Closing Update & Carta Transition (Updated August 16th)
UPDATE (8/16/2019) It's taken a LOT longer than anticipated, but we're just about ready to start importing shareholders into the new share management system. We'll be doing it in batches starting with the Round 4 shareholders. There's nothing you need to do--we'll send an email with further instructions when we get to your batch. Stay tuned!
As of this writing (7/27/19) Wefunder has processed almost all Round 4 investments and Round 3 transitions. We had over 8,800 individual investments, and while most go smoothly there are always a small percentage that don’t. At this point we have about $80K worth of investments that Wefunder has told us should close the week of Aug 5th. If you are one of the folks still having trouble, we thank you (again!) for your patience and assure you we are working diligently to close your investment. NO FAN LEFT BEHIND!
As for the 99.9% of investments that have already closed, one of two things should have occurred by now:
You received an invitation to view your shares in Carta. The last Carta invites went out in late February 2019, and cover most (but not all) of those who transitioned/invested by December 31st, 2018. To see if you received an invitation, please search your email (including promotions and spam folders) for an email from carta.com.
You received an email from Legion M stating that your investment has processed. These emails went out in batches on May 16th, June 7th, and July 2nd. To find this notice, please search for an email from email@example.com that has the subject line “Your Legion M Investment has Processed”.
WHAT IS A REGISTERED TRANSFER AGENT?
If you aren't familiar with a transfer agent, their job is to maintain the company’s cap table (the official record of who owns the company’s stock) and record any issuances and transfers of shares. In the old days, this information was recorded in a large book, and shareholders were given paper stock certificates (that needed to be stored in a safe!) which served as their official proof of ownership. Today of course, everything is done digitally online.
As an SEC regulated company offering shares under Regulation A of the JOBS Act, Legion M is required to use an SEC registered transfer agent. This is intended to give you, the investor, assurance that the cap table is being maintained according to SEC standards and prevent shenanigans by unethical entrepreneurs. Anyone seen The Producers?
Legion M has used Carta as our transfer agent since our very first round back in 2016 (back then they were known as eShares—they changed names to Carta in 2017). At the time we started with eShares/Carta, equity crowdfunding was new and they were one of the companies looking to pioneer the space. Three years later, things have changed. When it came time to import our latest group of 6,000+ shareholders, Carta informed us that their pricing model had changed, and they needed to renegotiate the terms of our agreement. While they have every right to do so and we like working with Carta, it became clear that the new pricing structure would not work for a company like Legion M that is built to have a very large number of shareholders.
Most private companies are set up to have a very small group of very large investors. Even large public companies don’t typically have all their investors listed on their cap table—instead they consolidate small retail investors and hold them “In Street Name” under a single account for brokerages like Charles Schwab and E*TRADE. Legion M’s goal is to have an extremely large group of shareholders, and while we expect this will give us an edge as an entertainment company, it makes us an odd-duck for a lot of transfer agencies.
Fortunately, we’ve found an SEC registered partner built for equity crowdfunding, and we’re in the process of transferring from Carta to a new platform. Like Carta, the new system allows investors to log in to view their Legion M holdings. The new platform also has some new features that we believe will make it easier for our shareholders to transfer their shares. And as before, these services will be provided free to our shareholders, with Legion M covering all costs.
We expect to announce more details very soon, and unveil the new Share Management Tool. In the meantime, there is nothing that you need to do. Those of you who already have Carta accounts will have your shares transitioned to the new transfer agent. Those of you who do NOT already have Carta accounts will be imported directly into the new system. In either case, we expect to have an update with more information within the next 2-3 weeks.
As always, if you have any questions about your specific situation, please send an email to firstname.lastname@example.org, and we'll get back to you as soon as we can.