TerraNova Capital Equities, Inc.
Client Relationship Summary – May 21, 2021
Our firm is TerraNova Capital Equities, Inc. (“TNCE”). We are registered with the Securities and Exchange Commission as a brokerdealer
and we provide middle-market investment banking services that primarily focus on four lines of business: Investment banking to small and medium sized businesses in high growth sectors; middle market mergers and acquisitions advisory services,
secondary trading, and merchant banking services. TNCE does not engage in traditional retail brokerage or account management
services. There are free and simple tools available to research firms and financial professionals at https://www.investor.gov/CRS,
which also provides educational materials about broker-dealers, investment advisers, and investing. This document gives you a
summary of the types of services we provide and how you pay. Please ask us for more information. There are some suggested
questions throughout this summary.
What Services do you provide?
- TNCE offers investment banking, mergers and acquisition, secondary trading and merchant banking services. Our banking
clients generally consist of small to mid-sized businesses in high-growth sectors, such as healthcare, clean energy,
technology, consumer products and manufacturing.
- We may recommend investments for you, based on your stated investment objectives, risk profile, level of experience and
sophistication. The ultimate investment decision as to your investment strategy and the purchase or sale of investments will
be yours. We generally limit the sale of private placements to “Accredited Investors” only, as that term is defined in the
securities laws. On an infrequent basis, we may solicit or sell certain private securities to non-accredited investors.
- When we act as placement agent for issuers seeking to raise capital, we offer our services to them as investment bankers, and
assist with deal structuring, valuation and capital raising.
- We do not offer investment monitoring services. Once you purchase a private offering from us, we do not provide any
ongoing information concerning the issuer, unless the issuer specifically requests us to send information to its investors.
- We do not provide you with any monthly or periodic statements concerning the value of our investments.
- We offer a limited selection of investments. For example, we do not offer stocks, bonds, mutual funds, exchange traded
funds or variable annuities. We only offer private placements. We do not offer proprietary products.
- We maintain certain requirements concerning minimum investor qualifications such as income, prior investment experience, amount of investment and suitability requirements before we solicit an investment or approve any client to participate in any particular investment. Issuers may have additional requirements and/or restrictions as to whom may participate in an investment in their placements and required minimum investments, which may vary by offering.
Given my financial situation, why should I invest in a private placement? How will you choose investments to recommend for my account? What is your relevant experience, including your licenses, education, and other qualifications? Please explain what the abbreviations in your licenses are and what they mean.
What fees will I pay?
- There are no fees or commissions paid by you to participate in any private offering. All fees and commissions are paid to us
by the issuers and are built into the investment amount. The amount retained by the issuer is “net” of its costs and fees
involved in the offering process, including our placement agent fees and expenses.
- The commissions and fees we receive from any particular issue differ from offering to offering and are negotiated between us
and the issuers at the inception of the placement agency process. While there is no specific commission or fees for all
transactions, a typical commission could be in the approximate range of five percent (5%) to ten percent (10%) of the gross
amount raised, plus an additional three percent (3%) fee for the placement agents’ fees and expenses, both accountable and
- In addition to the cash compensation earned from the placement issuer, may also receive additional non-cash compensation,
such as shares of the same or a different class of the securities as being offered to our clients, and/or warrants or options to
purchase additional shares of the securities of the issuer for a price that has been negotiated and agreed to by and between the
issuers and us as the placement agent, which may be less than the price at which the securities are being offered to investors.
- You will incur fees and costs whether you make or lose money on your investments. Fees and costs paid to us from the
issuers will reduce any amount of money you make on your investments over time. Please make sure you understand what
fees and costs you are paying.
Help me understand how these fees and costs might affect my investments. If I invest $100,000 in a private placement offering, how much will go to fees and costs, and how much will be invested for me?
What are your legal obligations to me when providing recommendations? How else does your firm make money and what conflicts of interest do you have?
When we provide you with a recommendation, we have to act in your best interest and not put our interest ahead of yours. When we provide any service to you, we must treat you fairly and comply with a number of specific obligations. Unless we agree otherwise, we are not required to monitor your portfolio or investments on an ongoing basis. The way we make money creates some conflicts with your interests. You should understand and ask us about these conflicts because they can affect the recommendations we provide you. Here are some examples to help you understand what this means:
- We raise capital for our issuer clients through securities offerings which we solicit and sell to our retail and institutional
clients. Recommending the purchase of those securities offerings to our clients creates a conflict of interest for us.
- This conflict is significant as we owe a duty to both assist the issuer in raising capital for which we will be compensated, and
we also owe a duty to our clients to only recommend investments that are in their best interests and suitable for their stated
- As placement agent, we are paid a portion of our client’s investment proceeds as commission and fees for our services to the
issuers of securities, which also creates a conflict of interest for us.
- We have raised and may in the future, raise capital for our holding company and other related entities which poses a
significant conflict of interest for us and our financial professionals in that we, or our related entity, will receive the benefit of
our clients’ invested funds to use for our/their business purposes at our/their full discretion.
- We seek to mitigate these conflicts by making full disclosure of these and other potential conflicts of interest, conducting
extensive due diligence on our issuer-clients, and only recommending the purchase of private placements to clients who we
deem to be suitable for the particular investments we recommend.
- From time to time, our investment professionals may also participate in the same offering that they are recommending to their clients. There is no incentive to do so and the representative does not receive additional compensation.
How might your conflicts of interest affect me, and how will you address them?
How do your financial professionals make money?
Our financial professionals are paid a commission (or other transaction-based fees as described above) based on the investments in the private offerings that they recommend and sell to their clients. Of the total commissions generated by TNCE for its work as the placement agent, our financial professionals receive a portion of those fees, generally in the range of 70% to 80% of the total fee earned by TNCE from its placement agent services. Payouts to representatives are established at the time of TNCE’s engagement in each transaction and do not change based on sales amount. Our firm does not engage in any practice that favors one type of investment over another. We also do not participate in sales contests, sales quotas, bonuses, or provide non-cash compensation to our representatives based on the amount of invested money raised. However, TNCE may sometimes allocate a portion of its non-cash compensation earned as placement agent (i.e. restricted stock, warrants or options), to its registered representatives who participated in the transaction, in its sole discretion.
Do you or your financial professionals have legal or disciplinary history?
Yes. Visit investor.gov/CRS for a free and simple search tool to research TNCE and our financial professionals.
As a financial professional, do you have any disciplinary history? If so, for what type of conduct?
For additional information about our financial professionals and services, visit https://www.investor.gov/introductioninvesting/
getting-started/working-investment-professional/using-brokercheck (https://brokercheck.finra.org/) or our web site (https://terracap.com/). Our phone number is (212) 381-7391 if you would like to receive additional information and a copy of this summary of our relationship. To report a problem to the SEC, visit Investor.gov or call the SEC’s toll‐free investor assistance line at (800) 732‐0330. To report a problem to FINRA, you can call 301-590-6500. If you have a problem with your investments or financial professional, contact us in writing, TerraNova Capital Equities, Inc., Attention: Compliance Department, 420 Lexington Avenue, Suite 1402, New York, N.Y. 10170, telephone (212) 381-7391 or by email at email@example.com.
Who is my primary contact person? Is he or she a representative of an investment adviser or a broker-dealer? Who can I talk to if I have concerns about how this person is treating me?