A Primer on Mechanics and Policies

Related FAQs:

• What is an oversubscription?
• What is an oversubscription and how does it work?

What is an Oversubscription?

An oversubscription occurs when you allow investors to commit funds beyond your fundraising target. Oversubscriptions are a gauge of investment interest in your campaign and allows you to safely land beyond your fundraising target of 100% by campaign close.

Philippine crowdfunding rules are All-or-Nothing meaning, if a fundraiser is unsuccessful in hitting their 100% fundraising target by their campaign deadline, all commitments will need to be refunded and you'll terminate your campaign with no funding.

Because allowing oversubscriptions lets investors commit funds to your campaign beyond your stated targets it means that even if some uncertain investors cancel commitments at the last minute, it won't jeopardize your ability to reach at least 100% of fundraising goal on your deadline.

Notwithstanding the benefits of toggling Oversusbcriptions for your campaign, before you do, you will need to

• 1) Indicate a maximum oversubscription amount, expressed as a total amount beyond your fundraising target.
• 2) Consider an Allocation Policy (see below).
• 3) Intended use of additional funds (as an addendum to their campaign's Use of Proceeds statement).
• 4) Ensure you have the authorized capital stock or the ability to issue additional securities to cover your oversubscription

Types of Allocation Policies

As there are many ways to slice a pizza there are also as many ways to allocate an oversubscribed fundraise.

Pro-rata Method

All investors will receive a proportional amount of equity ownership equivalent to the following: their total commitment divided by how much the multiple that the campaign was oversubscribed, divided by the security price. Too many friends have shown up to your party, so every pizza slice gets a little skinnier with each additional friend. 🍕

First Come First Serve (FCFS) Policy

All investors will recieve their full commitment on a FCFS-basis, until you have reached your stated oversubscription limit. Your friends get whatever pizza they want until the pizza runs out. Some friends don't get pizza, well, they should've shown up earlier. 🍕

Other 

You may suggest a different policy, such as by a randomized selection or 'lucky draw'. Here, you throw random slices of pizza into a crowd and lucky friends get to catch them.  🍕