Collectibles under RegA+

Speakers

Oscar Jofre

CEO and Co-Founder

KoreConX

Oscar Jofre

CEO and Co-Founder

Oscar is currently one of the Top 10 Global Thought Leaders in Equity Crowdfunding, a Top 5 Fintech Influencer, Top 10 Blockchain and a Top 50 InsureTech. He has published an eBook that has been downloaded in over 20 countries, and been distributed by partners worldwide. Oscar is a featured speaker on Fintech, regulated, equity crowdfunding, compliance, shareholder management, investor relations, and transparency in the USA, Australia, UK, Germany, France, Netherlands, Canada, Singapore, Indonesia and China. He speaks to audiences covering alternative finance, RegTech, insurance, banking, legal, and crowdfunding. Oscar also advises the world’s leading research, accounting, law firms and insurance companies on the impact Fintech, RegTech, LegalTech, InsurTech and OrgTech is having in their business.

Sean Levine

Managing Director

Entoro Capital

Sean Levine

Managing Director

"Investment banker, attorney, securities analyst, entrepreneur and consultant with a focus on private placements, energy markets, fundamental and technical equity and commodity analysis, trading system development and policy intelligence. Led a team focused on design, development and optimization of unconventional/innovative trading systems. Also wrote and published newsletters and reports on the oil and gas industry, economic and geopolitical dynamics. Hold Series 7, 63, 86 (Research Analyst), and 87 securities licenses. I analyze problems from a variety of perspectives. Strong planning, analytical, collaboration, negotiation, and mediation skills. Affiliated with Entoro Capital and its Broker-Dealer. Specialties: Private Placements, Structured Finance, Data Analytics and Modeling, Writing, Oil/Gas Price Modeling, Financial Publishing, M&A, Research and Analysis

Sean Levine  00:00

Last time and rely on me, except 

Oscar Jofre  00:03

I have a webinar just with Laura. I can’t find anyone who’s had any experience with a RegA for now for profit.

Sean Levine  00:13

Okay, well, I’ll tell you what, when you like to, I mean that I think Unfortunately, this is going to probably need to be more of a spitballing session and probably a short webinar

Oscar Jofre  00:23

Spitballing. There’s no such thing spitballing in this world, what do you mean,

Sean Levine  00:28

I’m gonna be disclaiming left and right that I, like, I’m not a collectables expert. I really am not. I have ideas and thoughts about this.

Oscar Jofre  00:36

But yeah, too. Okay, well, that’s the isn’t that the best way to approach things is from first we need to engage and then we need to ask questions and get we

Sean Levine  00:51

will be asking as many questions of you as you do have me I think, because this could probably be more of a conversation because, you know, I’m going to be asking you what your see I’m seeing interesting, you know, I hear about things I know, like certain companies trying to do certain kinds of raises, but I don’t even have any RegA issuers doing. Doing this right. Do

Oscar Jofre  01:16

Collectibles? Yeah, yeah, we do. Good. Well, you got to tell us all about them. Yeah, we we’ve, they’re they’re they’re collectibles are different. collectibles are different, because it puts what it does to the traditional capital raise. It flips it on its side, because you go, Wait a minute, this guy’s collecting glasses. He collects glasses that were worn by famous writers. Is there is there a specific issue where he’s doing that is that there is and and, and these are the glasses that Ernest Hemingway wore. Right? And, and, and so I’ll go to one that I think it’s pretty neat.

Sean Levine  02:00

I buy a 10 1000s interest in those glasses.

Oscar Jofre  02:03

Well, so the other one is where they are utilizing arm to buy famous guitars. So think of it this way you like something so much. So what is it? What is collectibles? And how does it fit into RegA? So it’s kind of two things that you would think that never come together. But they actually do if you just think about the modeling. So we’ll talk about cars, music, watches, shoes, wine, and guitar. Did I say guitars already. So

Sean Levine  02:40

I’ve got some that we can throw in the mix as well, that you haven’t mentioned. So there’s there really are lots of interesting things going on in this space. And if not directly in this space may be tangential but kind of overlapping conceptually with it.

Oscar Jofre  02:54

Yes, but I know people call the collectibles. But in reality, I mean, they still needed to create a company an entity. So it’s no different than you and I are getting together and say, Hey, Sean, let’s create a company. Great, let’s do it. Let’s, uh, let’s go to the lawyer. And we’re going to call it ABC collectibles. And it just so happens, we’re going to be collecting earplugs. And, and if each of these seriously, if DC to these earplugs today, they’re worth $100. And the reason you’re buying it is because you know that it’s going to increase in value is earplugs by Dre. But there you go see? And and then the investor What are they investing? Well, they’re investing in this company that owns these collectibles. And so the interesting thing is we’ve made such a big deal of it as of late that it’s gotten a bit confusing, but it’s no different than real estate. It’s no different than any other company. And

Sean Levine  03:49

I was gonna say, to the degree that they’re digitization trends going on in real estate, right? It’s very similar. It’s just not a collectible. It’s it’s a real asset but but By the way, did you are we are we live now?

Oscar Jofre  04:02

Well, yeah, we’re talking. Should we tell everybody who you are who I am before we get all nerdy and geek out on Sean Levine and you are Oscar Jofre? There you go. So we’ve we’ve done the confusion. Now I might as well be because I might as well be Oscar interviewing you at this point. I think it’s gonna be It’s okay. It’s okay. Well, good afternoon, everyone. And welcome to the KoreSummit webinar series. 2021. My name is I’m Oscar Jofre. Yes. The other one is just a fake. It’s just right. So you kind of get the sense of our webinars is really, we’re exploring topics that are coming up. And this one is one that is definitely getting everybody’s attention. It’s kind of weird in a way, but it really it isn’t. And we’re kind of demystifying a bit. We’re gonna, you know, we’re not it’s very early in the game, and we hope that you’ll enjoy the conversation. I’m going to be joined alongside with my colleague, please Sean,

Sean Levine  04:59

take a moment out I’m Sean Levine with Entoro capital, I’m the head of the firm’s RegA and CF cap raise practices. We’re licensed broker dealer all 50 states, the District and in both Rico. And yeah, this is it’s a, this is a niche, but quickly growing and and kind of fascinating sub segment of of the crowdfunding space more broadly as

Oscar Jofre  05:26

it is. And you know, the the thing that’s interesting about it is that it’s not that difficult. It took me a while I have to be honest. I mean, the first time somebody came to me, it was watches. And I really I, I personally, I mean, I don’t know about you, but I would rather collect cars. Okay, see, we Some people go Okay, I get it. But there are people who collect shoes, running shoes.

Sean Levine  05:54

Yeah, oh, yeah. No, no, that’s it. Yeah, that’s a big thing I have some friends on Facebook are big into that. And they’re always posting the newest, the newest kicks. And so it’s a, it’s a, it’s a big, it’s a niche, these are all niche markets, appealing to different folks. But the folks that are into them are very passionate about what they’re into. And I guess if you have a large enough audience focused on a certain thing, then if you can get the word out, then theoretically you can, you can kind of create these batches.

Oscar Jofre  06:23

I mean, it’s the real thing about collectible, is, it’s not the fact that you’re the one collecting it, how many other people would like to collect. So let’s take an obvious one. Because I think once you get the obvious one, it’s easy to describe the model, we can safely say, I’m not suggesting that everybody wants to collect cars. But if you could collect a bunch of cars, imagine you being the collector, and Sean comes over my house and Harry and Jerry, and they Oh, man, you got to be nice to to have just a little bit of ownership of that. And I decided, you know what, I’m going to create a company, and I’m going to put all my collectibles in that. And I put a value of those cars today. You know, whatever the price is, let’s say it’s worth 10 million for all those collectibles. And the reason why you would invest in my collectibles is because you know, I got a car in there that could easily and the next few years increase in value based on auction pricing. So it’s no different than it is higher risk. Because

Sean Levine  07:24

it’s the only way it’s the only way I can get a piece of I don’t have $2 million. And see, that’s the only way that I can play in this game. It’s a creates, again, this whole broader theme with crowdfunding and democratization of investment we keep. Those are our buzzwords that we keep the mantra that we keep preaching. And this is one more way that happens because it’s all special, opaque market that regular investors have been unable to participate in. And it creates a pathway for you to invest much smaller scale at your scale that you can afford, hopefully, but but to be able to still potentially capture that same upside because if the asset appreciates, you know, 300% over the next two years, then your fractional interest will appreciate the same.

Oscar Jofre  08:08

Agreed, agreed. And what sets it apart is well that I’ve seen is that I gave you the holistic where I make my all my cars part of the collectibles. And as I keep raising capitals to buy more collectibles to increase the value. So again, it’s like any other company, except for that it sits there in this asset that could gain in value.

Sean Levine  08:30

So this is where I do start to have a question. You know, you mentioned that you do have some some client issuers who were who were doing this taking this model up. When we talk about this, are we talking about helping raise money for the issuer? Who wants to launch this market? Are we talking about? They have a $10 million car, there’s some bad entity in the backdrop there’s a $10 million car they have they have a whole bunch of collectible cars. This one, you want to invest in this, this Ferrari this ancient Lamborghini, you know, prototype they got raised once and whatever is the is the RegA 1973 Lamborghini? Is it it is a Is it a specific asset? Or is it an entity issuer that wants to run a market in these types of goods? What are what are you seeing in that regard? And could it be both? We’re seeing

Oscar Jofre  09:27

So, and that’s where the investors really need to pay attention to because I have seen so I’ve seen one right now on guitar. I mean, it hasn’t been approved yet. Where you are actually they’re raising the entire amount just for one guitar. Okay, so how much are they raising? I think on this one’s about $5 million. So that’s it. Now, the only reason we I want to make sure we’re careful here is that I’m not certainly suggesting that these assets Are these collectibles are like real estate is just purely as an example. It cannot be an object. And I’ll tell you a couple reasons why there are certain restrictions out there in the market that we’ve seen already. Like your your retirement plan A won’t allow you to invest in collectibles, if there’s because they, even though people can make the claim that it’s going up in value to them, it’s not even a matter of hi read this, this is the ultimate risk, you know, because this is something that the only way he gets his value, it’s on an auction. But let’s say it was, you know, let’s take a product that somebody was wearing the runners of, you know, Oscar Joffrey and Oscar wonder, whatever the great cop and all that and all sudden Oscar gets into some scandal so that the shoes go from, you know, $10,000, boom, drop down, it’s the same shoe,

Sean Levine  10:52

because publicly traded equities never faced that that level of

Oscar Jofre  10:56

growth. It’s totally so much safer. It’s completely it is it’s very different. It’s making me laugh. I’m trying to keep a straight face. I’m

Sean Levine  11:07

just I’m so disgusted with the public in the public market and and the delivery of inflation relative to reality at this point that any of these conversations about the risk of alternative investments just I don’t know,

Oscar Jofre  11:19

I understand that. It’s just that there are gatekeepers within the industry that may restrict it. But as of now, whatever our views are, the regulators us are what they are. And they’re the ones everybody exactly, but the reality is, companies are individuals are doing it. We’re seeing it in where you can actually own specifically be an owner of a guitar. So you would be among other fans of this particular and the question is how many fans are there for that product, and it could be I’ve even seen it in for cards, collectible cards, I mean, cheese’s I mean,

Sean Levine  11:55

this is a trading card games card. I I know I’ve trade and sports cards. Speaking of just seeing people randomly posting things on Facebook, as far as collectibles, you know, I had a buddy that was into comic books, and he I bet I knew him 20 years ago, and all of a sudden, he started posting about all you know, he’s just bragging about, like, you know, everybody’s big on this or that in the market. And I picked these up, you know, 20 years, they’ve appreciated, you know, however many 1,000% in value. And I don’t even think the comic book market is anywhere near as hot as it was back when I was a kid like in the you know, the 90s, it was it was a huge an 80s and 90s, it was this big fad, and it got, you know, the market blew up. And, but so this is more a little bit more of a subdued, collectible market relative to some other things these days. And still, you know, if you got the right ones huge appreciation. So

Oscar Jofre  12:49

in it, I think that’s the risk that everyone is associating it with, where there may be an end, like everything, there’s always a risk, but as soon as one risk goes down, it affects any other future ones, but that it’s not discouraging companies from exploring it. So it’s basically a model of I am a collectible of glasses. And there is a value perceived value, either by a third party or something which loves the asset.

Sean Levine  13:20

Let me ask you this. I think I understand. And in this, the theme of this particular webinars is under RegA. Right, right. Right. So here, I mean, I guess your you know, you you take the cost of the RegA is going to come out of the cost of the asset, I guess you’re gonna offset it against that value, when it ultimately is, is liquidated or monetized or whatever. And that would, you know, because that there is a cost raise are not inexpensive. But I get other than that, I get the concept, you you, you basically get this asset out into the marketplace through the RegA, and the value of it will rise and fall based on the trading in the in these units because RegA shares are publicly transferable immediately. Theoretically, right?

Oscar Jofre  14:07

Well, well, and that’s where that’s where it’s getting a little muddy. I mean, so the the the community is treating collectible of, in a class of its own, without looking at, you know, would we normally think about a company that owns a whole bunch of playing cards and art and all that separately as a legal entity, let’s say it’s, you know, ABC collectibles, because we brought it down to the granular right down to the one item. It is it has sparked a lot of interest in it, you know, from fine art. I mean, art is one particular one where you’re not going to see somebody raise money for a whole bunch of paintings, they’re going to do it for one and, and they say, you know, there there’s a lot of pros behind it where, you know, a guard against inflation. You know, we’re diversified and fun, but when you know When you start bringing it back to the legal sorry, to the legal and the broker dealer community, um, it’s, it’s a product that has no income component to it. And the fluctuation of up and down is unexplainable for them to where the question is, will the broker dealer be liable for selling this product to their clients? Right? Or like a registered investment advisor making, you know, saying that this was, let’s say, this was the 1961 version of the form 105. But nobody, I mean, we’ve seen this in art. One April can for you definitely

Sean Levine  15:39

creating, you’re getting me really excited about Endor getting involved in this space. I tell you that much. Yeah, that right there, reg bi, we’re, you know, we’re getting treated more like investment advisors in certain ways. And even though we’re not and it right, bi, you know, that that’s Yeah, these are very legitimate questions and something that I mean, look, I think you can, you have to be able to make your case for why it’s a reasonable investment for somebody. And I think you can you can collect data and and make reasonable arguments whether, you know, the bottom line is reg, bi more broadly just kind of creates a license for the regulator’s to mess with broker dealers. It is that’s what it is. Because looking backward, anybody can blow up whatever arguments somebody made and say, Well, yeah, but you were wrong. And you should have known better. And, you know, at the time, nobody does know, ultimately, and that that goes beyond these collectibles, and other types, it’s all you can say is Look, this is a, this is a clean asset, or entity or issuer or whatever, as far as there’s nothing shady going on. So I guess, for a collectible, the kind of comp that a comparable analogous worth that you might do is to try and make sure that it’s not counterfeit, and and ascertain the veracity of the item. And the authenticity of it. I think that’s that’s what you would try to do. But that’s a very difficult in the real world and the collectibles market, they are just trying to authenticate items. So at least if it’s an issuer, you can figure out if they have a criminal record or not. And you can really try and dig down and make sure that they’re not a fraudulent, you know, entity up to no good and so on. You can you can dig around and get a good handle on that. And you can look at their business model and see if it’s not a model multilevel marketing scam or if it’s a real thing. Not that disclaimer, I’m sure they’re entirely legitimate multi level marketing. And he’s but but but still.

Oscar Jofre  17:48

I think it’s really I think it’s really interesting because it the fact that we’re already seeing it companies raise money for watches and all that persists. Sorry, that was the other one that was getting to me personally. There’s a group that’s doing purses like high end versus product, Louis Vuitton Hermes and all that, which never had any trouble with counterfeiting. Well, that’s the you know, I’ve been looking at this and I’ve been denied watch the documentary The other day on wine, how one guy just kind of took the industry by surprise by doing counterfeit by taking away that peel in the cork. I mean, he fooled all the kind of sewers everyone with fake inexpensive one. So, um, that that is the part of it in some, like our wine in those categories. I mean, I don’t know if I bring it to the same with guitars and playing cards, I guess you could put it to him. So it, it does bring something really interesting, the collectible industry in general. Eight, it needs a verification component to it. And I haven’t seen that yet in in a RegA where somebody is actually bringing some sort of high like innate

Sean Levine  19:05

in high end collectibles. They do and like musical memorabilia, I mean they do and autographs and stuff, there’s Chain of Custody work that, but it hasn’t been done for very long. And it’s kind of somewhat a few and far between that you’re gonna find items that have that chain of custody, but that that’s sort of like the gold standard of, of tracking. And with you know, with RFID getting more popular, there are more and more ways to do that kind of thing. But for all the older stuff that’s been out in the market for years and decades. It well good luck, you know,

Oscar Jofre  19:39

but this is that the stuff that’s the valuable stuff. I mean, the first question I asked the the group regarding the guitar, how do you know? They go What do you mean? Well, how do you know that was the guitar that he played on? I mean, how do you know? Yeah. Oh, it’s been autographed. Well, I I watched the show a sharpie in the Yeah, it I wasn’t trying to be cruel, just trying to get an unjust. And I get it from a fan’s perspective, where now they can feel that you can own something. I mean, I like that part of it where God, Jesus, You know what, I would never get a chance to win a Ferrari like that bad, you know what I put in 1000 bucks, I get a piece of it, if it goes up, I’m going to be enjoying that, right. And I can say, I’m an owner of that collectible, that

Sean Levine  20:24

the cars are probably a little easier, you know, because they’re usually there’s so few of them made when it’s something really, really unusual. And the kind of thing that people want to collect, or, you know, they have, they have Vin numbers, and they, you know, they’re they’re various things that that industry has tried for a while to, you know, legitimately track in a comprehensive way, those items, so it cars are naturally, you know, somebody buys and sells a car, you gotta you gotta have the title, you got to move it in there, we already kind of tried to track those. So that one, maybe that lends itself really well to this idea. And it’s probably a good one to do kind of did for the industry to kind of dip its toe in the water, because it seems a little safer. There was somebody that was doing a race thoroughbred race horses, or wanting to do that you you may be familiar with them as well, I don’t I don’t know. But there was somebody out there recently that’s wanting to do something in that space. Maybe that’s a high end market. And the genetic, you know, there’s genetic testing and stuff you can do. So maybe that that kind of thing. Maybe that makes decent sense for

Oscar Jofre  21:32

Yeah, the I love the the question will be what Couldn’t you classify as a collectible? I think that the, that’s going to be an interesting thing that the SEC will have to go through on because I mean, they’re one of the things they’re not doing is judging the merits of a business, I mean, who’s gonna say your business is going to be better than the other who’s to say that this little thing here is not a collectible, if you think it is, and if you got other people to think of the market will decide, right? Ultimately, that is there. But there are some questions that are arising from it, but it is causing a bit of a kind of confusion in the market as to, you know, people when they think of collectible all grade I, I put in money on that art, do I get to take it on you, you don’t do

Sean Levine  22:22

that? I’m afraid you can frame the your shares or whatever, whatever. unit of ownership, and you can put that on your wall and take a little picture of the thing and put it next to it. Because that’s

Oscar Jofre  22:34

about all you can. That’s all you can do. That’s exactly uh, you’re not going to be able to do anything further than that. I think this is the part of collectibles that there’s a lot a few things people need to understand of it that it’s because it’s relatively new. It may not. I mean, just because you think, you know, purses are great and all that the likelihood that it can be tradable as these but again, the same argument could be set for any other company, whether it’s tradable or not. One, they would argue that it’s a collectible. Everybody knows Michael Jordan shoes are worth a million. So there’s a lot of buyers out there.

Sean Levine  23:14

It’s kind of like it’s a commodity investing, it is a specialized commodity,

Oscar Jofre  23:19

correct? Correct. Super specialized.

Sean Levine  23:23

It’s not a commodity, because the debit is the very definition of a commodity is it’s some kind of ubiquitous thing. But but but still, conceptually, it’s that kind of investing. You pick a thing, you think the value of the thing is going to rise? And you put the money in

Oscar Jofre  23:41

it correct? Correct. And it’s it’s really about moving the book, this is just pushed the push things forward with the market in a way that we probably never even envision and try to imagine the first time I’ve been trying to figure out who the first one is, I think it was Otis Otis collectible. I think they’re doing purses, and they’re doing watches and shoes, they have an array of different types of collectibles that they’re doing. And they were, you know, when I think oh, that what they needed to do in the early days to get started or even, you know, to to even be allowed to do what they do. There, you know that so yeah, so they’re doing shoes, purses, and cards, right? And so the the, the key here, this is a very different environment that we have seen before, where the on one end, they’re raising the capital to create this environment on the other end, they’re also creating the environment to sell the the asset as well. So not only are they creating demand, so right now I’m looking at one particular one they have here is you can you can buy shares in the Michael Jordan runners a $10 a share. Right? And it’s, it’s, you know, it’s got the Michael Jordan going through the hoop number 23. And these are the these are the ones he wore. Right? It’s a, it’s so somebody who really loves Michael Jordan says, Yes, I want though, I want to be part owner that I could never buy it because it was worth, I don’t know, hundreds of 1000s of dollars. Now I own one chair, and if they decide to So, so the real question about the collectibles that I think we haven’t covered yet is, you know, like every investment people make, you know, collectible. Sometimes people keep it for life, because I love that car, I’m just not gonna get rid of it. You know, no matter how much money you offer me, it’s just my car. Right? Question is where you got a business where, you know, it’s time to retire? Well, are you retiring? The collectible? are you returning the business? Like, there’s a lot of questions that haven’t come out yet,

Sean Levine  26:09

you get a whole Yeah, that is some of the ripple effects of this development. If it does kind of come to fruition we were talking about, you know, one could argue that part of the reason that certain collectibles see such high prices, is partially due to the liquidity of the market. And the fact that you only see liquidity events set, you know, high end auctions, and, and things like that. And there’s only so much of it, or only, you know, there’s one or two of these things, and they never get sold. So when they do the spread, the bid ask spread on the thing can be gigantic, where if we translate this one thing, into 1000s of units that become liquid, you might start to get you get some interesting price discovery dynamics, among 1000s of people looking at a thing, and what it should be worth that you wouldn’t necessarily have in the traditional channel of monetizing the thing. Because you know, it’s not something that’s only going to happen once every 30 years, because my little piece of it that can happen every day, you know, if I’m plugged into this marketplace, and that that that pulls the kind of breaks the exclusivity and the illiquidity of that market a little bit, which is a good thing from an kind of an Adam Smith kind of standpoint, you know, markets assessing the proper values to things because of the ability for people to get in and out of them. But, but if you’re somebody who owns those assets, now, would you potentially be a little more reticent to take that path, if you’re worried that that might dilute the value of it? And one other piece to think about is, if you start to see this stuff, take hold and gain traction is I want to buy warehouses,

Oscar Jofre  28:07

but I Oh, I know to store them, but let me Yeah, cuz they’re just gonna sleep. They’re gonna be hidden away somewhere. Okay, but you brought trading I mean, one thing about collectibles, we know where they get it sue the what’s a wish the auction houses the big name, Celebes, that’s where you go, they set the price. So having secondary market trade for those shares. What I mean, now, when I’m having a problem with

Sean Levine  28:31

that track, it’s really it’s two because one, there’s the free trading market over here, that’s going to just set the day to day value, but but then over here, you have the real liquidity event where the option would happen. And those those the physical asset will occasionally change hands. And that that’s two separate completely dead, but they could impact influence each other. And that’s what I’m saying about if you are somebody who actually did own one of these assets, if you’re worried that what’s going to happen the day to day over here, if the price you know, falls and maybe it’s a temporary blip maybe it’s something that you just would have waited and and maybe you still wait but but maybe that that visibility on the the movement of the day to day could eventually you know bleed through and have an impact on the long term price as well.

Oscar Jofre  29:21

Yeah, that’s the one that I’ve been struggling with because RegA is a liquid asset and the fact that you can secondary market trading, I saw Otis make an announcement for secondary market I’m going okay, so I own I own shares in these shoes. $10 a share on and I’m not cracking I think it’s great. I just I’m trying to get the logistics down to get your head around. Yeah, it’s Thank you get to How would I know that it went up, unless I’m getting an indicators on some auction house. So that would mean there would have to be another one like it or another one duplicate to it to give some compare again. It, it is. It is an asset class. I read an article about this once, they said that those who invest in collectibles should be those who love collectibles who love that particular you shouldn’t do it for the same reason you do other asset classes, because you need you’re there to have fun with it like to say, Oh my god, I actually own that 1932 Ferrari right on

Sean Levine  30:28

YouTube, there’s a practical utility that you get out of this is Jerry, and I’m feeling I’m feeling like I had a good humanities education at West Virginia University is very Jeremy Bentham, utility of the item, it has inherent value for you that you’re getting out of it, regardless of whatever else it is a practical utility that you get just in the enjoyment of the item, as opposed to just some monetary store of value that you’re trying to gain the value of it over time.

Oscar Jofre  31:00

Yeah, I think we obviously we were encouraging people to you, obviously those who like collecting or have a collectibles, or see a business in the collectibles, you can clearly see. So we’ve now seen cards, shoes, guitars, athletes. So which which plays all

Sean Levine  31:19

these plays, and I want to come back athletes, I like that you mentioned that I was going to mention it too. But this, this plays back into the broader theme of with a reg. Reg a or reg CF. You know that that’s part of the appeal for these raises anyway, for an issuer is to get to build brand awareness and create this army of brand ambassadors. So the corollary being the people who are passionate, much like people who are passionate about whatever collectible it is, are the people that ought to be really, you know, involved in that market. The people who are passionate about some some comic company x that’s got a good or service that they love, they can be the best investors and supporters of those companies when they have a RegA offering. Because they’re taking it gives them the ability to take even further owner literal ownership in this good or service that they love. In addition to being a consumer of it.

Oscar Jofre  32:20

You know what, really good for the collectible industry, this the same people that are advising they ultrahigh will know where where to invest in this painting, we’re in this because they will bring value these people do that for a living, right. They encourage people of great wealth that you should buy these things in over five years. So this will be worth x. We need that one more. We need a one more layer down so the industry can understand what this potential could be. Yes, today, these glasses are worth 100,000. But in five years, based on everything today, it could be worth this like any other business, but they’re coming at it the same way they advise the altar to say, we know art is being purchased. We know all of these collectors are already been what what I like about this is that we’re not being offered something odd or weird. We’re just being offered something that typically is been bought by one person who then makes them Museum in their house, which is

Sean Levine  33:19

fine, or pay somebody to store it in a warehouse just so they don’t they just want to own it for the appreciation. They don’t even show it.

Oscar Jofre  33:25

They don’t even show it. That’s right. Clearly, so now it’s relates

Sean Levine  33:29

to what we’re talking about as a regular investor buying a 10,000 share of the thing where they can’t show any so that I think the warehouse demand as this picks up warehouse demand just rises because you’re gonna be more and more people taking little tiny slivers of something don’t actually have it. It’s good to things got to be kept safe. You’re going to put it in the dark in a box in row 37 B of a warehouse in it.

Oscar Jofre  33:56

Well, they better make sure they make their monthly payments because I certainly don’t want to see it on one of those shows. Yeah. Oh, no auction. Art Look at that. No, but it that, you know, it’s it is interesting collectibles are here to stay. That’s for sure. We definitely got a lot more questions to ask. And, you know, Sean, I listen, I appreciate you and i doing this today because it it’s funny for everyone out there. There isn’t a lot of experts. nobody’s been talking about it other than the people that did it themselves. And unfortunately, we can’t just bring those companies that are doing it right now on a webinar because the fact they’re doing a RegA right now restricts them to certain activities, and this is one of them. But we’re my curiosity is I think it’s a great thing. I think, you know, for me cars are one of the things I love. So what I invest in Jay Leno’s collection, if he was to put it out there and everybody could the way that guy takes care of cars in a heartbeat, right? So we’re gonna see that with sports. Same thing.

Sean Levine  35:01

Let’s, before we get to it, I think we should touch on this because it’s a totally different flavor of this idea. But, yeah, be careful, I think about how we talk about it. But at pro athletes, and we know that I know some issuers who are doing this creating these channels and marketplaces for pro athletes to monetize a piece of their future cash flows. And by letting people invest into that cash flow stream and digitize that tokenize, that that cash flow stream. And it’s, if they can pull this off and get this at any kind of scale, and they went there today, they’re talking about doing these as see apps. So that the investor in with a reg CF, you got to hold it for a year before it’s transferable. But because it’s a lot cheaper than a RegA, and again, you can kind of take little, little individually, if you wanted to get a whole bunch of different people that you could invest in their future cash flows, it’s a less expensive way to create that market other than having to wait a year to do it. But yeah, Spencer Dinwiddie, if you if you google around, he tried to do this a couple years ago as an NBA player. But these guys want to do this at scale. And it kind of mashes up the idea of people who love fantasy sports, but to actually with a stock market, that whole market of 1000 and call NFL players and who are all in when they come in, and they sign their rookie contract, and then they go out and they create this, this, this security. And you go in and you say, all right, well, I think this guy’s gonna make it, he’s got the guns, he’s long as he doesn’t get hurt, he’s gonna be a huge asset to the league for 15 years, and he’s the next contract is going to be an $80 million contract or something crazy. You come in with his rookie year and you you participate in this, this security. And then you wait out the four year, you know, the rookie contract, and if that when it comes time to renew, or it comes time to sign, you know, for real and cash in, then you get a piece of that. Oh, it’s a fascinating idea.

Oscar Jofre  37:09

If you see some of the new this evil, evil is getting the athlete even before they become famous, I mean, who would have thought of that in evolution? They’re doing a RegA right now. Like, that’s one of them. There is a fan vaster. And what are they doing? They’re, they’re allowing you to own pieces of music. And and yeah, musicians can be another an exact same. Another one. Exactly. And then we saw it in in gaming, online gaming. So collectibles, I don’t know why they got this kind of, I’m not gonna say they got a bad bad press, I think part of it is because art and wine, and cars, purses and all that and watches just kind of weird and shoes to a certain degree, but it’s no different than the others. It’s just we get the the real key will be, um, making sure that there is, you know, here, there’s due diligence, you know, if you go to forms like crowd, crowd check, I saw Hanks, how does she do a due diligence on an asset? She doesn’t even know that that’s Michael Jordan signature. Yeah, that’s, that’s the issue. I was right there at that game and buyers to pick me and Michael. So that’s

Sean Levine  38:25

the that’s the chain of custody stuff I’m talking about. It’s the kind of work that the folks in the collectibles industry tried to do that, you know, again, varying varying degrees of success. But that’s theoretically, the bandwidth and with the advent of RFID tag and being able to try to chip things, I guess, but yeah, how much that’s actually

Oscar Jofre  38:43

done. The newer stuff will be there, good. But right,

Sean Levine  38:47

but all the stuff inside, it’s hard. It’s very, you can’t just go back in time machine. And most of this stuff has just been floating around. As status things as these markets go on and incorporate the new technology advances and the new best practices, it’s gonna get easier. And maybe you know, what the evolution of these markets that we’re talking about, could help spur that and help push those folks to adopt those practices.

Oscar Jofre  39:14

I think those Well, I think now that we’re going to see a lot of young entrepreneurs that are getting into the, you know, buying a soccer team, collecting soccer team players and all that, we’re going to end up creating, I love that because you know what, it just goes to show that the things that we always thought it was 10 feet away from us, or even further, could be a lot closer just by giving an opportunity to to be an owner in it. And I do get the joy. I mean, I like collectibles. I think it’s fun. I’m not a big fan of shoes or fans or any of that. But I’d like the art one. That one really appealed to me, but I know that I know there’s a high level of risk on that one, right? whiskey whiskey barrels.

Sean Levine  39:58

There’s folks doing that and the RegA side. Or as I write Deeside. I think that’s really neat. I’m I’m a whiskey guy. And I think that would be super fun to get

Oscar Jofre  40:08

a barrel a barrel of whiskey,

Sean Levine  40:10

no, but full of whiskey like you, you get it. And then they looked at the appreciation value of whiskey as it’s aged over time, and it’s pretty impressive. And, and so you can age it for cert, you know, keep aging it for years and years. And there’s a point at which it kind of peaks out and starts to get to Okay, and what happened? Yeah, if you pick the distiller, you pick the the master distiller and if you know that what they know what they’re doing, and or somebody comes into a barrel, and then you can, you can transfer the juice over into another kind of barrel so that it does something different than people who are into that stuff. There’s all kinds of different nuances to it. And it can be very expensive, the end product can be extremely expensive. And it’s a wholesale good, really, because it’s not until you bottle it. And there’s so there’s a huge price difference between what it is and the barrel. And when you ultimately bottle it, it goes way up.

Oscar Jofre  40:58

So well. I love that. I didn’t know that’s a fun one. But that just goes to show you anything goes right. I mean, that is the that’s the bottom line to this. And I and I hope for everybody loved it. Unlike all the other ones where we have very specific answers to the question you heard, we’re just really exploring what’s there already, we’re trying to someone not take it apart, but put some understanding to it from the structure of how cow investing is done. And obviously, you got to got this on the web, you could search it and get that on your own. But you can clearly see that we’re going to see an increase in this we didn’t when we first got involved with it, it, I think there was only one or two, I think now we’re going to see more than with $75 million, it does increase the collectible profile that you could have. So you know, imagine you buy $75 million of collectibles, or you have a is a lot you can do with it that brings value to these investors or so it it is going to be an industry that’s going to evolve. And hopefully, as well, our conversation will involve where we’ve been hunting to find. There’s been not no broker dealers involved in these. So that’s one a lot of lawyers. They they’ve done them, but they go You know what, I don’t want to talk about it anymore.

Sean Levine  42:23

We’ve we’ve had some conversations, we’ve met you, but we haven’t quite gotten to the point of foam trip yet. Yeah. And we might like we’re very, we’re very forward looking firm. And like we were early into crypto and we’re like, you know, into tokenization. And it’s possible, we might be one of the first ones to dive in and see what happens. But, Jim, our managing partner is not afraid to take take a risk and to try and move the ball forward on something in FinTech and financial services, structuring as things evolve, you know, we’re not we’re not scared, we don’t shy away from it. We’d still try and do a thorough evaluation to make sure we’re comfortable. But

Oscar Jofre  43:04

yeah, I think everyone is I think that what makes this one a little different is that there are some variables that the question is, you know, if if the SEC is not doing all the due diligence, which is not possible, like who’s on the hook? If, if in I say only if, because this is the data has been?

Sean Levine  43:31

That’s why I think it’s it’s probably for, for some trust, again, you know, it’s probably going to need to be something that that is more easily authenticated, like the cars or something where there there’s just or something where you can genetically test, maybe the whiskey if you could if you could do chemical analysis of that, you know, you got to be able to kind of get the DNA of the opposition, have it and figure it out and make sure it is what it’s supposed to be something that’s a little more easily analyzable, authentic, capable and less, less, less formidable, less, less subject to potential fraud,

Oscar Jofre  44:12

just like any component of our business leading up due diligence at the beginning. Now we do we didn’t have investor accreditation, we didn’t, this is going to be just one of those things we’re going to need to be aware of as sales come in, right? How do

Sean Levine  44:24

you how do you analyze a pre revenue company? You know, it’s the same we’ve had those conversations, the same kind of thing. You just you have to come up with a process that makes sense and is defensible and adds some value? I mean, it’s not there is no, this is not perfect math. All of this stuff involves a degree of subjectivity and degree of art as well as science. But you, you come up with a process that makes sense, and you apply it and you learn and you go forward. I mean, that’s,

Oscar Jofre  44:55

hey, it’s been a great conversation with your Sean today. I’m really I’m glad it You got on and I think I did a much better job than Jim would have done. So say that don’t say that he may get upset. He gave

Sean Levine  45:06

me an hour’s notice. So this is he gets that he gets that. I’m happy you’ve done is great. I hope I hope you got something out. I hope anybody who hears it did I put out?

Oscar Jofre  45:18

Sean, the whole idea right now is just discussion. It is trying to imagine what we were when we were discussing crowdfunding, where we were putting theory, we knew we kind of kind of did and this one’s a little different. We already got some ideas out there. But the point is, they’re just scratching the surface of what people are going to come out with. That’s what I’m saying. There’s going to be adult seven is evolving in real time. Exactly. evolving, real time right in front of our eyes. So listen, have a great week. Sean, it was great talking to you. Great, everyone. Looking forward to seeing everybody at the next KoreSummit webinar. Have a great afternoon. Cheers. Thanks, Oscar. Take over.

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