How Do I Know if My Company Can Use RegCF

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.

Andrew Corn

CEO

E5A Integrated Marketing

Andrew Corn

CEO

Andrew Corn is the CEO of E5A Integrated Marketing, a systematic, data-driven investor acquisition-focused agency that assists firms with raising assets or capital, engaging in outreach to prospective shareholders or clients, and launching new products. His experience spans several industries, including advertising, marketing, software development and investing. Previously, Andy was the CIO for E5A Funds LLC, a firm specializing in alternative investments and after-tax alpha strategies. He also served as CIO for equities at Beacon Trust Company, CEO of Clear Asset Management, and SVP for Corporate Marketing for TheStreet.com. Prior to that he was EVP Digital for Citigate which purchased his software firm MasterApproach and was the CEO/Head of Strategy for the agency Admaster Communications.

Justin Renfro

Strategic Growth

Wefunder

Justin Renfro

Strategic Growth

Justin leads growth and operations at Wefunder, an investment platform helping entrepreneurs raise capital. Wefunder has a global audience of investors and makes it easy for founders to raise capital from both accredited and unaccredited investors. Justin enjoys working in collaboration with founders to help them find the best avenues for capital raises.

Andrew Corn  00:00

We are at the deep end in the moment between Justin nine we know everything anyway, so you asked will answer.

 

Oscar Jofre  00:06

You know, it just seems like the last panel I had, it seems like you guys are you’re ready for the role. I think it’s much of the day or something ridiculous like that.

 

Justin Renfro  00:22

So I was pleased to see your name in that in the mix when when I got when I got locked into this.

 

Oscar Jofre  00:30

Well you can think of Jonny for that right. So Jonny, Jonny said you were the qualified person. So here you are. Alright, so it is now 3:30 in the afternoon. Thank you, everyone, and welcome to the KoreSummit webinar series 2021. My name is Oscar Jofre, and welcome. Obviously, you can hear it we’re having some fun here with our two panelists that I didn’t know they knew each other. Now that we do those, you’re welcome to leave. But I encourage you to stay because it’s gonna be a one hour of fun 45 minutes of straight talk conversation. That’s right, no PowerPoint presentations. No, no plugging in product naming, you know, here’s an iPhone, buy it now. None of that. And of course, 15 minutes of questions and answers for you. That you can ask the panelists then, of course, like always, all our events are on YouTube Live. And of course, they can be made available to you on our KoreConX channel. So you wish to watch it before so today’s discussion is an interesting one. Because I think, you know, it’s one that I am certain each of you have been asked tremendously. And I’m going to ask it from different ways, because that’s the advantage I have is asked it. So the topic today we’re gonna have is, how do I know if my company can use regulations here. But before we get there, let’s do some quick introductions. And let’s start with you, Justin, you’re the new kid on the block. So let’s your own

 

Justin Renfro  02:03

My name is Justin. I lead Business Development and Operations at Wefunder which is equity crowdfunding platform. My job is to find awesome entrepreneurs that are looking to raise capital and help them figure out how to construct their raise on on the platform. My background, I started at a nonprofit called Kiva, which does interest free crowdfunded micro loans. I built and established the US program at Kiva and then moved to San Diego and started my own boat business, which I operate. It’s called chill charters. So I joined the Wefunder team about two years ago, and I just loved working in this startup, the startup world, it’s it’s a true joy, connecting with founders and helping them figure out how they can raise capital. It’s an important part of the equation. And if I can add value, that’s my main goal.

 

Oscar Jofre  03:06

Great, nice to meet you. And Mr. Corn.

 

Andrew Corn  03:10

Hi, everyone. I’m Andrew Corn. I’m the founder and CEO of E5A. We are a systematic data driven investor acquisition firm. I got my start writing IPO roadshows for major investment banks and have worked on hundreds of them, and 1000s of aftermarket presentations, meaning for analysts or brokers. I eventually built that firm to around 80 people sold it. Eventually did two stints as chief marketing officer to public companies, and left and change careers to Asset Management built a multi factor model. Built a bunch of ETFs and some other financial products sold that firm and started E5A. E5A has been around for about five years. We work marketing financial products, mostly an asset management, and then got involved first with Reg D, then RegA plus and we’re recently CF. Since CF is going to 5 million on March 15.

 

Oscar Jofre  04:20

The Ides of March, you took away the only thing I had to add to this whole conversation. Sorry,

 

Andrew Corn  04:26

when my opening Hold on, hold on. Forget I said that. And let’s do a little drumroll for Oscar. Yeah, we’ll do a little rewind.

 

Oscar Jofre  04:34

I got to get my mind into this now. So I Yes, of course. Thank you. I don’t have background like these two individuals, which is that’s why they’re here because they are the they they’ve had more experience. So but the good news, I think Andrew touched on it some good news. fantastic news. So on the last webinar we had people have been hearing about the buzz about  a freeze, but that freezes is not going to happen. We are going live on the 15th of March, you can raise up to $5 million. That’s one of those three quarters single ended packet saying, okay, $5 million into your company. So nothing is stopping it other than you. And we’re going to get started. So, you know, the question, How do I know if my company can use regulation CF? So let’s start it from one perspective. I’m going to, I’m going to guide you guys a little bit. But please feel free to because you guys see it all. But let’s start it geographically. Because I think this is an important one. It’s one that gets lumped in during discussion, but I’m going to start it right from the get go. Because, you know, the whole world’s watching the same holy, I want to go and do regulation CF, I heard it’s pretty simple. So let’s start from there. Andrew, geographically, regulation CF, who’s it for and who it’s not for.

 

Andrew Corn  06:04

So let’s start off with I’m not a lawyer, and I’m also not an investment banker. I have played both on the stage though. So that does make me a little bit qualified. So you know, the whole thing goes back to the JOBS Act, and the JOBS Act was one of the very few bipartisan things to happen in the US Congress in the last 50 100 years. So with that, it is all about US companies, or if you are a non US company, having a US subsidiary that intends on doing business in the United States, because it is all about creating jobs. I think that is reasonably accurate.

 

Oscar Jofre  06:49

Oscar, okay,

 

Andrew Corn  06:50

so we’re have an authority on this than I am.

 

Oscar Jofre  06:52

Yeah, I? Well, I just want to make sure it’s black and white for people. When it comes to regulation CF. It was a regulation under the JOBS Act, which is great, but it’s for you as based companies. I know. People go well, you know, I’m from Canada, I’ll go ahead and create a company from Australia. I’ll do that. I caution you all. Before you do that, please speak to legal counsel, I’m not trying to put refunds. This is not about refund or, or anger and all that. It’s about what is your strategy for capital raising, you may find it that if you do that, you’re gonna derail your ability to use the really great exemption of RegA. So there’s a trap between reg CF and RegA that most people do not understand. And foreign issuers need to understand not to get caught in that trap. So I leave it at that, that the regulation was intended, and it is for creating us jobs for US companies that are based in the United States. Okay. So I might add that, yeah, I

 

Justin Renfro  07:53

go, am I add that international companies can take advantage of reg CF in the US if you have an incorporation in the in the country. So you can be based overseas, as long as you have an incorporated kind of arm of the company in the States.

 

08:09

I’ve seen international companies utilize crowdfunding. But then that subsidiary has to be the one raising the money not the parent company. Can they rely on the strength and balance sheet and reputation and history of the parent company? It starts to get gray. 

 

Oscar Jofre  08:26

and it will go from gray to red. The minute they decide, oh my god, I want to do a RegA and that’s when it gets on Robin. Sure. There’s a great article that Sarah Hanks wrote that everybody I look, the reason I put it out is because there’s a group. I’ve been watching the ads. And I I this is obviously an important question. Because everybody’s thinking, hey, you’re just all incorporating Wyoming and set up shop and a way to go. But again, I’m I’m letting you know that there is a there is a process that the SEC if you do decide, and I said this again, if you’re doing a RegA, no other exemption, will it be will it get exposed as it does in a RegA? So we’ve seen it and it’s very sad when the deal just goes. Right? Because the SEC will put a stop to it. So okay, so we, you know, we killed that one down next. Who else can So, um, Alright, so let’s now let it you started the conversation, Justin by saying you like working with startups? And then of course, Andrew, you’ve been dealing with mature based companies. So this is going to be a really interesting conversation between the two of you here. So, obviously, Andrew, I’ll start with you. You’re, you’re coming new to the REITs. Yep. But you’ve known about it. How do you see or do you see that established companies can use it, or simply, as Justin said, for early stage startups.

 

Andrew Corn  09:56

So I’m seeing established companies use it in a few ways. One of them is it’s a backdoor way into raising 80 million instead of 75. It’s a way of almost testing the waters with a RegA plus, but actually accepting investments using the CF. Because the barriers to CF are much smaller than they are for a reg AG, the timeframe is much more compressed, the costs are way less, just to get going. So that’s one way I see established companies using it, and others are using it as. So let’s get into startup, you know, they have an MVP, they have a minimally viable product where they don’t people call us and they’ve got a PowerPoint. And most of the time, we suggest they go to a platform, or even do a friends and family raise before going to a platform. But some companies, they have their minimally viable product, they’ve got a bunch of doors up and they have a really good plan and path, they’ve got some reasonable management in place. And they’ll come to us for a RegA. And as of a month or so ago, we’ll say, Whoa, slow down, it’s gonna take four months just to get the legal done. Why not to a C, raise between one and $5 million, hit a few milestones, then you’re legitimately you can raise your valuation, and then go and do an A plus. So that’s another use that I see for CF that I think is really viable. And frankly, we’re already working on three of those. So that’s where iccf being used

 

Oscar Jofre  11:49

to kind of end jobs. attainers Yeah, yeah, of course. And Justin, from your, from your end, obviously, you started out right, helping entrepreneurs, so startups. Are you limited to that or your love to hear your thoughts on that one?

 

Justin Renfro  12:04

Yeah, the activity I’ve seen has been mostly companies in the seed to series A. In 2020, there were a lot of companies using platforms as a bridging mechanism, bridge rounds to get, you know, past COVID, and then new 2021, where they’re going to take a more kind of like focused approach at raising serious capital and a series A, obviously, with the regulations going from one to 5 million, I think that, you know, we will have the capacity to help companies through that series A, obviously, depending on the company, depending on the industry, a smaller series of 5 million definitely opens the gates to a large extent, but seed stage two series A where it’s like, hey, we’ve already raised some capital, hey, we’ve got traction, and we’re looking to to buy time, more or less. That’s, that’s what, that’s what I’m seeing on our end.

 

Oscar Jofre  13:08

So for I mean, okay, so up until recently, nobody I mean, reg CF, we weren’t we talked about it. But there wasn’t a lot of talk. I mean, Andrew, Jr, that we’ve been included in topics, all of a sudden, it’s become a topic. And we got to face that. They call it the white elephant and no pink elephant in the room. It’s there. There it is. And actually, Pittsburgh, did a report, what are the effects of reg CF now, in the venture capital space, I mean, that’s pretty impressive in my books, that Pittsburgh now recognizes that this regulation, actually is going to compete now head to head on a series on a seed round on a series A with this type of investor base, which I think it’s exciting from an entrepreneurial point of view, that you have this particular choice. So because of this increase, obviously, it’s changing the roadmap of what the what kind of company we see, to utilize it. You know, we we’ve been predominately thinking them as startups only. And that’s, you know, because it’s $100 million, just startups. But in as you said, That’s Justin bridge bridging. I know that you’ve been using it. Andrew, for clients who are using it for another capital race, right as stepstone bridging again. But it does this game completely changed now. We’re March 15. Today, we’re $5 million. What What, what kind of company now can expect to use this, that when they’ve looked at it before, and they should look at it now. And

 

Andrew Corn  14:53

so one of the things I think that the audience is getting here is kind of East Coast view, West Coast view as well. Not that we Yes, yes, work everywhere. But you know, having grown up in New York and having started several businesses, and I am not a young entrepreneur, it doesn’t make me any less of an entrepreneur. And I believe that Justin is one as well. And I know several people on his team, and I would say they’re all entrepreneurs working together for a common cause within this industry. So, you know, I said it very quickly before, so maybe I can be a little bit more illustrative. You know, what we are counseling, a lot of companies who have done a seed round, or they’ve done a friends and family round is what we generally call it here, it’s like, raise a little money, get yourself going, prove that there’s some real viability in what you’re doing. And then come to someone like us to help you raise the 5 million or close to it, meaning you know, you only need four, you need three and a half, whatever it is, you’re going for, as a CF. And when you do it as a CF. You know, as we said, minimal paperwork, it’s very quick to file, you get approvals very quickly. And then prove yourself, now you’ve raised a serious amount of money, kind of like a series A, lots of series A’s are not anywhere near 5 million, they’re less, some of them are five times that as well as to do with industry and stage and you know who the backers are and who the management team as, but with $3 million, most concepts can go out and really prove themselves. So if you’re raising 3 million, and you’re starting and saying, hey, my firm is worth $20 million already, you know, which is probably too high, but I’m going to raise three. So now my post money is, let’s make it easier math, uncle, Ahmed 17 million, I’m going to raise the fee, that means my post money is Wani, I just sold 15% of my 15% is owned by people outside of my core group are management. Well, that’s great. Now you’re going to raise 50 million, because you proved a lot with RegA. Well, now you can raise your valuation to something more appropriate, because you don’t want to raise 50 when your pre money valuation is 20. Because you’re giving up the bulk of your firm. So that you want to do when Wall Street comes and grabs, you know, when you do your s one and do your IPO. So that was a joke. Because you never really want to, you always want your valuation to be appropriate. But the C app is a great way of getting in some serious capital, improving your valuation, and then raising more money with an A plus. And that is a very typical stepping stone. But frankly, there’s other scenarios where I see using CF as well. But that one, I’d love to, you know, toss it over to Justin and see what he thinks,

 

Oscar Jofre  18:01

yeah,

 

Justin Renfro  18:02

I would, I would love to build on that. I think that, um, what we’re seeing now and a new kind of perspective of how to use a platform to help with a raise, I think, traditionally, it was kind of seen as a one, you know, there’s a there’s a three month window in which you’re running a campaign. Now, the idea is, there’s no kind of time limit on a on a reg CF raise. So you can raise your first million, and then you can go, you can actually pause your campaign, close out all the investors that came in through that first million, then increase your valuation. And, and and, and cycle back and build over an extended period of time. So the ability and then in the construction with these new regulations allows for a kind of evergreen, consistent fundraising process that happens in stages, until you’ve kind of and you can go, you can start this process as early as inception, where it’s like, hey, first money in friends and family. And we’re just going to build until you’ve raised that 5 million. And at that point, if you raise 5 million, you’ve clearly shown there’s demand there’s appetite, people are interested in what you’re doing, which can justify the extra cost and time and energy to kind of roll into the RegA and to be able to do that and build a base of investors over a prolonged period of time, I think. Excuse me. I think it’s an incredible opportunity for for entrepreneurs and will be the status quo. If you look at the two to two to five year horizon.

 

Oscar Jofre  19:50

And that’s pretty valid. I mean, we’re all agreeing startups, mature based companies, which companies that are already established. It’s becoming clear now that this is a it’s an equalizer that’s bringing everyone in, there’s another group that I actually want to bring into this discussion. I want to hear your thoughts on it, do you think it will have an impact? Because, you know, $5 million is you can do a lot as a company, right? You can build a restaurant you can, you can start a software company or consulting firm and all that. So. So, I’ll go to you first, Andrew minorities. I mean, if you know, the Father, the jobs that David wield, I mean, his big passion of the JOBS Act was democratizing capital giving owners back on the the ownership, which is it’s clearly doing, but the other was to become an equalizer for minorities. You know, Latinos block up people of color, just to bring the equalizer, do you see the same impact?

 

Andrew Corn  20:52

So not yet. You know, we tend to work for issuers, not for platforms, but we play very nicely with platforms. But as a client, we’re not like interested in building up their investor base, we’re interested in ringing the cash register and bringing money. So the one exception per us is that there is a platform and the black community, and they want to raise money for, you know, black owned businesses, and then raise it from the community. And My only advice to them is, is like, let’s expand that investor base to supporters of the community. Similar we have, we’re working on a project and it is aimed exclusively at the LGBT community. And that’s an you know, also an easy community for us to identify. And I want to take a step back, because this goes to all all cnips. Why does someone want to do with sia, rather than friends and family? Well, if they’re going to, maybe they’ve run out of friends and family, and they started that way, they’ve gone through that money yet, but they’re, they’re on the right trajectory. And I say this about a plus. But now I really say it about CF. The reason you want to do this, instead of venture capital is is you don’t want to give up a board seat. You don’t want to and also, do you want your business verified by three or four people who are highly educated? Or do you want 1000s of people, many of which are highly educated to come in and verify your business by investing. So one of the reasons to crowdfund is, I want to crowd as my investor base, there’s a RegA plus that Oscar, you and I both know, they already have 30,000 investors, their goal is to have a million investors. And it makes sense in their business. And if they have the right transfer agent, you know, a good transfer agent, please recommend them for us, Oscar. So going back to an equalizer, it is if you understand data targeting, if you understand the needs of the community, from an investment perspective, if you’re willing to do some investment, education along with it, and I’m very willing to work with this particular platform that’s aimed at the black community. But what we’re doing in it, it’s fascinating how I got into the whole supporter thing is, in this LGBTQ project, we were doing a lot of data. I’m working right now in my dining room. And my daughter heard me and said, Dad, why are you excluding so many people? What’s wrong with you? And basically, I said, What are you talking about? She’s like, well, if you’re looking for followers, RuPaul has 12 million. So there are a lot of supporters and maybe want to take a look at that data, too. And I think every group has supporters. So that is something that’s going on now. It’s just awareness, and let’s get people in who have viable businesses. And definitely make sure that you know, that all the ducks are in a row to make sure that everyone is successful.

 

Oscar Jofre  24:14

Good point. And Justin, I’ll throw it back to you. Um, obviously, we find her you guys have been successful. Have you seen a trend with minorities? And if you had some examples to give us as well?

 

Justin Renfro  24:26

Yeah, I would like to make a point before I jump into that is I think it’s really powerful, especially for consumer facing brands. If you can convert your customers to be investors, they’re going to be your best customers. If you can bring in new investors and convert them into customers. You know, it is a two way flow where it’s like you’re building a strong investor base, you’re also building a strong customer base, and that can be a really powerful asset for any given company, to transition specifically to the question around, minorities and evening the planet First, I’d like to flag that we funder is a public benefit corporation, if you read our charter, if we funder.com backslash charter, that is in our very explicit kind of motivation to exist as a company is to help bridge that divide. The way I look at it is, you know, traditionally in angel investing, you know, you go out and you know, you’re talking to early angels, you might have a $25,000, minimum check size for people to be able to come in and invest, to be able to lower that to $100 really opens a very wide door for people to be able to engage in this capacity. So I think that, um, you know, being able to activate kind of local communities to fund businesses that they want in their community, I think that’s a that’s, that’s one of the biggest benefits of a platform is being able to accept people with no minimum to come in and be a part of the action. The best example, the one that that comes to mind is a race that we did last year, with a business called Black Mama T, it’s a tea shop in New York City, and they got a media PR kind of shout out through a black business publication, and raised over a million dollars from people from black people in New York, that was the circulation. And that was where all that activity came from. A really powerful example of how media and PR can just drive a lot of people in the community to support a common cause. But I think if you look at it more practically, it’s like, you take this, you know, this tea shop, it’s a tea, it’s a physical location in New York City. Anybody that comes in and gets tea or you know, kind of engages with that business physically has the ability, you know, that the the, the retail shop has the opportunity to extend that to all of their customers, which is a really powerful offering, it’s a cool way to engage with, with their customer base in a meaningful way. Again, going back to my first point around your customers, being your investors, that’s going to be your best customer bringing in new investors, converting them to customers, that that’s just like a very powerful marketing mechanism. That also raises you capital. So if you can knock out two birds with one stone, I I see it as a as a no brainer, personally.

 

Oscar Jofre  27:37

Yeah, both your comments are good. But I think you both missed the point. So being being a Latino immigrant in a country, it’s it’s one thing being born in a country and feeling like you’re, you’re here, you know, I’m 55 years old. Like, not all of these, you guys are younger than me, of course, but I’m an intrapreneur. And I feel like 20 but I know what it’s like being an immigrant and raising capital. It’s you. I’ve been very fortunate as an entrepreneur that most people didn’t know, I was a Latino as a joke, I kid you not I came out of the closet in 2001. In 2001, I actually made in a news announcement that I was born in Chile. Up until then, most people thought that I was German background. So I got to hear this marks of, you know, we belong in hearts are the only thing we’re good for is drug, you know, mules. And so, I firmly believe, though, in my, from my perspective, that minorities are, have an equalizer. And that’s the message I want to get here. I agree with you, they they will you still need to have all the basics. It’s just just the fact that you’re a minority and are there Yeah, no, you still need to, and, but it provides you that ability. Now, nobody will judge you that way because you can spread out more people are somewhat paying attention to it. And what Andrew said is even more critical is that you can combine all the different subgroups of it, because there’s attention to it, people are starting to see that just because you are from this culture doesn’t mean that you cannot be an intrapreneur and there are people mark my word, there are people who have that ingrained in their mind. And that’s why I think, you know, when I hear the story of the tea shop, it makes me feel happy because I hope there’s another young lady or another young man sitting somewhere wondering Oh my God, I had this idea but you know, I just didn’t want to go for it because you know, how are people are gonna think about me running this business. So that’s why I think the regulation crowdfunding well the JOBS Act, and if you listen to David Weil today version 2.0 it’s all about minorities. He wants to make it more accessible for women. I know, Andrew, you’re part of that you have some daughters yourself that it. It’s we all want to make sure that there’s an equalizer. And so that’s my, my, my take on what I who can use it, I think we’ll see more. Well, then this time, I think we will see more minority entrepreneurs, which will be great. I didn’t say they’re going to be successful. That’s not what I said, you still need to have the basics

 

Andrew Corn  30:28

well. So let’s get into that and what successes because Justin brought up a really good point of companies that are consumer facing. And that has been the essence of what’s happened with CF in the beginning. But there’s three or four other categories of things in crowdfunding that we see are moving. And yeah, our experience is more with a plus than CF. But as I mentioned, we have the apps going or about to launch and all them will then amend their filings to go to 5 million on March 15. But we’re seeing real assets, we’re seeing impact investing, we’re seeing innovation, and we’re seeing things that produce steady income. So there’s a lot of different categories, those are four more categories. And I just want to hit back on the I don’t know anything about the tea shop, so I’m not commenting on the tea shop, let’s call it a dry cleaning business, you have a dry cleaning business, and you want to open three or four more stores, absolutely reg CF as a way to go. You’ve got customers, you want to expand into more neighborhoods, etc. It’s still a lifestyle business. So now we’re getting into expectations. I put money into a startup, and I’m hoping it’s the next Google and I’m going to get 10,000 times my money back. That’s one expectation. And that’s more the venture capital mindset of I want 100 or 1000 times on some of the investments. And I should diversify and invest in a bunch of C apps, so that one of them will end up hitting. But there are a lot of CFCs out there where you’re just going to invest in the dry cleaner, who’s expanding, and they’re going to share in their profits. And that is a really great thing to do to help small businesses. And I think CF is fabulous for that. The not everyone has to be shooting for the stars.

 

Oscar Jofre  32:29

Great point. Great point, Andrew, thank you for that. Because I I have to remember, you know, going back a few years. The whole idea of it is you don’t need to be a unicorn to be successful. There are different levels of success. And that it’s funny. You mentioned the drycleaner shop. That was the story we always told, you know, how important is that dry cleaner for you. That’s just around the corner from your house where you drop off your items. Right? Well, I

 

Andrew Corn  32:59

live in a small town called New York City. I live in Manhattan’s Greenwich Village. So it is so small town where I live, I don’t even get a ticket. I drop my clothes, we chat for a couple of seconds now both in masks. And I leave I don’t get a ticket, they charge my credit card and send it send it to my doorman. Like we know each other really well. Why would Why would I put them through that. So yeah, they are part of the heart of the community. So here’s the difference is, I can’t work for that client. They can go to a platform, and they can use all the services of a we founder and have a successful raise. But a company like mine is going to say no to them, we’re only looking for the ones that are shooting, swinging for the fences. Why? Because we’re a marketing company. We’re an investor acquisition firm, we are not a platform. So on top of us, you’re gonna have to pay a platform. And their platforms are from very inexpensive to more expensive depending upon what they offer. Justin can certainly speak to that better than I can. But we are built to raise a lot of money. So if someone wants to raise $600,000 for store expansion, we are not a viable option for them. Because our fixed costs are going to be too high for a raise like that, where they can go onto a CF platform and all kind of hand this ball off and let you take that.

 

Justin Renfro  34:31

Yeah, I would I honestly want to double down on my point earlier about the minimum investment size, you know, having a $25,000 scope versus $100 scope, opening the door. From a minority standpoint, I think it adds a lot of opportunity obviously from the community example the local dry cleaner or the local cafe that’s one use case but I think this use case applies across all businesses. Where if you can open the door without without you know, it’s like How many people in your community of 25,000 have disposable income that they can they can put in an investment, how many people have $100 a year you that is a that is an equalizing effect that is very powerful. Um, so I think that, uh, you know, that that ability to offer equity and to offer something at a lower dollar amount, it, you know, helps even the playing field

 

Andrew Corn  35:27

itself, it does, but some are shooting for the stars, and they’re only $100 minimum investment. And, you know, I go back to this entertainment company, they want a million shareholders, because when they put a new movie out, if a quarter of them go to that movie, and bring a friend, they have their first half million people. So you know, exactly in the minimum dollar amount, doesn’t always equate to what the goal of the company is. But I totally agree that if you keep it low enough, you’re going to get a lot of passion, people who just want to be a part of something. And that’s a really good thing. And that goes a lot to positioning and messaging and what people think of what you’re doing and what it means to their future. If they’re even thinking it through that much, they may just look at it, say, Gee, I love it. You know, we actually turned down a solar project, because it was a small solar project, they went up on we found her and I’m one of their investors, though I said no to them, that our firm can help them. But that doesn’t mean on unbelieving what they’re doing. And I was very proud to make that investment. So

 

Justin Renfro  36:42

I appreciate the passion investment, I believe in that as a construct in, you know, in in the scope of what we do. But I also think that it’s like you can, you can make a smaller investment, because that’s what you can afford to do and be looking for those bigger, you know, those 10x plus opportunities, just because you invest $1,000 doesn’t necessarily mean it’s a fact, it’s a passionate investment. It could it could mean I’m interested in investing, I see a lot of opportunity here. And I want to you know, that’s what I can afford to invest. So I do think, again, it’s you know, there’s there’s a lot of use cases here. But I don’t necessarily think that just because you invest $1,000 means it’s a you know, it’s a pity play, or a community play or a Passion Play. It can also just be, you know, an investment play, you know, from somebody that doesn’t have $25,000,

 

Andrew Corn  37:40

it should be a sound investment, even $100. You should do it, not only to help but because you believe you’re going to get a return for sure that that is one of the big questions. So we have a new client, we’re onboarding, they take cow manure from major dairy farms, capture the methane and turn it into almost zero admissions jet fuel. So they are cleaning up what is basically toxic waste coming out of dairy farms. And they’re turning it into something that we need that is polluting the world, but they’re doing it we’re barely pollutes the world. So we’ve got two things going on there. We’re going to need jet, very long time. They’re not going to all be electric in five years. And anyway, so it’s a consumer facing, kind of because everyone knows what dairy is. And everyone knows what jet fuel is. Is it passion, it kind of is. Also they have a zero cost on their raw material, which is the methane coming from cow, you know, cow manure. So is it passion? Is it a great investment? I think it’s a little evolved us. So this will be a $50 million raise. So it’s an A plus not a CF, but it could have started as a CF easily.

 

Oscar Jofre  39:02

Yeah, yeah. To get the engine started. But they were I want to circle the conversation to we we’ve talked, you know, we’ve been we determining whether your company qualifies. And we said, okay, your us base, your every startup or you’re already operational, your consumer base, non consumer base, you can get the idea that right now, it’s basically the PDA to Zed. Everything’s up for grabs. But there is one part that I think that isn’t always up for grabs in and we get to see it always afterwards. And this is a question that doesn’t get asked up front, or doesn’t get dealt with a company needs to be and that is there’s a lot of intrapreneurs that love it. They go Oh yeah, look at this. I can raise five grand, excellent. I’m going to be able to stick them in that SPV put 10,000 people there. I’m ready to go. But it isn’t a there. The part of the other part of the qualifier in my view is that the company needs to qualify itself. Its operational side, how are you going to manage that base? Not just from a shareholder perspective, but what else are you going to do? Because if you just treat it like a shareholder, shareholder, base, we’re not going to be any different than public companies. I’ll just report to them every quarter. And you know, I’ll get back to them. It’s going to fail. So they’re, I think, part of the qualification is, okay, great. Are you? Are you ready for it? Because part of the jobs I had was, you got the ownership back. Now the responsibilities on you? What are you going to do to keep that shareholder happy? What do you what do you think of that?

 

Andrew Corn  40:36

Well, you are building a community, whether you like it or not, because if you have $100, minimum investment, and let’s say your main average, at the end of the, at the end, is 200. And you’ve raised $2 million, you now have, you know, 10,000, investors. So, with 10,000, investors, how are you going to manage them, you need really good technology. But also you need really good communications, because if 1% of them decide to call you because you’re not communicating, that is a boatload of phone calls that you just don’t have time to deal with. So if you have a proactive Investor Relations plan, then you’re going to stay ahead of that. And you know, you can over communicate, but it’s pretty rare. Most of the time, you want to not only have your regularly scheduled communications, but it’s like, oh, we did a webinar for you to help raise the money. Why not do a webinar for your shareholders, and let them know what’s going on. It’ll get you ready for an investor day when you finally are prop if you decide one day to go public. So putting out regular and milestone oriented communications is important. Here’s the part that’s tough until you do it, which is when there’s bad news, you need to do the same fact. You can’t just be spreading sunshine. There is no business that doesn’t hit bumps in the road. And those need to be shared. And remember, most people who invest in in you are there for the journey, not just for the unresolved, so nothing is going to be a straight line up unless they have crazy expectations.

 

Oscar Jofre  42:26

Thank you for that. And I’m going to come sorry, Justin, please.

 

Justin Renfro  42:29

Yeah, I would just add on, I think good investor relations is self serving. These are folks that can double down, they can invest more, they’re going to buy your product, or you’re going to going to be your best customers on if you if you effectively engage with them. I think it adds a lot of value to the business. So I think it’s a it’s a very self serving kind of strategy to build a base of investors and engage with them in a way that they can they can drive the business forward. I look at it in a very pragmatic sense. This is a powerful stakeholder with the right engagement, it can add a ton of value to the to the operation.

 

Oscar Jofre  43:08

I couldn’t I agree 100% with both your comments. So now I’m going to you know, with me, it’s all about data, right? Bring the easel, bring the heat. So with all of that in Why are they not doing it now. And I wanted the people that are here to listen to this. Because this is important. We’re growing up, we’re having lots of great success with online investing. And we want it to be even more successful. We don’t want the SEC to shut it up. But personally, I’m getting concerned. I’m getting concerned because I see companies with 5000 2000 1000 10,000 100,000. And I and I can pinpoint the companies that are communicating daily, versus the companies that are not in we we see people go, I heard from them all the time when they were raising money. Now I can’t get ahold of anyone. So I believe that the the education that needs to start it needs to start whether it’s at the vendor or the undercurrents of the world, our world, but we have to I mean, are you getting that feedback? I mean, obviously, we funder would affect you, because if investors are not getting information, they would not really be investing. So kudos to a certain degree, but I ohms I’m also finding out that investors often don’t realize that they could actually go back to the wonders of the world and follow a complaint there. Why the company is not reporting to them, I guess. How do you guys feel about that?

 

Justin Renfro  44:39

I mean, I guess again, it’s you know, I think it’s bad business if you’re not communicating with investors, and I think it’s our job to articulate why good communication helps helps your business. So I think that, you know, we we to the extent that we can try and translate that you’re obviously going to have companies across the spectrum. We have a lot of companies They’re doing it really, really well. There’s surely lots of companies that aren’t doing it at all. And and my, my best kind of, you know, take on that is, it’s, you know, I see it as we funders job to articulate why it’s good business and why it’s a good strategy and why it’s in their best interest to do that effectively. At the end of the day, it’s up to the founder to decide whether that’s what that’s what they want to do. There are certain sec regulations and pieces in place that require update. But, um, I think that for my

 

Oscar Jofre  45:36

work, it’s funny, you mentioned that one, sir. Friendly, you mentioned that one. So, again, we we’re not going to dwell on the past the past, we’ve learned we got to do it. And to your point, we’ve got to, you’ve got to put that in position. But more importantly, you have regulatory reporting, you’re there, this time, the regulators are not going to give a pass. I firmly believe as many do that this time. So the consequences are that, again, you’re coming in, do you qualify? Do you? Are you ready for this regulation? You’ve been handed the gift to raise money from the crowd to and 33 million Americans? So are you ready? Do you fundamentally, you know, as, as Dustin, and Andrew said, having an investor relationship, that could be the CEO, I mean, it doesn’t change anything, just being regular about it, maybe once a month, maybe every two weeks, the same way you go after clients, I’m sure you’re communicating with them daily. So why would you not do it with them. But that regulatory reporting, if you miss it this time, I firmly believe that they will remove that 12 g rule, which puts you in a predicament you do not want to be in, which is you’re a full reporting issuer, just like a publicly traded company. And nobody wants that. So this is where I am in,

 

Andrew Corn  46:55

let’s just go back to the basics you’ve decided to take in outside capital that makes every single one of them is a part owner of your company. It’s just a simple thing. So do you talk to your partners? Well, these are passive partners, they’re not active in your business. But if you had one single investor, and they were a venture capitalist, they’re going to make you do a quarterly board meeting, to a board book, they might even make you do monthly meetings, and hold your feet to the fire. So here you have this very supportive gang of people, that’s your gang. And, you know, if, you know, I’m kind of forced to do this sunsoo quote, of all battles are won or lost before they’re fought. If you plan properly, and you know, every month, I’m going to put out a note, some of them are going to be three sentences, and some of them going to be three pages, and everything in between. That all works, because then you’re authentic, you’re telling them what’s going on. And it doesn’t have to be monthly, it can be based on events plus quarterly, but whatever it is planned to do, it needs to be part of your communications. And every time I hear, I’m just too busy for that. It just means that you’re not prioritizing your shareholders. You’re prioritizing revenue above shareholders, you know, when you were prioritizing, raising capital above revenue. So, you know, you can’t just shift that back and say, now you’re in the back seat, so I can go do this. It’s like, Yeah, but we’re in the backseat. And we’re watching what you’re doing. Sorry, gone. No, I was just gonna say, but they don’t truly know. Unless you tell them. And it’s, yeah, it’s just simple to help them. It’s, it’s really simple.

 

Justin Renfro  48:58

Yeah, I was gonna say it’s also not like a huge ask to do like, a quarterly update on what’s happening with the business associated with a webinar, like we’re talking about, like, maybe two hours a quarter of like, baseline engagement, that is best practice. I don’t think this is like terribly complex. Every quarter, you say, this is what’s going well, this is not what’s going well, this is how you can help the business. We’re doing a webinar on Friday, from three to four to talk about the business if you want to join, you know, like putting that together is you know, that’s a that’s a poor excuse. If you can’t if you can’t make that happen.

 

Andrew Corn  49:40

Or as simple as you don’t have to look 5000 envelopes and make 5000 copies, yeah, and get 5000 stamps. All you have to do is write the email, you send it to someone on Oscar’s team and say, send this to all my shareholders. All right, and it goes out. It’s just not that hard.

 

Oscar Jofre  50:01

It’s easy as 123 You know, this discussion has been good. You kind of got a grasp. Obviously, we we have some attendees, this is your time now to ask questions you may be curious, does your company qualified the company, all you need to do is click raise hands. If you have questions. I will be more than happy to answer the questions here with Andrew and Justin. We will continue obviously, the dialogue here. Until I see somebody sound is up and asking the question, but I, the reason I’m spending a little bit more time on this one is because you know, Andrew is brought up the point that we’re always going to find people the scoundrels of the market where they’re going to take advantage of something, something so simple, follow a form, see and raise my capital. And now I’m going, we need to flush them out. And I’m flushing them out pretty quickly. I, you know, I often go, are you ready to manage 10,000 people? Why do I need to manage 10,000? I’m gonna put them on that SPV? Yes. But you’re managing the SPV. The way the regulator’s wrote, The rule is that you’re still responsible, the only thing that they gave you is the ability to put one line item on your cap table. But you’re still fully responsible for all the holders in this company. Oh, nobody wants that. I thought the whole idea was I could put them on the SPV. Get the money and, and operate the business. And that’s that is the red flag right there. Right. That that is I ran into a couple companies that that is their use of the SPV to stick the investors in it. So they don’t have to do it. They feel like it’s going to be taken care of. and I are concerned. So who do you think takes care of that? Well, the SPV, you’re the SPV. It’s a constant down. So I’m, I’m all for, you know, any company utilizing it coming with your eyes open, trying to understand the dynamics of valuation? And what’s best for the market and for you and all that, but as well. Okay, what are your plans after you raise the money because you’re going to be successful? What’s the plan here, because they both need to be part of this whole strategy. I know why we started this way. But we now have enough data to say it’s time to change. And that’s what I’m telling the both of you, I can tell you unequivocally in reg CF, more than 98% of them, do not do this part after they’re done. And we need to fix that. Because now that the regulators have given us the gift, we now need to take it to the next stage. And I don’t believe the regulator’s this time around are going to sit back a million dollars was different. Five brings it up to another level. And we’re also introducing something different that we hadn’t seen before. And I’m surprised you didn’t touch on it that there. And that is there’s the refunds of the world that are going to assist you. But the broker dealers are getting into this. So I you know how you know who will be held accountable to what if things don’t,

 

Andrew Corn  53:18

let me just touch on that for two seconds. So we now have the green light with the next CF that we’re doing where we’re building an offering page the same way we would for an A plus, it will be on a unique URL, it won’t be but it will then be hosted by the broker dealer. So that fulfills the reg CF obligation. And their fees are substantially lower because they’re providing fewer services than what we found or what. So no more CMS, everything is 100% customizable, but this is what it takes to raise $5 million, as opposed to a million. It is exponential. It’s not as simple as we’re going to do this five times, because you’re going to run into a data wall where they’re just no more investors. You know, we we will identify millions and millions and millions. My firm has a proprietary database of a million angel investors, that means they’re all accredited. That’s not enough to do a race and not even close. It’s the tip of an iceberg. But knowing that we have all these new tools, including total customization, this is going to make a really big difference. This is also though, it then kind of weeds out who can do this because they have to be able to afford our services and afford all that custom work. So for a ton of issuers. When I speak to them, I’m like, hey, do you guys know we funder Do you know some of the other platforms? This is really where you belong. They based on the size of your race, and what your current capabilities are, when it comes to financial resources, so,

 

Oscar Jofre  55:08

so that’s an interesting dynamic, we never touched on that. It, it has it in itself, the fact that we changed it to 5 million, the issuer themselves has now changed the playing field, we’ve added another element of, we brought in different types of funding, portal revenue, base revenue sharing, you know, equity, different verticals, vegetarian, you know, arts and all that. But this is very different, right? a broker dealer actually now, doing reg CF, recognizing to our point that started this whole conversation that, hey, wait a minute, I didn’t want to touch it when it was a million. But now I’m touching it because it’s five. And now my reg D client is an actual reg CF. And why would that be correct? Yeah, I

 

Andrew Corn  55:54

mean, the mindset has been that let’s build a website. And every deal will follow a certain pattern, because it makes it easy for investors. And I totally agree with that, to you know, raise a million dollars, but raising five, I love that we will have the freedom to do anything we want. And set it up. So exclusively for that issuer. It is a completely different world. And I’m curious what the platforms are going to do and how they’re going to react to that. And there may not be a ton they can do until the 15th of March, I’m not sure about that. But you know, we are already in the midst of getting these set up so that we can start off with a million dollars. And then of course, amend the race on the 15th to five, and be set up and have already built the data and built the messaging and done a lot of the optimization work that we do to make it so that it can scale. So we’re super looking forward to all of that, because it is a game changer for issuers.

 

Oscar Jofre  57:04

Yeah, clearly, obviously, Justin, I just knew you’re probably not sure if you were getting wind of that what’s happening. And

 

Justin Renfro  57:13

we have a full time person and we funder that thinks about this all day. So very much, it’s very much top of mind, you know, like, if our investors aren’t being triggered right by the founders, that hurts our business. So it’s in our best interest to make sure founders are doing right by the, by the investors that they get and you know, like in terms of these different kind of channel partners that are kind of come into the mix. So it’ll be interesting to see how it develops. I think that, you know, it’s going to be big industry is going to evolve a lot over the next year.

 

Oscar Jofre  57:46

No, I agree. I think this year, we’re going to see some really interesting things. You know, in our earlier channel webinar, we just heard that the very first RegA deal raising $50 million dollars actually had a institutional investor. That took a fairly large chunk of that. So we’re ready seen an introduction of different types of investors coming in to and I think now with REITs. Yep. One other thing that we didn’t touch on, but we’ve spoken about it before, is that the accredited investor can now invest. I mean, that’s an unlimited amount there. There’s no limits anymore for them, as they had before. So if I’m an accredited and thinking, you know, why not invest here, I don’t need to go through that whole verification process that I’m like, dude, we’re, you know, people say, Well, we should be putting more effort in reducing the regulation D, the accredited investor exemption, you know, who qualifies is that and I got, yeah, you can beat that box. I know, we’ve been going out for the last four years. It’s gotten us nowhere. But on the other hand, they’re expanding, year by year or every three years, the ability to do more with what we have. And I’m, I just have to think to myself, What more do the regulators need to provide us?

 

Andrew Corn  59:06

Yeah, they’re the only reg DS we work on now or other institutional, or we’ve gotten it the whatever the project is, is a CUSIP on some custodial platforms so we can market it to independent financial advisors. But cfma take care of all that. Just like we have three $5 million see apps. We already have 270 $5 million dollar RegA pluses that we’re starting work on. So the industry is expanding where it should. And quality issuers are seeing this and saying, Wow, this is a whole new way of raising money for ourselves. And that does not make it so startups can’t do their work. You know, we’ve got a blockchain company that basically is doing vineyard to table you know, it’s all about wine. Like there are, there’s so much innovation out there. It’s unbelievable. And there’s some great quality issuers, but of all different sizes.

 

Oscar Jofre  1:00:12

And that’s the key, right? It’s no longer before it was just these sizes. Now we’ve expanded that now even greater. And I think that’s the closing remarks is that for regulation CF, the, if there is, the market has been open March 15. And the conversation starts now you, obviously, you need to have your proper partners, your legal adviser, your financial advisors, so of course, working with a firm’s, or a platform to guide you in that journey, whatever is best. But more importantly, we’ve expanded the type of companies that can now take advantage of this regulation. See, it is a really great way to, you know, fund their operations or their business or their dreams. But regardless of all that, just try to keep the principles in place, why it was created in the first place, democratization, keeping the ownership back to you, but with a responsibility, as Justin and Andrew kept saying, and I keep repeating over and over again, do not disregard these people, these, they’re critical to the success for all of us. We love the fact that they put in billions and billions of dollars today. And they were going to keep doing it again and again and again. But we all have to work on it together. So this is what I truly love about red CF brigade is a true team sport. It truly is. There is no your own. And by your own, you’re not you’re never going to be alone, that’s for sure. You’re going to be in a very large crowd. So I want to thank everybody for coming out this wonderful Tuesday afternoon. And hopefully you’ll make it to our next webinars tomorrow morning at 730 in the morning. And then of course at 330. We have you know, almost two a day coming with you until the mid April. We want to bring you the top thought leaders people like Gander and Justin and many more to come and you’ll get an opportunity if you want to get in contact with them. You can go to www.KoreSummit k o r e summit.io.com.io.io and you will see our click on your speakers. You’ll see his name and his contact details email address full transparent so you can get a hold of them and start engaging. Thank you again, everyone, Justin. Thank you, Andrew. As always have a great afternoon, everyone.

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