The shares offered
Neighborhood Grocery will be offering 200,000 of its 1,000,000 shares to the public, equivalent to a 20% ownership stake in the company. The company’s shares are $5, with a minimum investment of $50. Investors are prohibited from investing more than $10,000. These shares will be preferred, with limited voting rights on operational matters. The full detailed description of these shares of stock are available in the company’s Offering Memorandum.
Are non-Michigan residents allowed to invest?
Neighborhood Grocery’s equity crowdfunding raise will be in compliance of the Michigan MILE Act of 2014 which means only Michigan residents are allowed to invest. Although this was a hard decision to make since Neighborhood Grocery has received national support in the past, I believe keeping this fundraising efforts local increases value for the Detroiters who will be directly impacted by this project.
Special considerations for GoFundMe contributors.
GoFundMe contributors looking to convert their donation into stock can have access to the company’s 200,000 shares, with some possible restrictions. If you’ve contributed to the company’s GoFundMe campaign anytime before January 31st, your donation qualifies for a stock conversion. For contributors whose contributions does not meet the investment minimum of $50, there will be an additional contribution needed to complete the transaction. NOTE: Because all investors are required to pay a surcharge on their stock purchases, GoFundMe shares will have to be adjusted to acknowledge these charges. For example: If you contributed $50 (the buy-in minimum) to GoFundMe, which can be converted to 10 shares of preferred stock, you will see a 7% surcharge resulting in an adjusted investment of $46, equal to 9 shares of stock. For a limited time, GoFundMe contributors who are not from Michigan has access to 10,000 shares of restricted stock. Because these shares are restricted, there’s a smaller return yield compared to the company’s standard shares of stock which is intended to preserve the local impact. This invitation ends on January 31st. You can request the subscription agreement for this function here.
NOTE: If you are interested in this conversion, do not contribute to GoFundMe until you sign the company’s subscription agreement.
Are there investment tiers in this equity raise?
There are no investment tiers for Neighborhood Grocery investors, meaning there will be no negotiations considered to change investment rates of return, repayment speeds, or any other special considerations as a result of a large investment made. Your investment are subject to the same terms whether you buy 10 shares or 2,000 shares. However, the company will only consider large investments from investors with resources to provide along with a financial investment. Resources like food industry connections, sponsorship, and celebrity influence are considered.
What’s the intended return?
Standard investors stand to receive a 5% annual interest starting in year 6 of operations at its latest. The company reserves the right to start the return earlier if it sees hit. You can request the company’s pro forma statement here.
Can shares be sold in an aftermarket once bought from the company?
Because there’s no stock exchange for private companies, Neighborhood Grocery’s shares are not allowed to be sold or transferred in an aftermarket capacity. These shares are designed to be bought and held for long periods of time. The company will present call periods, where both the company and its investors are to examine whether to “call the investment.”
What documents are you required to read and sign to invest?
To be an investor with Neighborhood Grocery, one must read the company’s Offering Memo, and Accounting Review. Although not required, other company documents are available by request. After reading the required documents, ALL INVESTORS are required to read and sign the company’s Subscription Agreement.
The Documentation Explained
Offering Memo — The Private Placement Memorandum, also called the Offering Memo, explains the investment, and its risk factors. Things to look for in an offering memo: (1) The company’s market capitalization, (2) management, (3) the terms of the investment, (4) investor rights, and (5) a history of the company. Most importantly, make sure the company is explaining what type of stock is being made available for purchase.
Accounting Review — The Third Party CPA Accounting Review is a document from the Certified Public Accountant that acknowledges any financial obligations affecting the company, such as lawsuit judgments, tax liabilities, collections, etc.
Subscription Agreement — The Subscription Agreement is the contract between the company and the investor. This document acknowledges what shares are being sold, how many the investor is being bought, and the conditions on the sale.
Can you buy shares for others?
Because Neighborhood Grocery will require a signed Subscription Agreement from each investor, you can only buy shares for yourself. Shares can not be gifted, or transferred to another person.
Is there an age minimum for investors?
Yes, all investors must be at least 18 years of age.
What documents are you required to read and sign to invest?
To be an investor with Neighborhood Grocery, one must read the company’s Offering Memo, and Accounting Review. Although not required, other company documents are available by request. After reading the required documents, ALL INVESTORS are required to read and sign the company’s Subscription Agreement.