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Logo of Nanno

Nanno

On-demand marketplace connecting parents and carefully vetted sitters
Kids B2C Marketplace Women Founders Apps
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Co-investors
500 Startups
Accelerator, San Francisco
500 Startups is an early-stage venture fund and seed accelerator that has backed over 2,400+ companies, including Twilio, Udemy, Canva, Credit Karma, Eaze, Grab, Behance and many others.
500 Startups also invested in:
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Problem Solution Product Traction Customers Biz. model Market Competition Vision and strategy Funding Founders
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Documents

Republic (OpenDeal Portal LLC, CRD #283874) is hosting this Reg CF securities offering by Nanno, Inc.. View the official SEC filing and all updates:
Official SEC Logo Form C SEC.gov
Company documents
Nanno Crowd SAFE Nanno Form C.pdf
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Hear from some of the 0 investors in Nanno


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Highlights


$1M+ raised
Company has previously raised over $1M in capital
Leading VC-backed
Company is backed by a leading VC firm
  • Proprietary vetting process: background check, skills & behavioral tests
  • Growing nationally with over 17K parents and over 35K sitters nationwide
  • High retention rates from both parents and caregivers
  • Proven unit economics: $50 CAC vs. $135 profit per user in first 3 months
  • Annualized GMV of $700K pre-pandemic

Problem


As a parent of young kids, child care is your lifeline to the life you once knew

Finding a sitter is never easy—and when you need one on short notice or while traveling, it can seem impossible. The few technology solutions that do exist are antiquated and unreliable. That’s why most parents still use old-fashioned methods to find sitters, and still pay them offline through physical cash transactions.

As millennials transition into parenthood, they are looking for a fast and reliable solution that solves this problem in the way that tech does best: using a simple on-demand app.

Solution


Nanno: quality childcare at your fingertips

Nanno lets parents book high-quality, fully vetted sitters on-demand.

How it works

  1. Set the criteria you are looking for in a caregiver. 
  2. The basic details of the booking are sent to all sitters who meet your criteria (you can also limit your search to "shortlists" you create).
  3. When a sitter responds that they're available, the booking is engaged automatically. 
  4. Payment is processed automatically once booking is finished. 

Our vetting process

Nothing is more important to our parent users than their children’s safety. That’s why we’ve built a proprietary 5-step vetting process, which includes a thorough criminal background check, a safety skills test, and a psychometric behavioral test. Nanno is the safest way to book a sitter, online or offline.


Product


A truly full-service technology solution in the child care space

Traction


Growing and retaining users across the US

We launched nationally in 2018, and are now in every major US metro area, with over 35K+ trusted sitters and over $1M in babysitting transactions processed nationwide.

Media spotlights

*Annualized revenue based on projected revenue in September; 35K+ sitters as of Sep 2021

Customers


Nanno is loved by parents and sitters alike

Sitters and parents agree—they love Nanno. Most of our users find Nanno through referrals and recommendations by other users.

Business model


Generating revenue through commissions and subscriptions

Our revenue model is twofold: Parents who book only occasionally pay only for the care they use—and we add a 20-30% commission to the hourly rate. Parents who book frequently can subscribe on a monthly basis for lower hourly rates. 

Our costs of acquisition, on both the parent and caregiver sides, are only a fraction of the lifetime value of our users—making our unit economics infinitely scalable.

*Numbers as of the end of August 2021

Market


A $34B addressable market

There are 34M families in the US with children under the age of 18. The average family spends approximately $1K per year on informal childcare (babysitting), which means the US market for informal childcare is approximately $34B.

Competition


When choosing child care, safety is key

In today’s on-demand world, parents are seeking a full-service, tech-enabled solution when they need a sitter. Our biggest competitors, Care.com, UrbanSitter, and SitterCity, offer antiquated directory-based platforms that simply give parents access to a list of unvetted sitters. 

Our network of background-checked sitters is LARGER in most US cities than our more established competitors.

The technology innovation that truly sets us apart is a comprehensive vetting process:

  1. Thorough criminal background check
  2. Safety skills test
  3. Psychometric behavioral test

When parents book with Nanno, they know their sitter has been through a vetting process that goes above and beyond what they would get anywhere else—online or offline.

*Competitor numbers as of July 21, 2021

Vision and strategy


Transforming the babysitting industry

Childcare is still primarily an offline industry. Even Care.com, the largest online marketplace for caregivers and babysitters, is only serving a small fraction of the market with 350K active users across all verticals (childcare, pet care, elder care, etc.). The first step to transforming this industry is offering a streamlined, on-demand way for parents to book vetted sitters from their phone or computer. The next step is to offer additional childcare and enrichment options to parents—tutors, art and music lessons, and STEM classes—using the same on-demand platform.

This is an industry crying for innovation—and Nanno is making it happen.

Funding


Raised nearly $2M to date

Nanno has raised funds from such notable investors as 500 Startups and Quake Capital Partners. Our previous Republic campaign successfully closed at $1.07M in January 2020, having received investments from over 5K investors.

Founders


Founded by parents and professional problem solvers

Liz Oertle (Co-Founder and CEO) is passionate about leveraging emerging technologies to solve the real-world problems of everyday people—especially parents and families. Before starting Nanno, Liz was a startup lawyer, working with companies of all shapes and sizes. In 2016, she founded the Independent Law Group, a consortium of business attorneys who utilize disruptive startup practices to revolutionize the business of law.

Nelio Carneiro (CTO) is a passionate software engineer with more than 10 years of experience in web and mobile development. He has worked on big companies back in Brazil and also helped startups to grow in Ireland. During his career, he's contributed to lots of open source projects and created a few by himself. Nelio received his bachelor’s degree in Computer Science from Federal University of Goias in Brazil. (Naturally, Nelio is also a dad.)

Desi McAdam (Co-Founder and Former CTO) is a veteran software engineer and consultant, and a global advocate for women developers for over 15 years. With over 20 years of experience building web and mobile applications, she is a recognized leader in the industry as a developer and for building products in a sustainable and mature fashion. In 2005, she co-founded DevChix, an organization for women software developers that now has thousands of members across 17 different countries.

Deal terms


Valuation cap

$11,000,000

The maximum valuation at which your investment converts into equity shares or cash.
Learn more

Discount

10%

If a trigger event for Nanno occurs, the discount provision gives investors equity shares (or equal value in cash) at a reduced price.
Learn more.

Minimum investment

$100

The smallest investment amount that Nanno is accepting.
Learn more

Maximum investment

$25,000

The largest investment amount that Nanno is accepting.
Learn more

Funding goal

$500K

Nanno must achieve its minimum goal of $25K before the deadline. The maximum amount the offering can raise is $500K.
Learn more

Deadline
Nanno needs to reach their minimum funding goal before the deadline ( ). If they don’t, all investments will be refunded.
Learn more
Type of security

Crowd SAFE

A SAFE allows an investor to make a cash investment in a company, with rights to receive certain company stock at a later date, in connection with a specific event. · Learn more

How it works

Documents

Republic (OpenDeal Portal LLC, CRD #283874) is hosting this Reg CF securities offering by Nanno, Inc.. View the official SEC filing and all updates:
Official SEC Logo Form C SEC.gov
Company documents
Nanno Crowd SAFE Nanno Form C.pdf

Bonus perks

In addition to your Crowd SAFE, you'll receive perks for investing in Nanno.
Invest
$100
Receive
  • A high-quality Nanno t-shirt with our slogan: You CAN have it all, you just can't DO it all by yourself.
  • Limited (100 left of 100)
Invest
$500
Receive
  • A one-year Nanno Pass subscription, giving you access to premium sitter rates in all U.S. cities.
  • Limited (100 left of 100)
Invest
$1,000
Receive
  • A Nanno-branded fleece or vest AND a one-year Nanno Pass subscription, giving you access to premium sitter rates in all U.S. cities.
  • Limited (50 left of 50)
Invest
$5,000
Receive
  • A Nanno-branded fleece or vest AND a lifetime Nanno Pass subscription, giving you access to premium sitter rates in all U.S. cities.
  • Limited (25 left of 25)

About Nanno

Legal Name
Nanno, Inc.
Founded
May 2016
Form
Delaware Corporation
Employees
5
Website
nanno.com
Social Media
Headquarters
Google Map location of of Nanno
1615 California Street 703 , Denver, CO
Headquarters
1615 California Street, 703, Denver, CO, United States 80202

Nanno Team
Everyone helping build Nanno, not limited to employees

Profile picture of Liz Oertle
Liz Oertle
Founder
Featured in Superheroes · Read
Liz Oertle is passionate about leveraging emerging technologies to solve the real-world problems of everyday people – especially parents and families. Before starting Nanno, Liz was a startup lawyer, working with companies of all shapes and sizes.
Profile picture of Nelio Carneiro
Nelio Carneiro
Chief Technology Officer
Nelio is a passionate software engineer with more than 10 years of experience in web and mobile development. Nelio received his bachelor’s degree in Computer Science from Federal University of Goias in Brazil.
Profile picture of Brandy Mello
Brandy Mello
Software Engineer
Profile picture of Michelle Brandel
Michelle Brandel
Director of User Success
Profile picture of Barb Garner
Barb Garner
Director of Accounting
3 more team members
Liz Oertle
Founder
Nelio Carneiro
Chief Technology Officer
Brandy Mello
Software Engineer
Michelle Brandel
Director of User Success
Barb Garner
Director of Accounting

Press

Covid Babysitting: When Virtual Camps and Sitter Dates Ge...
WSJ
·
Jul 14, 2020

When the coronavirus shutdown meant Christina Ravazzolo could no longer babysit her two young charges in person, she offe...

Opinion: Child care in Colorado was ready for reinvention...
The Colorado Sun
·
Jun 28, 2020

COVID-19 brought Colorado to a near standstill in mid-March. Businesses shut down, schools closed and families were asked...

What Everyone Can Learn From Parents of Big Families (Pub...
Nytimes
·
Apr 16, 2020

When you're parenting at scale, keeping things simple is key. This story was originally published on Jan. 9, 2020 in NYT ...

13 Startups That Are Making Parenting Life Easier
Red Tricycle Red Tricycle
·
Apr 3, 2020

Taking care of kids is no easy feat. That's why we appreciate any company that creates a shortcut or finds a way to ease ...

Nanno App Review: A Safe Childcare Alternative - Parentology
Parentology
·
Oct 28, 2019

Every parent who works outside of the home has been there before: you wake up one morning to discover your child is too s...

The Stress-Free Way to Find the BEST Babysitter
Military Mom Collective
·
Sep 26, 2019

I know I cannot be alone in this. Especially as a military spouse with no family nearby, it's incredibly hard to find rel...

The Denver-based way to find a last-minute babysitter
KMGH KMGH
·
Jun 12, 2019

If you're a parent, you've probably been in a childcare pinch. A last minute school closure, a call-in to work, an unexpe...

Denver startup builds childcare platform to help during C...
Colorado Inno

In mid-March, Liz Oertle and the Denver-based Nanno team were invited to help brainstorm ways to find childcare solutions...

Call Emmy: Live More, Chore Less
Call Emmy

My head spins trying to keep up at home, with meals, laundry, school - and that full-time work all in between (somehow). ...

Show all

FAQ

How do I earn a return?

How do I earn a return?

We are using Republic's Crowd SAFE security. Learn how this translates into a return on investment here.

What must I do to receive my equity or cash in the event of the conversion of my Crowd SAFE?

What must I do to receive my equity or cash in the event of the conversion of my Crowd SAFE?

Suppose the Company converts the Crowd SAFE as a result of an equity financing. In that case, you must open a custodial account with the custodian and sign subscription documentation to receive the equity securities. The Company will notify you of the conversion trigger, and you must complete necessary documentation within 30 days of such notice. If you do not complete the required documentation with that time frame, you will only be able to receive an amount of cash equal to (or less in some circumstances) your investment amount. Unclaimed cash will be subject to relevant escheatment laws. For more information, see the Crowd SAFE for this offering.


If the conversion of the Crowd SAFE is triggered as a result of a Liquidity Event (e.g. M&A or an IPO), then you will be required to select between receiving a cash payment (equal to your investment amount or a lesser amount) or equity.  You are required to make your selection (and complete any relevant documentation) within 30 days of such receiving notice from the Company of the conversion trigger, otherwise you will receive the cash payment option, which will be subject to relevant escheatment laws. The equity consideration varies depending on whether the Liquidity Event occurs before or after an equity financing. For more information, see the Crowd SAFE for this offering.

Still have questions? Check the discussion section.

Risks

We depend on certain key personnel, including senior executives.
Our future success depends on the efforts of key personnel. Liz Oertle is our co-founder and chief executive officer and Nelio Carneiro is our chief technology officer. The loss of either of their services would have a materially adverse effect on us. We expect to face intense competition to be able to attract and retain additional qualified personnel, and it cannot be assumed we will be able to attract or retain qualified personnel.
We have a limited operating history upon which you can evaluate our performance, and accordingly, our prospects must be considered in light of the risks that any new company encounters.
The Company is still in an early phase and we are just beginning to implement our business plan. There can be no assurance that we will ever operate profitably. The likelihood of our success should be considered in light of the problems, expenses, difficulties, complications and delays usually encountered by early stage companies. The Company may not be successful in attaining the objectives necessary for it to overcome these risks and uncertainties.
The amount of capital the Company is attempting to raise in this Offering may not be enough to sustain the Company’s current business plan.
In order to achieve the Company’s near and long-term goals, the Company may need to procure funds in addition to the amount raised in the Offering. There is no guarantee the Company will be able to raise such funds on acceptable terms or at all. If we are not able to raise sufficient capital in the future, we may not be able to execute our business plan, our continued operations will be in jeopardy and we may be forced to cease operations and sell or otherwise transfer all or substantially all of our remaining assets, which could cause an Investor to lose all or a portion of their investment.
Although dependent on certain key personnel, the Company does not have any key person life insurance policies on any such people.
We are dependent on certain key personnel in order to conduct our operations and execute our business plan, however, the Company has not purchased any insurance policies with respect to those individuals in the event of their death or disability. Therefore, if any of these personnel die or become disabled, the Company will not receive any compensation to assist with such person’s absence. The loss of such person could negatively affect the Company and our operations. We have no way to guarantee key personnel will stay with the Company, as many states do not enforce non-competition agreements, and therefore acquiring key man insurance will not ameliorate all of the risk of relying on key personnel.
The Company is not subject to Sarbanes-Oxley regulations and may lack the financial controls and procedures of public companies.
The Company may not have the internal control infrastructure that would meet the standards of a public company, including the requirements of the Sarbanes Oxley Act of 2002. As a privately-held (non-public) Company, the Company is currently not subject to the Sarbanes Oxley Act of 2002, and its financial and disclosure controls and procedures reflect its status as a development stage, non-public company. There can be no guarantee that there are no significant deficiencies or material weaknesses in the quality of the Company's financial and disclosure controls and procedures. If it were necessary to implement such financial and disclosure controls and procedures, the cost to the Company of such compliance could be substantial and could have a material adverse effect on the Company’s results of operations.
Our business could be negatively impacted by cyber security threats, attacks and other disruptions.
We continue to face advanced and persistent attacks on our information infrastructure where we manage and store various proprietary information and sensitive/confidential data relating to our operations. These attacks may include sophisticated malware (viruses, worms, and other malicious software programs) and phishing emails that attack our products or otherwise exploit any security vulnerabilities. These intrusions sometimes may be zero-day malware that are difficult to identify because they are not included in the signature set of commercially available antivirus scanning programs. Experienced computer programmers and hackers may be able to penetrate our network security and misappropriate or compromise our confidential information or that of our customers or other third-parties, create system disruptions, or cause shutdowns. Additionally, sophisticated software and applications that we produce or procure from third-parties may contain defects in design or manufacture, including “bugs” and other problems that could unexpectedly interfere with the operation of the information infrastructure. A disruption, infiltration or failure of our information infrastructure systems or any of our data centers as a result of software or hardware malfunctions, computer viruses, cyber-attacks, employee theft or misuse, power disruptions, natural disasters or accidents could cause breaches of data security, loss of critical data and performance delays, which in turn could adversely affect our business.
The Company may never elect to convert the Securities or undergo a liquidity event and Investors may have to hold the Securities indefinitely.
The Company may never conduct a future equity financing or elect to convert the Securities if such future equity financing does occur. In addition, the Company may never undergo a liquidity event such as a sale of the Company or an initial public offering. If neither the conversion of the Securities nor a liquidity event occurs, Investors could be left holding the Securities in perpetuity. The Securities have numerous transfer restrictions and will likely be highly illiquid, with no secondary market on which to sell them. The Securities are not equity interests, have no ownership rights, have no rights to the Company’s assets or profits and have no voting rights or ability to direct the Company or its actions.
The use of individually identifiable data by our business, our business associates and third parties is regulated at the state, federal and international levels.
The regulation of individual data is changing rapidly, and in unpredictable ways. A change in regulation could adversely affect our business, including causing our business model to no longer be viable. Costs associated with information security – such as investment in technology, the costs of compliance with consumer protection laws and costs resulting from consumer fraud – could cause our business and results of operations to suffer materially. Additionally, the success of our online operations depends upon the secure transmission of confidential information over public networks, including the use of cashless payments. The intentional or negligent actions of employees, business associates or third parties may undermine our security measures. As a result, unauthorized parties may obtain access to our data systems and misappropriate confidential data. There can be no assurance that advances in computer capabilities, new discoveries in the field of cryptography or other developments will prevent the compromise of our customer transaction processing capabilities and personal data. If any such compromise of our security or the security of information residing with our business associates or third parties were to occur, it could have a material adverse effect on our reputation, operating results and financial condition. Any compromise of our data security may materially increase the costs we incur to protect against such breaches and could subject us to additional legal risk.
We may implement new lines of business or offer new products and services within existing lines of business.
As an early-stage company, we may implement new lines of business at any time. There are substantial risks and uncertainties associated with these efforts, particularly in instances where the markets are not fully developed. In developing and marketing new lines of business and/or new products and services, we may invest significant time and resources. Initial timetables for the introduction and development of new lines of business and/or new products or services may not be achieved, and price and profitability targets may not prove feasible. We may not be successful in introducing new products and services in response to industry trends or developments in technology, or those new products may not achieve market acceptance. As a result, we could lose business, be forced to price products and services on less advantageous terms to retain or attract clients or be subject to cost increases. As a result, our business, financial condition or results of operations may be adversely affected.
Damage to our reputation could negatively impact our business, financial condition and results of operations.
Our reputation and the quality of our brand are critical to our business and success in existing markets, and will be critical to our success as we enter new markets. Any incident that erodes consumer loyalty for our brand could significantly reduce its value and damage our business. We may be adversely affected by any negative publicity, regardless of its accuracy. Also, there has been a marked increase in the use of social media platforms and similar devices, including blogs, social media websites and other forms of internet-based communications that provide individuals with access to a broad audience of consumers and other interested persons. The availability of information on social media platforms is virtually immediate as is its impact. Information posted may be adverse to our interests or may be inaccurate, each of which may harm our performance, prospects or business. The harm may be immediate and may disseminate rapidly and broadly, without affording us an opportunity for redress or correction.
Security breaches of confidential customer information, in connection with our electronic processing of credit and debit card transactions, or confidential employee information may adversely affect our business.
Our business requires the collection, transmission and retention of personally identifiable information, in various information technology systems that we maintain and in those maintained by third parties with whom we contract to provide services. The integrity and protection of that data is critical to us. The information, security and privacy requirements imposed by governmental regulation are increasingly demanding. Our systems may not be able to satisfy these changing requirements and customer and employee expectations, or may require significant additional investments or time in order to do so. A breach in the security of our information technology systems or those of our service providers could lead to an interruption in the operation of our systems, resulting in operational inefficiencies and a loss of profits. Additionally, a significant theft, loss or misappropriation of, or access to, customers’ or other proprietary data or other breach of our information technology systems could result in fines, legal claims or proceedings.
The U.S. Securities and Exchange Commission does not pass upon the merits of the Securities or the terms of the Offering, nor does it pass upon the accuracy or completeness of any Offering document or literature.
You should not rely on the fact that our Form C is accessible through the U.S. Securities and Exchange Commission’s EDGAR filing system as an approval, endorsement or guarantee of compliance as it relates to this Offering. The U.S. Securities and Exchange Commission has not reviewed this Form C, nor any document or literature related to this Offering.
Neither the Offering nor the Securities have been registered under federal or state securities laws.
No governmental agency has reviewed or passed upon this Offering or the Securities. Neither the Offering nor the Securities have been registered under federal or state securities laws. Investors will not receive any of the benefits available in registered offerings, which may include access to quarterly and annual financial statements that have been audited by an independent accounting firm. Investors must therefore assess the adequacy of disclosure and the fairness of the terms of this Offering based on the information provided in this Form C and the accompanying exhibits.
The Company's management may have broad discretion in how the Company uses the net proceeds of the Offering.
Unless the Company has agreed to a specific use of the proceeds from the Offering, the Company’s management will have considerable discretion over the use of proceeds from the Offering. You may not have the opportunity, as part of your investment decision, to assess whether the proceeds are being used appropriately.
The Company has the right to limit individual Investor commitment amounts based on the Company’s determination of an Investor’s sophistication.
The Company may prevent any Investor from committing more than a certain amount in this Offering based on the Company’s determination of the Investor’s sophistication and ability to assume the risk of the investment. This means that your desired investment amount may be limited or lowered based solely on the Company’s determination and not in line with relevant investment limits set forth by the Regulation CF rules. This also means that other Investors may receive larger allocations of the Offering based solely on the Company’s determination.
The Company has the right to extend the Offering deadline. The Company has the right to end the Offering early.
The Company may extend the Offering deadline beyond what is currently stated herein. This means that your investment may continue to be held in escrow while the Company attempts to raise the Minimum Amount even after the Offering deadline stated herein is reached. While you have the right to cancel your investment in the event the Company extends the Offering, if you choose to reconfirm your investment, your investment will not be accruing interest during this time and will simply be held until such time as the new Offering deadline is reached without the Company receiving the Minimum Amount, at which time it will be returned to you without interest or deduction, or the Company receives the Minimum Amount, at which time it will be released to the Company to be used as set forth herein. Upon or shortly after release of such funds to the Company, the Securities will be issued and distributed to you. The Company may also end the Offering early; if the Offering reaches its target Offering amount after 21-calendary days but before the deadline, the Company can end the Offering with 5 business day’s notice. This means your failure to participate in the Offering in a timely manner, may prevent you from being able to participate – it also means the Company may limit the amount of capital it can raise during the Offering by ending it early.
The Securities will not be freely tradable under the Securities Act until one year from the initial purchase date. Although the Securities may be tradable under federal securities law, state securities regulations may apply, and each Investor should consult with their attorney.
You should be aware of the long-term nature of this investment. There is not now and likely will not ever be a public market for the Securities. Because the Securities have not been registered under the Securities Act or under the securities laws of any state or foreign jurisdiction, the Securities have transfer restrictions and cannot be resold in the United States except pursuant to Rule 501 of Regulation CF. It is not currently contemplated that registration under the Securities Act or other securities laws will be effected. Limitations on the transfer of the Securities may also adversely affect the price that you might be able to obtain for the Securities in a private sale. Investors should be aware of the long-term nature of their investment in the Company. Each Investor in this Offering will be required to represent that they are purchasing the Securities for their own account, for investment purposes and not with a view to resale or distribution thereof.
Investors will not become equity holders until the Company decides to convert the Securities into “CF Shadow Securities” (the type of equity securities issuable upon conversion of the Securities) or until there is a change of control or sale of substantially all of the Company’s assets.
Investors will not have an ownership claim to the Company or to any of its assets or revenues for an indefinite amount of time and depending on when and how the Securities are converted, the Investors may never become equity holders of the Company. Investors will not become equity holders of the Company unless the Company receives a future round of financing great enough to trigger a conversion and the Company elects to convert the Securities into CF Shadow Securities. The Company is under no obligation to convert the Securities into CF Shadow Securities. In certain instances, such as a sale of the Company or substantially all of its assets, an initial public offering or a dissolution or bankruptcy, the Investors may only have a right to receive cash, to the extent available, rather than equity in the Company.
Investors will not have voting rights, even upon conversion of the Securities into CF Shadow Securities. Upon the conversion of the Securities into CF Shadow Securities (which cannot be guaranteed), the holders of the CF Shadow Securities will be required to enter into a proxy with the Intermediary or its designee to ensure any statutory voting rights are voted in tandem with the majority holders of whichever series of securities the CF Shadow Securities follow.
Investors will not have the right to vote upon matters of the Company even if and when their Securities are converted into CF Shadow Securities (the occurrence of which cannot be guaranteed). Upon such conversion, the CF Shadow Securities will have no voting rights and, in circumstances where a statutory right to vote is provided by state law, the CF Shadow Security holders are required to enter into a proxy agreement with the Intermediary or its designee to vote their CF Shadow Securities with the majority of the holder(s) of the securities issued in the round of equity financing that triggered the conversion right. For example, if the Securities are converted in connection with an offering of Series B Preferred Stock, Investors would receive CF Shadow Securities in the form of shares of Series B-CF Shadow Preferred Stock and would be required to enter into a proxy that allows the Intermediary or its designee to vote their shares of Series B-CF Shadow Preferred Stock consistent with the majority of the Series B Preferred Stockholders. Thus, Investors will essentially never be able to vote upon any matters of the Company.
Investors will not be entitled to any inspection or information rights other than those required by law.
Investors will not have the right to inspect the books and records of the Company or to receive financial or other information from the Company, other than as required by law. Other security holders of the Company may have such rights. Regulation CF requires only the provision of an annual report on Form C and no additional information. Additionally, there are numerous methods by which the Company can terminate annual report obligations, resulting in no information rights, contractual, statutory or otherwise, owed to Investors. This lack of information could put Investors at a disadvantage in general and with respect to other security holders, including certain security holders who have rights to periodic financial statements and updates from the Company such as quarterly unaudited financials, annual projections and budgets, and monthly progress reports, among other things.
Investors will be unable to declare the Security in “default” and demand repayment.
Unlike convertible notes and some other securities, the Securities do not have any “default” provisions upon which Investors will be able to demand repayment of their investment. The Company has ultimate discretion as to whether or not to convert the Securities upon a future equity financing and Investors have no right to demand such conversion. Only in limited circumstances, such as a liquidity event, may Investors demand payment and even then, such payments will be limited to the amount of cash available to the Company.
Equity securities acquired upon conversion of the Securities may be significantly diluted as a consequence of subsequent equity financings.
The Company’s equity securities will be subject to dilution. The Company intends to issue additional equity to employees and third-party financing sources in amounts that are uncertain at this time, and as a consequence holders of equity securities resulting from the conversion of the Securities will be subject to dilution in an unpredictable amount. Such dilution may reduce the Investor’s control and economic interests in the Company. The amount of additional financing needed by the Company will depend upon several contingencies not foreseen at the time of this Offering. Generally, additional financing (whether in the form of loans or the issuance of other securities) will be intended to provide the Company with enough capital to reach the next major corporate milestone. If the funds received in any additional financing are not sufficient to meet the Company’s needs, the Company may have to raise additional capital at a price unfavorable to their existing investors, including the holders of the Securities. The availability of capital is at least partially a function of capital market conditions that are beyond the control of the Company. There can be no assurance that the Company will be able to accurately predict the future capital requirements necessary for success or that additional funds will be available from any source. Failure to obtain financing on favorable terms could dilute or otherwise severely impair the value of the Securities. In addition, the Company has certain equity grants and convertible securities outstanding. Should the Company enter into a financing that would trigger any conversion rights, the converting securities would further dilute the equity securities receivable by the holders of the Securities upon a qualifying financing.
We may face potential difficulties in obtaining capital.
We may have difficulty raising needed capital in the future as a result of, among other factors, our lack of revenues from sales, as well as the inherent business risks associated with our Company and present and future market conditions. We will require additional funds to execute our business strategy and conduct our operations. If adequate funds are unavailable, we may be required to delay, reduce the scope of or eliminate one or more of our research, development or commercialization programs, product launches or marketing efforts, any of which may materially harm our business, financial condition and results of operations.
Equity securities issued upon conversion of the Securities may be substantially different from other equity securities offered or issued by the Company at the time of conversion.
In the event the Company decides to exercise the conversion right, the Company will convert the Securities into equity securities that are materially different from the equity securities being issued to new investors at the time of conversion in many ways, including, but not limited to, liquidation preferences, dividend rights, or anti-dilution protection. Additionally, any equity securities issued at the Conversion Price (as defined in the Crowd SAFE agreement) shall have only such preferences, rights, and protections in proportion to the Conversion Price and not in proportion to the price per share paid by new investors receiving the equity securities. Upon conversion of the Securities, the Company may not provide the holders of such Securities with the same rights, preferences, protections, and other benefits or privileges provided to other investors of the Company. The forgoing paragraph is only a summary of a portion of the conversion feature of the Securities; it is not intended to be complete, and is qualified in its entirety by reference to the full text of the Crowd SAFE agreement, which is attached as Exhibit C.
There is no present market for the Securities and we have arbitrarily set the price.
The Offering price was not established in a competitive market. We have arbitrarily set the price of the Securities with reference to the general status of the securities market and other relevant factors. The Offering price for the Securities should not be considered an indication of the actual value of the Securities and is not based on our asset value, net worth, revenues or other established criteria of value. We cannot guarantee that the Securities can be resold at the Offering price or at any other price.
In the event of the dissolution or bankruptcy of the Company, Investors will not be treated as debt holders and therefore are unlikely to recover any proceeds.
In the event of the dissolution or bankruptcy of the Company, the holders of the Securities that have not been converted will be entitled to distributions as described in the Securities. This means that such holders will only receive distributions once all of the creditors and more senior security holders, including any holders of preferred stock, have been paid in full. Neither holders of the Securities nor holders of CF Shadow Securities can be guaranteed any proceeds in the event of the dissolution or bankruptcy of the Company.
There is no guarantee of a return on an Investor’s investment.
There is no assurance that an Investor will realize a return on their investment or that they will not lose their entire investment. For this reason, each Investor should read this Form C and all exhibits carefully and should consult with their attorney and business advisor prior to making any investment decision.
The Company has the right to conduct multiple closings during the Offering.
If the Company meets certain terms and conditions, an intermediate close of the Offering can occur, which will allow the Company to draw down on half of the proceeds committed and captured in the Offering during the relevant period. The Company may choose to continue the Offering thereafter. Investors should be mindful that this means they can make multiple investment commitments in the Offering, which may be subject to different cancellation rights. For example, if an intermediate close occurs and later a material change occurs as the Offering continues, Investors whose investment commitments were previously closed upon will not have the right to re-confirm their investment as it will be deemed to have been completed prior to the material change.
The COVID-19 pandemic has had, and may continue to have, a significant effect on our business operations and revenue projections.
In January 2020, the World Health Organization has declared the outbreak of a novel coronavirus (COVID-19) as a “Public Health Emergency of International Concern,” which continues to spread throughout the world and has adversely impacted global commercial activity and contributed to significant declines and volatility in financial markets. The coronavirus outbreak and government responses are creating disruption in global supply chains and adversely impacting many industries. In the child care industry specifically, the COVID-19 pandemic has dramatically affected by the need for in-home care and the availability of caregivers willing to care for children in their homes. The outbreak could have a continued material adverse impact on the Company and the economy as a whole. The rapid development and fluidity of this situation precludes any prediction as to the ultimate material adverse impact of the coronavirus outbreak. Nevertheless, the outbreak presents uncertainty and risk with respect to the Company, its performance, and its financial results.
We operate in a highly regulated environment, and if we are found to be in violation of any of the federal, state, or local laws or regulations applicable to us, our business could suffer.
We are also subject to a wide range of federal, state, and local laws and regulations, such as local licensing requirements, and retail financing, debt collection, consumer protection, environmental, health and safety, creditor, wage-hour, anti-discrimination, whistleblower and other employment practices laws and regulations and we expect these costs to increase going forward. The violation of these or future requirements or laws and regulations could result in administrative, civil, or criminal sanctions against us, which may include fines, a cease and desist order against the subject operations or even revocation or suspension of our license to operate the subject business. As a result, we have incurred and will continue to incur capital and operating expenditures and other costs to comply with these requirements and laws and regulations.
The market for our product may be smaller than we expect and we may not be able to generate the revenue we expect.
There can be no assurance that the market for our product is as we expect. Furthermore, the unit cost may not be achieved for many reasons, including the pricing of competing products, general economic conditions and the market.
We may face significant competition in our markets.
We are competing with a variety of companies in the United States and abroad. A number of companies are much larger, well-established, have longer-standing relationships with customers and potential business partners, have greater name recognition and have, or may have, access to significantly greater financial, and marketing resources. If we are unable to compete effectively with competitors, our business, financial conditions and results of operations may be adversely affected.
Our business would be adversely affected if caregivers on our platform were classified as employees instead of independent contractors.
Changes to foreign, state, and local laws governing the definition or classification of independent contractors, or judicial decisions regarding independent contractor classification, could require classification of caregivers on our platform as employees (or workers or quasi-employees where those statuses exist). If, as a result of legislation or judicial decisions, we are required to classify caregivers on our platform as employees (or as workers or quasi-employees where those statuses exist), we would incur significant additional expenses for compensating caregivers on our platform, potentially including expenses associated with the application of wage and hour laws (including minimum wage, overtime, and meal and rest period requirements), employee benefits, social security contributions, taxes, and penalties. Further, any such reclassification would require us to fundamentally change our business model, and consequently have an adverse effect on our business and financial condition.
State and federal securities laws are complex, and the Company could potentially be found to have not complied with all relevant state and federal securities law in prior offerings of securities.
The Company has conducted previous offerings of securities and may not have complied with all relevant state and federal securities laws. If a court or regulatory body with the required jurisdiction ever concluded that the Company may have violated state or federal securities laws, any such violation could result in the Company being required to offer rescission rights to investors in such offering. If such investors exercised their rescission rights, the Company would have to pay to such investors an amount of funds equal to the purchase price paid by such investors plus interest from the date of any such purchase. No assurances can be given the Company will, if it is required to offer such investors a rescission right, have sufficient funds to pay the prior investors the amounts required or that proceeds from this Offering would not be used to pay such amounts. In addition, if the Company violated federal or state securities laws in connection with a prior offering and/or sale of its securities, federal or state regulators could bring an enforcement, regulatory and/or other legal action against the Company which, among other things, could result in the Company having to pay substantial fines and be prohibited from selling securities in the future.
A Crowd SAFE holder may lose their right to any appreciation or return on investment due to defaulting on certain notice and require action requirements in such Crowd SAFE; failure to claim cash set aside in this case may result in a total loss of principal.
The Crowd SAFE offered requires a holder to complete, execute and deliver any reasonable or necessary information and documentation requested by the Company or the Intermediary in order to effect the conversion or termination of the Crowd SAFE within thirty (30) calendar days of receipt of notice (whether actual or constructive) from the Company. Failure to make a timely action may result in the Company declaring that the Investor is only eligible to receive a cash payment equal to their Purchase Amount. While the Company will set aside such payment for the investor, such payment may be subject to escheatment laws, resulting in a total loss of principal if the Investor never claims their payment.
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