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Collective equity FAQs

What is TPC Collective Equity?

TPC Collective Equity is a way for The Portfolio Collective (TPC) to raise funds by inviting a large number of individuals – like you –  to invest in the company. This approach is similar to crowdfunding, where you can contribute money and, in return, receive shares. This means you become a part-owner of TPC.

Why is TPC crowdfunding?

Our long-term vision is to build a company that’s owned by its community. We believe TPC should be created by its members, for its members. The money raised through the Collective Equity initiative will help us grow by:

  • Improving the platform – Making it easier to use, adding new features and strengthening the technology behind it. Also making it easier for members to collaborate with other members. 
  • Scaling paid memberships – Expanding our reach and attracting more engaged members to our community, generating more revenue to invest in growth.
  • Launching new programmes – Developing valuable new courses and events for our members.
  • Achieving critical mass in more cities – Expanding our physical presence and fostering vibrant in-person communities in new locations.
What kind of investment is this?

This is an equity crowdfunding investment. That means you’ll be investing in TPC by buying shares in the company. As a shareholder, you become a part owner of the business and will benefit if the company grows its valuation. We’re using a legal agreement called an Advance Subscription Agreement (ASA) to facilitate the investment, via a trusted platform called SeedLegals. (In the US, a similar agreement is called a SAFE: Simple Agreement for Future Equity.)

 

What is an Advance Subscription Agreement (ASA)?

An ASA is a funding agreement between investors and a company. Under an ASA, investors commit to providing capital to the company immediately in exchange for the right to receive shares at a fixed point in the future (typically after six months). By committing earlier, the investor can secure their right to shares at a lower valuation than they would during a later round. The terms of the agreement specify the trigger event – either a new funding round or the longstop date (typically after six months). Once triggered, the agreement converts into shares at the pre-agreed valuation.

  • Conversion event – The event that triggers the issuance of shares (e.g., a new funding round).
  • Discount – The percentage discount at which ASA investors receive shares compared to the valuation of the future funding round.
  • Valuation cap – A maximum valuation at which the ASA investment will convert into shares, protecting early investors from excessive dilution if the company’s valuation rises significantly before the conversion.
  • Longstop date – A date by which the shares must be issued, even if a conversion event hasn’t occurred. This is crucial for EIS compatibility and is typically done after six months.

When your investment converts into shares, you’ll be acquiring shares directly in THE PORTFOLIO COLLECTIVE LTD, which is registered under company number 12699120.

What does "Capital at Risk" mean?

Investing always carries risk, especially in early-stage companies. “Capital at Risk” means you could lose all or part of your investment. This is different from savings accounts or government bonds, which are usually safer. The value of your investment can go down as well as up.

Things to keep in mind about “Capital at Risk”:
  • No guaranteed returns – There’s no promise of profits, dividends or a return on your investment.
  • Illiquidity – Investments in private companies are generally illiquid. Although there may be a secondary market, it can be very difficult to sell your shares quickly or at all, as there isn’t a readily available market like a stock exchange. Note that we plan to create a secondary market for members to sell their shares by 2027.
  • High risk – Early-stage companies carry a higher risk of failure compared to more mature, established businesses.
  • No FSCS protection – Your investment is not covered by the Financial Services Compensation Scheme (FSCS) in the UK (or equivalent schemes in other jurisdictions), which protects deposits in banks.
  • Dilution risk – Future funding rounds may lead to new shares being issued, which could dilute the percentage ownership of your shares.
What are the potential returns?

While “Capital at Risk” is crucial to understand, there are several potential ways you could see a return on your investment in TPC:

  • Future sale of the company – If TPC is successfully acquired by another company, shareholders typically receive a payout based on their ownership stake.
  • Dividends – While we don’t anticipate paying dividends in our early growth stages, profitable mature companies often distribute a portion of their profits to shareholders.
  • Secondary market – A future secondary market could allow you to sell your shares to other interested parties.
Should I seek financial advice before investing?

Yes, we strongly recommend speaking with an independent financial, legal or tax adviser before making any investment. These FAQs are for general information only and do not replace professional advice.

What are SEIS and EIS?

The Seed Enterprise Investment Scheme (SEIS) and Enterprise Investment Scheme (EIS) are UK government programmes that offer tax benefits to UK taxpayers who invest in early-stage companies.

  • SEIS targets very early-stage companies.
    • Up to 50% income tax relief on your investment (up to a certain annual limit).
    • Profits from the sale of SEIS shares can be exempt from Capital Gains Tax, provided shares are held for at least three years.
    • If the company fails, you can claim loss relief against your income tax or capital gains tax.
  • EIS targets slightly more established early-stage companies, such as TPC. 
    • Up to 30% income tax relief on your investment (up to a higher annual limit).
    • Capital gains tax exemption if shares are held for at least three years.
    • You can claim loss relief if the company’s valuation goes down.
    • You may be able to defer capital gains tax on other assets by investing through EIS.

Important Note on SEIS/EIS for investing in TPC

Since TPC is a more established early-stage company this round will not offer any SEIS certificates. EIS is still available to UK taxpayers. Potential investors should confirm the specific EIS status around their individual tax circumstances.

What is the minimum investment amount?

The minimum investment is £1,000.

How do I invest?

Here’s how the investment process works:

  • Review the offer – Read the investment page to learn about the benefits for the various investment tiers and join one of our crowdfunding calls .
  • Understand the risks – Ensure you fully comprehend the risks involved, including the “capital at risk” warning.
  • Express your interest – Complete our ‘expression of interest’ form. Our CEO, Ben Legg, will be in touch to share the latest version of our investor deck, answer any questions and brief you on the next steps of the process.

The investment process will be facilitated through SeedLegals, the UK’s most trusted platform for such transactions. Their platform ensures that all necessary legal agreements, like the Advance Subscription Agreement (ASA) we’re using, are correctly generated and executed, providing a secure and transparent environment for your investment.

What do I get if I invest?

If you invest now via an Advanced Subscription Agreement (ASA), your investment will convert into TPC shares in six months or earlier. Your investment will convert into shares at a TPC valuation of either 1) £10m, or 2) 10% lower than the valuation agreed with any large investors who invest in the next six months. In addition, we have implemented added benefits for certain investment tiers outlined here.

How will I receive updates on my investment?

We’ll send quarterly newsletters with updates on TPC’s performance and progress.

What types of shares will I own?

As an investor in TPC, you will own ordinary shares, which is the same share class as the founders and all other TPC investors. They come with the same voting rights for all shareholders. TPC also has a few non-voting B-ordinary shares. These were issued to employees as part of incentive programmes and do not carry voting rights. TPC has no other share classes.

Will TPC's shares be tokenized or governed by a DAO in the future?

Tokenizing shares or governing a company through a Decentralized Autonomous Organization (DAO) involves representing company ownership and decision-making rights on a blockchain. This could well be the future of investor management, but it is still early days with a lot of cost and complexity. Therefore, TPC is not currently pursuing such an option for its shares. However, as the digital asset landscape evolves, we may explore tokenization or DAO governance as potential avenues in the future. Any such change would be conducted in full consultation all shareholders.

*Disclaimer: We encourage investors to seek independent financial, legal and tax advice before investing.