like to participate on the Board of Advisors or Board of Directors of a startup, please check the relevant box upon joining. As an Advisor or Director, you will get the opportunity to shape the directions of startups that are working in areas of your expertise.
Simply sign up here and begin creating an expert profile! When investment opportunities in your relevant fields of expertise come online, we will share your profile with the startup management for their consideration. Once they approve your background as an evaluation contributor, we will send an invitation to you via email.
Experts are asked to address 6-10 investor questions in an online evaluation process. These questions will pertain to your area of expertise and no additional research is required to respond to these questions. Of course you are free to skip questions that you don't feel sufficiently informed / knowledgeable about. Responding to these questions should take between 30 - 60 minutes of your time, but you will have 10 days to work on your responses, save as draft, then come back to submit the final responses at your convenience.
If you are interested in getting introduced to the companies you evaluated, please let us know by emailing firstname.lastname@example.org. We will reach out to the startup management; if there is interest in a mutual introduction, we will absolutely make the connection. We do not, as a policy, make introductions to investors for privacy reasons. However, upon investors' request, we may reach out to specific experts.
Once an expert submits his/her response to an investor question, the startup management is alerted to review the response and provide a rebuttal if they find it necessary. The response then becomes available to investor users as part of the full evaluation results (along with insights from other contributors and attributable to the respective contributors). Note that investors must first gain approval from the startup before they can view the evaluation results to ensure no conflict of interest (e.g., if the investor is affiliated with a competitor).
- To keep evaluation results strictly confidential;
- To not disseminate the results in any manner, including provision to any third party or any form of publication;
- To not use the evaluation results other than for their internal use that is not competitive to the relevant startup.
User Submissions may be provided by (without limitation) Users who are members of a Start-Up management team, contacts referred by Start-Ups (including without limitation customers, scientific advisors, background references, suppliers and distributors), accredited investors who are Users of the Propel(x) platform, and external experts referred by the Company. The insights, recommendations, views and other content reflected in a User Submission should be taken as opinion rather than statements of facts. Investors should conduct their own diligence before making an investment. Nothing contained in a User Submission constitutes tax, legal, insurance or investment advice, or the recommendation of or an offer to sell, or the solicitation of an offer to buy or invest in, any investment product, vehicle, service or instrument. Such an offer or solicitation may only be made by delivery to a prospective investor of formal offering materials, including subscription or account documents or form, which should be reviewed carefully by any such investor before making the decision to invest in any particular company issuer listed, reviewed or discussed on the Propel(x) platform. To the maximum extent permitted under applicable law, you hereby release Propel(x) (and our officers, directors, agents, investors, subsidiaries, and employees) and each other User from any and all claims, demands, liabilities, losses or damages (whether direct, indirect, consequential, incidental or otherwise) of every kind and nature, known and unknown, suspected or unsuspected, arising out of or in any way related to User Submissions (including your reliance thereon). You acknowledge that, in connection with the foregoing release, you hereby irrevocably waive all rights granted to you under Section 1542 of the California Civil Code or any analogous applicable state or federal law or regulation. Said Section 1542 of the Civil Code of the State of California reads as follows:
“A general release does not extend to claims which the creditor does not know or suspect to exist in his or her favor at the time of executing the release, which, if known by him or her must have materially affected his or her settlement with the debtor.”