Security Deposit
An upfront payment required from issuers to initiate onboarding and cover preliminary structuring costs.
Full Definition
A security deposit in the context of securities issuance is an upfront payment made by issuers to begin the onboarding process with a platform or service provider. This deposit covers preliminary costs including legal review, compliance assessment, entity structuring, and initial documentation.
Unlike fees tied to successful capital raises, security deposits are typically required before work begins, ensuring the platform can commit resources to preparing the offering.
Why It Matters
On Sails.to, the security deposit demonstrates issuer commitment and funds the initial structuring work required to prepare a compliant offering. This includes setting up the Series LLC or SPV structure, drafting offering documents, and configuring smart contracts.
The deposit is disclosed transparently in Sails.to's pricing schedule so issuers can budget appropriately. Some platforms offset the deposit against success fees upon successful completion of the raise.