Pro-Rata Reductions

As mentioned in a previous post, we've been working very hard with Wefunder to resolve our oversubscription issues and close the round. We're getting very close and have made a huge amount of progress, including moving about $175K worth of investment out of the Title III and into a parallel Reg D round open to accredited investors. 

Ultimately, we ended up about 70K oversubscribed, and needed to be trim back about 800 investors. To that end, we sent out 800 e-mails this AM that looked like this:

Dear Investor;

Thank you for supporting Legion M with your investment. As you may have heard, over 3,100 enthusiastic investors like yourself came together to make Legion M the most popular Title III offering in US history, establishing our company as a break-out success story for the JOBS Act. 

Momentum in the final week of our campaign drove the committed investment dollars for this round over the $1 Million cap set by the SEC. Our round became oversubscribed, triggering rules we had in place to manage an oversubscription (you can read more about these rules here, if you'd like).

We've spent the past 8 weeks doing everything in our power to reduce the impact of the oversubscription. After exhausting all practical mechanisms, we've ended up about $70K over the cap, which means we need to trim about $70k worth of investments from 800 investors like yourself.

As per the rules we filed with the SEC, your original investment of $<<Investment Amount>> has been adjusted down to $<<Final Investment Amount After Adjustment>>. You will receive a refund from Wefunder for the difference of $<<Pro Rata Reduction>>.

The good news is that the vast majority of your investment will convert to a stock that has proven to be in very high demand. Also, the fact that we used a "pro-rata reduction" policy (as opposed to a "first come, first served" policy) means that we have over 500 additional investors helping us push Legion M forward. This is just the first round--for us to be successful we need as many people as possible on board. 

In the coming months we will open another investment round, and we'll be giving first priority to you and all the other investors that were trimmed back in the seed round.

Thank you again for believing in Legion M. We're sorry we need to trim back your investment, but we hope you understand the reasons why, and realize how hard we've worked to minimize the impact. We thank you for your patience and understanding, and look forward to making history together!

If you have any questions, please send mail to paulandjeff@thelegionm.com.

Best,

Paul Scanlan and Jeff Annison
Cofounders, Legion M

The e-mail pretty much says it all. As a company, we are extremely fortunate to be in this position. We're bummed for the 800 individual investors who were trimmed back, but glad that we were able to minimize the impact. The worst case scenario was a 13% reduction for a couple investors--for most it was less than 7%. In the end, we believe that the value those investors receive from holding an oversubscribed stock will more than offset the pain of the reduced investment amount.

As always, if you have any questions, please let us know!