Payments and overfunding. Timing matters

Payments and overfunding. Timing matters

05 September 2021





Equity crowdfunding is a financing system that is not only innovative, but also democratic. Referring to Mamacrowd, a platform authorized by Consob, anyone can invest in a live campaign as long as they are of age and in possession of an Italian tax code. Once the verification of appropriatenessthe user can proceed with the investment. But pay attention to the timing of the investment, because equity crowdfunding follows a time criterion.

What does it mean? When you identify a project considered interesting and with high potential it is advisable to proceed as soon as possible with the investment in order not to lose priority over it. Basically, it is necessary not only to join the project, but also to ensure that the collection of the payment of the order, on the escrow account intended for the project, occurs within 14 days (calendar) from the date of accession (for information on the right of withdrawal see the section FAQ.)

But let's go in order. During the course of an equity crowdfunding campaign, the investor may find himself in two different situations:

  1. Find in time a project that you consider interesting and decide to join before the offer reaches the maximum target, with related collection of payment within 14 calendar days, even with online transfer through PISP. In this way you can participate in the offer with time stamp priority. On the contrary, if the payment is made after 14 calendar days he will lose the priority on the investment and therefore will be bypassed by those who joined later, with the risk of being excluded if the campaign reaches the maximum goal.
  2. He joins when the maximum target has already been exceeded (overfunding), then he is placed on the waiting list. He will be able to access the offer only if the collection of the payment of those who preceded him does not respect the deadlines or if those who have joined before him do not complete the operation with the transfer. It is therefore advisable to make the payment in any case respecting the deadline for the collection of the order, not to give way to the next investor. There is provision for a refund at no additional cost in the event of exclusion with payment made.

Now, let's take a step back and clarify a point.Overfunding occurs when an equity crowdfunding campaign is highly successful and reaches investment quotas above the maximum expected fundraising target. It is in these cases that the campaigning company may decide to extend the capital raise by setting a new target, in order to make room for investors who were initially excluded. However, this situation does not always occur. Consequently, the exclusion of the late investor from the campaign is very likely. In general, therefore, it is advisable to act now and proceed with the investment in order not to run the risk of missing a potential opportunity for profit.

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