Seed Raise FAQ

Below is a collection of questions and answers the team have prepared, along with a section covering recent user questions.

  1. What is the Seed Raise?

    The seed raise is a unique opportunity to invest, and take ownership in the Gray Digital ecosystem. The raise is limited to 200 spaces, and is on a first-come, first-served basis. This seed raise is for individuals to contribute to the growth of the platform and support the development of our products and services, with upside when new investors join.

  2. How does the Seed Raise work?

    To participate in the seed raise a minimum of one space must be purchased. In return you will receive a portion of the equity that is being offered.

  3. What are the eligibility requirements?

    To participate in the Seed Raise, you must be a registered user on the Gray Digital platform and have a valid Pro subscription. A minimum of $30,000 is required to purchase equity.

  4. What is the minimum amount to participate in the Seed Raise?

    The minimum amount to participate in the Seed Raise is $30,000.

  5. Can I purchase more than one space/SAFE?

    Yes, investors can purchase as many spaces as they want, on a first some first serve basis. Limited to 200.

  6. How do I claim my SAFE?

    To claim your SAFE, you must first participate in the Seed Raise, by purchasing your desired amount of spaces. Once the raise is completed, SAFE will first be provided by way of a generic NFT, which outlines the raise, your contribution, and your ownership rights (agreement). This NFT can not be sold to other users. Redemption of the SAFE will be possible at during later rounds.

  7. Do I need to KYC?

    Initially no. To purchase the SAFE- there will not be a KYC requirement. However, to redeem the SAFE and/or equity during later rounds, this would likely be required.

  8. Can I use my fund balance to contribute?

    Yes. Users can use their active fund balance to contribute, however, all performance fees are still applicable.

  9. What chains can I use to contribute?

    All currently active chains on the platform including Binance Smart Chain, Ethereum, Polygon, Avalanche, Optimism, Arbitrum, Base, Tron, and Solana. USDT and/or USDC required.

Users Questions & Answers

  1. Will the NFT be more used like an access token to access a platform to sign legal documentation (SAFE/kyc/....) or am I misunderstanding the purpose of the NFT? Yes, the primary use case of the NFT will be to view your unique SAFE agreement, download it, and sign it (digitally). The goal of using an NFT was to keep the agreements on chain and secure, while also allowing additional advantages of holding one for use on the platform. The NFT is being used for its technology and won't hold its own tradable value.

  2. When contributing to the seed raise through your fund balance, will the date you contribute affect your fund returns or will it not matter? The amount used from your fund balance will be subject to all applicable fees, and you'll be allocated returns on that portion of funds up to the date they are contributed.

  3. If you do a series A in June/July does that cash out the current investors or just reevaluate the investment? This depends on what the venture groups want to do, or if they want more equity. Usually this is a reevaluation period, where the investment is marked up based on the new funding rounds closing value.

  4. What's the better decision/investment: reducing fund balance to get into the seed or leave it in the fund? This is entirely up to the individual to decide on whats best for them, and their goal and investment timeline.

  5. If I decide to go for the seed investment, I should expect a lockup of the amount for at least 3 years? Or what do you think is the recommended timeframe I am looking at with this kind of investment? Generally, from a seed investment to exit in fintech the time period is 3-5 years; however this can be less or more depending on each individual situation, and how the team positions the company.

  6. How will you verify identity and remedy a situation where someone loses their NFT or wallet gets compromised? This will be handled on a case-by-case basis, like we do with the Gray Fund. As a starting point, I would always recommend Pro users two have two accounts attached to their profile, even if they don't use the second one, to help verify ownership via a secondary account registered on your profile. The NFT is non-transferable (soulbound) - and will remain with that wallet forever. If a wallet is compromised, we'll still be able to use it to do a handshake request with the owner, and move them to a new address.

  7. What are your thoughts on the legality of selling OTC and the practicality of restricting early investors to exit? In general, private companies can sell securities OTC if they comply with the relevant exemptions from registration, such as Regulation D. Restricting early investors from exiting their investments is a common practice in private equity and venture capital to ensure the company has sufficient time to grow and develop before investors can liquidate their holdings. This is often achieved through contractual lock-up periods or other transfer restrictions. The practicality of enforcing these restrictions depends on the terms of the investment agreements, which will be outlined in the SAFE, and the company's ability to monitor and control the transfer of securities (soul bound NFT contract).

  8. With a SAFE, we wouldn't actually be getting equity up front, correct? Only if certain trigger events/conditions are hit? Correct. A SAFE (Simple Agreement for Future Equity) is a type of investment contract that provides the investor with the right to convert their investment into equity at a later date, typically during a future funding round or liquidity event. The conversion is contingent upon the occurrence of specific trigger events or conditions outlined in the SAFE agreement. Until those events occur, SAFE investors do not hold actual equity in the company.

  9. What would be the timeline for people to start seeing yield or which phase of VC raises do you see investors can redeem? The timeline for investors to start seeing returns (yield) on their SAFE investments depends on the company's growth and the occurrence of the trigger events specified in the SAFE agreement. In many cases, SAFE investors may not see any returns until the company undergoes a liquidity event, such as an acquisition, additional series round raise or IPO, which could take several years.

    As for the phase of VC raises when investors can redeem their SAFEs, this typically occurs during a priced equity round, such as a Series A or Series B round. The specific terms of the SAFE agreement will outline the conditions under which the SAFE can be converted into equity. Some SAFEs may also include provisions for early redemption or conversion under certain circumstances, but this varies on a case-by-case basis. See the draft SAFE for more information.

  10. What's your 3-year, 5-year plan for the company? Our 3-5years plan for the company is to focus on expanding the product offerings, growing the user base, hiring additional support and development staff to increase deliverables, hire investment oriented staff such as dedicated compliance, and investment advisors, securing additional funding rounds, and potentially preparing for an acquisition or IPO (if appropriate).

  11. How will you handle returns if the trigger event for SAFEs is not met? If the trigger events outlined in the SAFE agreements are not met, the investments would likely remain as SAFEs until a qualifying event occurs or the company decides on an alternative path. The specific terms of the SAFE agreements will be outlined in the document itself.

  12. How does the 504 exemption work in relation to investment companies? Rule 504 of Regulation D is an SEC exemption that allows private companies to raise up to $10 million in a 12-month period without registering the offering with the SEC. As we're raising specifically for the technology side of the company, and not the investment management side, this rule and exemption applies to our offering.

  13. Can you explain the difference between SAFEs and regulation crowdfunding? SAFEs (Simple Agreement for Future Equity) is a type of investment contract that allows investors to convert their investment into equity at a later date, typically during a future funding round. Regulation crowdfunding refers to the rules set by the SEC that allow private companies to raise funds from non-accredited investors through registered online platforms. The key difference is that SAFEs are a specific type of investment instrument, while regulation crowdfunding refers to the legal framework for raising funds from a broader pool of investors.

  14. Is a SAFE considered a private placement? Yes, SAFEs are typically considered a form of private placement, as they involve the sale of securities to a limited group of investors without a public offering.

  15. How does the company plan to handle the broker-dealer requirement? In general, companies offering securities may need to register as or work with a registered broker-dealer to ensure compliance with SEC regulations. The specific requirements and how Gray Digital handles them will depend on the type of broker-dealer license we acquire, and the products we eventually decide to release. As an initial step the company is proceeding on acquiring a broker-dealer, and then setting the broker-dealer parameters separately to ensure each product lines up within the US regulatory frame work. The broker-dealer process is long, and will likely conclude toward the end of the 2024 year.

  16. Will the redemption process involve claiming through crypto (e.g stable coins) as an option for non-US folks? Yes, the same methods that are available to contribute to the seed round can be used to claim, when that time comes.

  17. How will you handle identity verification for seed investors, especially considering the off-chain nature of redemption? KYC (Know Your Customer) will likely be required when redeeming the SAFE and/or equity during later rounds. On the website, when there is a claim available - this process will be seamless, and follow industry standards.

  18. How will you handle the situation if someone's wallet gets compromised or they lose their NFT? This will be handled on a case-by-case basis, similar to how Gray Digital handles the Gray Fund. We recommend that Pro users have two accounts attached to their profile to help verify ownership. Since the NFT is non-transferable (soul bound), it will remain with the original wallet. In the event of a compromised wallet, Gray Digital will use the NFT to do a handshake request with the owner and move them to a new address. Additionally, there will be a function built to allow the team to burn compromised NFTs (SAFEs), and replace it with a new one on a non-compromised wallet for the individual affected.

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