Rafael Goncalves 00:42

Hello, good afternoon. Good morning. Good evening, wherever you guys are watching this from. This is our KoreTalks number 10. This is our 10th podcast, dash LinkedIn Live. And today we have a very, very special guests here. We have Samson Williams with us say hello to everyone, Sam. Hey, what’s up? Good morning. Good afternoon, and greetings, beautiful people. That’s great. I’m the Communications Coordinator for KoreConX. And I’m very thrilled to be here today with Samson Williams. I cannot call you Sam. By the way, we didn’t discuss it backstage. Generally call me Sam. And I’ve already sent you an invoice otherwise I go by Samson. Okay. All right. That’s, that’s good. That’s great. So that’s it. So Sam, I would love to have an introduction about you. Just tell people who you are about your background, what you do, and about this amazing work that you guys do at the Crowdfunding Professional Association, please. 

 

Samson Williams 01:48

Cool. So my name is Samson Williams. I like to say I’m the accidental president of the crowdfunding professional association. The crowdfunding professional association has been around since 2012, at the very inception, of regulated crowdfunding. And so most people just got hip to the concept of crowdfunding. And I’m gonna pause right there. So we can define crowdfunding. Even though you’ve been in crowdfunding space for a while, there’s a lot of people who are moved to the area. So use the internet to ask strangers for money. That’s crowdfunding. If you’re selling a pin, you’re not asking strangers for money; you’re just selling something. You’re still using the internet to sell something that’s been that’s not crowdfunding because you’re selling a good product or service. However, you’re using the internet to ask strangers for a donation to participate in rewards based crowdfunding or to make an investment. That’s crowdfunding. Why that’s super important to know, is that since the ICO craze initial coin offering craze of 2017 2018, a lot of people took a lot of liberties with crowdfunding by saying, Hey, we’re not crowdfunding, we don’t need to follow the jobs out of the Jumpstart. Just Just a second, just I’m going to restart the session, because there seems to be a problem for LinkedIn Live button just a second. Let me let me let me pause the session.

 

Rafael Goncalves 03:50

Hello, everybody, good morning. Good afternoon. Good evening, depending on where you’re watching us from. My name is Rafael. And I’m the connection the communication coordinators, sorry, the communication coordinator for KoreConX. I’m from Brazil. And I’m very happy to have our 10th edition of KoreTalks today or this rate, LinkedIn Live dash podcasts that started with David Wield himself, the father of the Jobs Act. And we are reaching the 10th edition of our podcast and I’m very happy and very thrilled to have Samson Williams from the crowdfunding professional association. Say our Hello Samson. Welcome to the show.

 

Samson Williams 04:32

Awesome. Good afternoon. Wonderful, beautiful people. My name is Samson Williams, I’m president of the crowdfunding Professional Association. We’re based out here in Washington DC, but we’re a national association. We also do have some international members from India. And so we’re always advocating on behalf of the 70 Plus FINRA license funding portals as well as secretly 3000 broker dealers even And if those broker dealers aren’t yet officially members of the crowdfunding professional association, so we’re not advocating for funding portal owners and broker dealers, of course, we’re always trying to look out for the interests of our most important customers, investors.

 

Rafael Goncalves05:16

That’s very nice. That’s very nice to hear. That’s very good. I hope you guys grew up, grabbed your coffee or a glass of water, because this is going to be a very, very interesting conversation. So Sam, before we go further, tell us a little bit more about you, where you’re speaking from, what do you do professionally, tell us a little bit more about your background and how you got and how you got to where you are today, how you got involved with crowdfunding and with private equity.

 

Samson Williams 05:46

Cool. By training, I’m a classically trained anthropologist, but I spend most of my days doing being a crisis manager, specifically for financial institutions. And so back in 2008, came up to Washington DC, on a 90 day contract to work at Fannie Mae, to help them with the 2008 recession. You might recall that almost around the universe in 2008, 9, 10. And so I learned a lot about capital markets, mortgage, backed securities. And then in 2016, my old college roommate said, Hey, there’s this thing called crowdfunding, we should do it. We should go. We should build a crowdfunding platform for real estate. Come join me. And so I left Fannie Mae in 2016, to join his crowdfunding platform. And that’s where I learned about the crowdfunding, crowdfunding the old fashioned way, by putting my life savings into it and see what happened. And let me tell you, there’s no journey quite like the entrepreneurship journey. Because we pay the Iron price for the information we’re about to tell you rather, I pay the Iron price for the information I’m about to tell you. But any entrepreneur will tell you, you’re really not an entrepreneur until you’ve burned through your life savings for the third or fourth time.

 

Rafael Goncalves 07:02

That’s, since you have a background on crisis management. I can say that. That’s scary. That’s kind of scary. But that’s also kind of exciting, isn’t it?

 

Samson Williams 07:14

Yeah, most people think. So crisis management is helpful because that’s like my day-to-day job. So when particularly when dealing with startups, and founders, this is the first time they’ve ever started a business. And it’s why their golf startups, and in many instances, the first time they’ve ever founded a business. And so most people think that success is a straight line, you’re gonna start this business, you’re all Excel billionaires, because you’ve got a beautiful spreadsheet that says, you’re going to go to Mark and you’re going to make X amount of money, you put your valuation at eight, nine figures, because you’re an Excel billionaire. But then life hits you. And so for all the businesses back in January of 2000, who launched with the new year, would dump their life savings into retail restaurant businesses. They’re like, yes, we’re gonna do it. That’s January 5 2020, march 6 2020, we went into lockdown for the pandemic. And so we often think that success is linear, you start, you finish early. It’s you start, you find out that on being an entrepreneur is like being a being a hurricane. And if you’re lucky, and most 95% fail in the first five years, five years later, you’ll be like, oh, yeah, I started, I did this thing. And now I’m here five years later, and I can start on my overnight journey to success. And I want to say, I know we’re going to talk about crowdfunding. 

 

Rafael Goncalves 

But sometimes we don’t give enough. We don’t talk about enough about entrepreneurship, and how difficult running a small business is. Because I might refer to it as a small business, but you you, your wife, your paycheck, your kids, it’s not a small business, it is the biggest business on the universe because that’s how you keep a roof over your head and your kids fed. So we do have to talk a little bit about the emotional journey of being a founder of being an entrepreneur, and what role crowdfunding plays in that. Yeah, that’s a that’s actually a nice way to say it, because when you see a small business, I mean, it can be a small coffee shop, or it can be a small software company. It’s providing the food and the roof you live in right for a family. So it’s not just about a small business about your life savings. Its about life itself, right? You have kids to support you have taxes to pay a lot of taxes to pay you have sometimes you have one two employees to pay your order enterpreneurs sometimes has to do itself to develop to build to sell to market, right 100% of the after I lost my first half million dollars trying to launch a regular real estate crowdfunding plan.

 

Samson Williams 10:00

My big takeaway from that is that a, I only wish entrepreneurship is so difficult, I only wish it on my enemies. B. Even if we’re not enemies, and you’re trying to be a founder or launch a startup, I’m cheering for you. But C, at least in my case, I find it a lot easier to be an investor, write a check, sit back, and let the founder deal with the stress of becoming successful, and why we’re why I’m still so heavily one, I’m invested into a couple of crowdfunding platforms, but also want to share that, again, your overnight journey, because I want to take you about 10 years. And it’s not linear. It looks like this. Before you can be successful, and why crowdfunding is so important is many times people think, Oh, I’m gonna go have this really good idea. I’m gonna get funding immediately. Where do you think that’s coming from? We should define crowdfunding. So crowdfunding, if you’re unfamiliar with the concept, use the internet to ask strangers for money. That’s crowdfunding. If you’re selling a pin, it’s not crowdfunding because you’re selling a product. But if you’re looking for investments, or if you’re asking for donations, using internet stalking strangers to ask for money, you can be getting donations, Kickstarter, we’ve Kickstarter or GoFundMe, those are donation, particularly a GoFundMe, a great donation platform. Kickstarter is excellent for rewards-based crowdfunding. When I say crowdfunding, I’m specifically calling out investment crowdfunding, whether you’re doing debt, or whether you’re doing equity, because this is what most small businesses are focused on. They’re focused on investment crowdfunding. And even though you might start off on a Kickstarter type platform, doing a rewards based crowdfunding at some point, to get that equity investment to get that capital growth you really need. You’re gonna go to investment crowdfunding. That’s where we’re talking about equity, crowdfunding, debt, crowdfunding, sometimes royalties. Those are all lumped in with investment crowdfunding.

 

Rafael Goncalves 12:16

Yeah, that’s, that’s nice. And that’s, that’s, that’s a journey. Right? That’s quite a journey. It’s very interesting. And one thing that I would love to talk about before we go a little bit deeper in the crowdfunding Association, and how we can help entrapreneurs I can’t help you, I have to remark that it’s amazing that you are a black man, right? Talking about about private equity. And we know that it’s a market that is made by white men, right? Most of them are white men. And how do you feel about being a black man talking about crowdfunding and about private equity? And about being the president of crowdfunding Association? How does it feel to you because you’re kind of a role model, right? You’re an inspirational, you have an inspirational role as well, right?

 

Samson Williams 13:10

I’m a horrible role model. Number one, I eat way too many gummy bears have poor dieting habits. But I understand and appreciate how important it is to see someone who sort of looks like you in a role, because it gives you that aspirational moment that Oh, I could be that too. And so what I like to talk to whenever I talk to black folks, people of color, a lot of Latin folks from Latin America has been a blank this is that customers have more money than VCs. I’m gonna repeat this because it’s super important to understand. Customers have more money than sharks. Customers have more money than angels. And so historically, the VCs, the venture capitalists, the sharks, the so called Angels, they’re like, oh, I have this great pin business. 

 

Rafael Goncalves14:20

this connection. Are you back? Are you back? Oh, okay. Yeah, we had you locked. You thought we were talking about having a better mouse. And then you got we lost you. 

 

Samson Williams So if you have a product, you’ve invented a better mouse, you need to remember that your customers have more money than VCs, your customers have more money than investors. Why this is important, is because investors don’t actually make your business profitable. Customers do. And so, if you’re black, if you’re a minority if you’ve been denied access to the traditional methods of venture capital of capital of accessing capital. You still might be able to tap into your customers who have more money than VCs, because it’s your customers who make your business profitable. How you tap into them is by using the Jobs Act, crowdfunding rules so that you can solicit from your customers, current customers, future customers, potential customers, investments into whatever your good product or services. This is revolutionary. So before 2016, retail investors weren’t possible. So you could have a mom-and-pop shop, you could have a taco shop and ice cream shop, you could be building mice, you could be making watches, you could have some kind of software. Before 2016, you legally couldn’t ask the 10,000 people who followed you on Instagram or Twitter, who are already your customers, if they loved your good product or service so much that instead of just buying it, they wanted to invest in your company. This is why investment crowdfunding is so important, because it goes back to the simple fact that customers make your business profitable, not VCs, definitely not sharks. Because if I’m a shark, I am more than happy to make an investment in your business. Because now you work for me. Because now when you make money, I’m going to skim off, hopefully 30 to 40% of that right off the top. Customers don’t do that. Customer say, Samson, I love your widget you’re good at your gadget. I love it so much. In addition to paying 2999 for this thing, I’d also like to invest, that changes the dynamics of capital formation in a big way.

 

Rafael Goncalves 16:47

Yes, this was something that I had that I had in my in my schedule here to ask you for your own but CF, let’s go there. Cause reg CF can really help companies raise money from brand advocates, right? You can you can have, you can have a brand advocates help you help invest in your company. And the entrepreneur maintains property, they don’t have to go public. And you do believe that this, this is still unexplored by companies, companies are still learning to do that.

 

Samson Williams 17:23

100% and I forgot to so particularly if you’re black, you’re sort of blessed to be the same complexion as Jesus like myself. Why you why crowdfunding is so crucial. When the VCs are preventing you from accessing the traditional, traditional capital, your customers open the door, you’re already an influencer, you already have your own style, probably have your own product, you’ve got a following, you built a community, you put in 5-10 years of building a community. Now you’re gonna convert that Community Capital, that social capital into financial capital. In that moment, you’re able to sell, you’re able to self-actualize the growth of your company, you can do this through investment crowdfunding, it’s like running a marathon. It is not easy. It is hard. But here’s the thing I want, I’m gonna refuse. I’m gonna lean in so everyone can hear me clearly. Raising money is hard. You only have about six funding options, go to a bank, and the bank will lend you your money at 12 to 18%. If you have a million dollars in the bank, they will lend you your money at 12 to 18%. You do not have your that money in the bank, they’re not going to lend you money. So if you can’t lend it, get it from the bank, you’ll think Oh, VCs, you probably don’t want to accept money from VCs, aka sharks, because there is a reason they call them sharks. They’re hungry, they’re greedy, they want to eat you alive. Then you have angels, why this group of investors is called Angels as a mystery, because they want the same terms as sharks. So why are they called Angels? I do not know. So after banks, after VCs after sharks, there is these people called hedge funds, they’re even more predatory, or rather, the terms that they want, can be even more egregious than sharks. And keep in mind, if this is your first time founding a business, and you go in front of a group of sharks, that is their business. The business of a shark is to eat as much as they possibly can. And if this is your first time ever raising money, and you go in front of a group of 2, 3, 5 Sharks, they’re gonna have you for lunch, because you just don’t know what you just don’t know. Banks, hedge funds, sometimes private equity, sharks, angels.

 

You can’t do invoice factoring, but definitely want to consider that carefully before you go down the route of Invoice factoring. Then that last group is the crowd. That last group is your actual customers. And this is again that game changing moment for retail investors because now founders can talk to their customers and say, If you love my good product or service app, you spend 2999. Buying this and you love this widget, why don’t you consider investing $290 in my business for an equity stake, and this is why it’s super important for black people, for women for women of color. Because when the traditional outlets tell, you know, you say, okay, cool, I’m gonna go engage my crowd, I’m gonna go engage my community, I’m gonna go engage my customers. And what that does, it gives you an opportunity to convert your customers into investors. And I stole this term from Woody Niess, I didn’t invent it. Those folks are called investomers. And an investor is a customer who’s now an investomers, that changes the game in a really profound way. But I want to be clear that whether you’re raising money from banks, VCs, angels, hedge funds, our retail customers, investors, all of these entities, they need this to know the same exact data. What’s your business? How do you make money? What are your offering? What terms are you raising on? How am I going to make my money back, doesn’t matter if it’s a bank, a shark or retail investor, they all need to know the same exact data points. So when I say that raising money is hard, we want to be clear, it’s hard. Because you still have to be investable, you still have to be worthy of investing. Because whether you’re trying to get it from a bank, a shark, a hedge fund, or an investomer, they all make their investment decision based on the same data point, you’ll often hear where people say, just go find an angel investor, do a reg D deal, you only need one investor. That is true. Do you know that accredited sophisticated investor, probably not, in which case, you’re going to spend all this time energy and money, typically 18 months, before you realize you were looking for accredited investors, those are folks who make more than $200,000 a year to invest in your business. And you found one, but they only wanted to write you a $20,000 check, maybe $100,000 Check. But you need $500,000 to launch or launch your business. If you’re going to spend time talking about your business, what it is, what your products are, how you make money, and how you make your investor money. Don’t just do it to sharks, because only about 4% of the US population is accredited investors, I’m not sure on the percentage of accredited investors down there in Brazil. But I’ll look up, look that up and get back to you. Because you’re going to pitch. Everyone who’s in the crowd, whether they are a shark, a whale, an angel are retail investors, you’re going to pitch them all the same exact information.

 

And if you’re only going after sharks, that means that 96% of the people that you pitch to, can’t invest in your deal. This is where with crowdfunding through the Jobs Act, you’re able to pitch to the crowd. And if your crowd consists of a few sharks, a few angels, a few retail investors, that’s awesome. Because they can all invest in your deal on whatever terms you dictate. That’s the last part before this long rant is going to conclude is that when you create your own deal, you dictate the terms. If you ever ask a shark for investment, sort of like asking a shark, what do they want for lunch, you’re on the menu. So one of the benefits of Reg CF. And under reg CF, you can raise up to founder or startup can raise up to $5 million, you get to dictate the terms of those $5 million. If you only need to raise half a million dollars, you’re saying hey, I’m raising half, I’m raising $500,000 for 10% of my company, you’re dictating the terms, because when a shark shows up, they’re like, Great, we’ll give you $500,000 for 100% of your company, that might not be your exit strategy. And it just became an employee, right? You’re now you’re just an employee. And so this is one of the other benefits, particularly for black people and people of color. When they’re trying to raise money. You’re going to spend money, it takes money to raise money. Because again, you have to pitch the banks, the sharks, the angels, the investors, they all you have to pitch all of them with the same exact information. That that is time consuming costs, it has expense has sunk cost. So instead of just pitching 4% of the population, pitch to everyone and last of course you of course want to determine your own terms. And that’s the other big to big deal that’s enabled through reg CF crowdfunding as well as Reg A, Reg A plus, crowdfunding. 

 

Rafael Goncalves 25:00

I really liked your explanation about the venture capitalists about sharks and angels. But we learned from friend that he was involved with, with, with venture capital in Brazil. And he said that sharks, they smell blood and angels want your soul. So oh, that’s a good one. That’s so it basically, it’s the same thing, but just said in a more in a more beautiful way. So sharks go for blood and angels go for your soul. 

 

Samson Williams 

Well, in theory, it’s better to have to give a shark a little bit of your blood because you only got one soul. But as the founder as an entrepreneur, you need to again, I’m going to repeat this, you have to present the same facts, regardless of the level of investor so they can determine if they want to invest. Sometimes, they don’t want to invest because they just don’t invest in the businesses in your vertical. I know a gentleman who is here in DC. He made his money in the taxi business, he only invest in businesses where there’s wheels involved. So he’s not investing in your SaaS company 99% of the time, because he’s like, your main method of making money doesn’t have a wheel involved. I’m all about transportation. So you have to keep in mind, if you’re just gonna go out and find that one angel investor, that one shark that’s gonna write you that $2 million check, you’re probably going to spend 18 months before you realize, oh, 90 96% of all people I talked to, they couldn’t write me a check. Because I was doing a private placement memorandum or a reg D 504, or 506 deal, in which case 96% of the folks you interact with, they just simply can’t invest. Whereas if you do a crowdfunding campaign, it’s difficult. It’s going to cost you money. Generally speaking, you should anticipate spending about 10% of whatever your goal, I’m sorry, 10%, up to the first million, then it scales down a bit. Meaning if you’re looking to raise a million dollars, it’s going to cost you $100,000 In sunk costs, to attempt to raise money. There’s no guarantee raising money is hard. But you should keep in mind that regardless of if you’re talking to sharks, VCs, angels are retail investors, you still have to pitch to them in that cost. There’s a sunk cost to pitching.

 

Rafael Goncalves 27:24

Yes, yes. That’s, that’s very interesting. That’s, that’s, that’s really having a masterclass today. So let’s talk a little bit more about the crowdfunding professional association. You guys have mostly an educational approach? Right? You help educate entrepreneurs? And what are the most common educational actions that the crowdfunding the CFPA offers to help the these associated companies?

 

Samson Williams 27:53

If you go to the crowdfunding ecosystem, or if you go to CFPA.ORG, and then you click on ecosystem, that’s probably one of the best resources out there. It provides you the ecosystem provide you a curated board of crowdfunding professionals, some accountants and lawyers, some IP folks, some marketing folks, and then you can ask questions, questions that are specific, questions that are specific to crowdfunding, I’m just reading the posts that are currently up there. Securities lawyers explain why violating crowdfunding regulations isn’t like speeding, super important. Our founders putting themselves at risk, if they reveal their fundraising plans on a public forum like Twitter, it’s actually a legal question. Not that they’re giving you legal advice, but they’re, they’ll give you color around the regulations. And so if you go to crowdfunding, ecosystem.com, you can read all the questions that founders have asked about crowdfunding, and get back expert opinions and expert informations from members of the CFPA the board, and I myself, I often respond to questions there, because one of the benefits is that if one person has a question 100 Other people have the same exact question. And 99% of the time, we’re not telling you anything new. For myself, for instance, if you’ve read the Jobs Act, it’s about 385 pages, then there’s an addendum, and that’s another couple hundred pages. So I’ve read the Jobs Act, highlighted it. And so when people ask me questions, I often just refer them back to a specific page, because I can give you my interpretation of the Jobs Act, or you can read it yourself. Yeah, but most of time, you just need to know and that’s what the crowdfunding Professional Association does. It provides you the technical expertise that you need in order to feel empowered to make your business decisions.

 

Rafael Goncalves 30:01

yeah, and also we have as an association of courses business in general, you have a company’s in different stages, right? Some people are starting, some people are already filing, some people are already have already done some some funding, somehow. So you have people with different levels of knowledge, and they’re able to exchange this kind of information, right. 

 

Samson Williams 30:26

100%. We have courses and posts and information specifically for founders, I, sometimes I call them one openers, they’ve got a nine to five, they want to be entrepreneurs, they’re not quite ready to leave their job, and they’ve never launched a business before. The information we give them is basic. This is what it means to start a business. You’re incorporated you file for your county or state tax license, you know, you’re a bonafide business because people can invest in an idea. Then there’s other information for people, this is their second or third time founding a business. They’ve had one or two successful exits. They went the VC route the first two times, but they weren’t very happy with it. So now they’re exploring. What is it? Now that I’ve had a couple of exits? How can I go back to my customers? I’ve got 100,000 customers, how can I go back to them for my new venture, my next venture? Those founders, they asked different questions because this is not their first rodeo. They ask less questions about business information, and more technical questions about what is crowdfunding? What are blue sky loss? What are some of the other technical terms that the CFPA experts can walk you through? versus you know, those rudimentary basic entrepreneurship one-on-one questions, and our last group of folks that we cater to at the crowdfunding professional association, our platform owners, so whether your KoreConX, whether you’re David Duccini, from Silicon Prairie, or Eve picker from small change that CO. Much like in the NBA, the teams are represented. We represent the whole league, all the crowdfunding portals, because when the crowdfunding portal, that person who owns a portal, they’re a small business owner, their biggest irritation is probably the SEC or FINRA, because the government has made some nuanced ruling that causes operational pain. And so instead of tackling it one at a time, from each funding portal, you come to the CFPA, we can say, Okay, if one funding portal has told us this, it applies to the next 70. Because it’s a pain point for them. It’s a pain point for all 70. Instead of having a discombobulated decentralized approach to how you address the regulator, we’re able to help organize and say, and engage regulators say, Hey, here’s some things that you should probably consider changing. When it comes to social media. We want entrepreneurs and issuers to be able to get on Twitter and say they have a deal, or they’re raising money and not get in trouble. Because again, all of the securities rules is based on the 1933 Securities Exchange Act. And shocking, shockingly enough, Twitter did not exist in 1933. So some of the rules don’t necessarily apply apples to apples, to how entrepreneurs and founders use modern technology to engage their customers. Now, things don’t fit right. 

 

Rafael Goncalves 

When you take when you take something from almost 100 years ago. And obviously, it’s not gonna fit our ecosystem and our reality, and the difficulties people might have, right. 

 

Samson Williams 

And because it doesn’t fit, this is where we advocate for all crowdfunding portals. Because when we advocate for the portals, we’re also advocating for the founders, the issuers, the entrepreneurs, as well as the investors, because part of it is, if you’re trying to raise money, you need to meet your customers, your investors, where they’re at. They’re on Reddit, if they’re on LinkedIn, if they’re on Twitter, if they’re on Facebook, you need to be able to use those platforms to in a regulated and compliant manner to attempt to raise funds from them. That’s what we’re here for. That’s the real mission of this. Crowdfunding professional association. 

 

Rafael Goncalves

Yeah, that’s, that’s, that’s very interesting. And also you can have you here on the on this forum, you can have a lot of answers with different perspectives, right? You have people from legal perspective, from accounting perspective, FINRA broker dealers, I mean, you have a different perspective, people looking from different perspectives and offering different answers that can connect right that can help give a better answer to the enterpreneur regardless on which stage he’s at, right. That’s, that’s very interesting. That’s very 100% 

 

Samson Williams 

Check out crowdfunding ecoystem.com asked a question, someone will get back to you go through the old questions. Generally speaking, when someone asked me a question, it’s not the first time the questions been asked. So I’ll find an old response from two, three years ago, and just send them the link and say, watch this video, then come back and ask me a question. Because it’s part of that. And I just don’t do that the variety of experts, you have about two dozen people who regularly respond to questions. That gives the entrepreneur a way to measure twice, before cutting once, because if you’re a founder, you’re about to bet your life savings, probably your spouse’s life savings, or whatever you’re about to do. And so you need to have the unbiased source, which is the crowdfunding professional association, to tell you in real terms. Entrepreneurship is so difficult. Samson only recommends it is enemies. And the resources help you understand why I say that.

 

Rafael Goncalves 36:00

Yeah, yes, yes. Yes. So sometimes your enemies can be your best friends as well. Right? But especially if you are the Superman, his enemy is actually just like him. So we hate him, the others when we’ve seen ourselves. So that’s a little psychological, literal, anthropological, but that’s a whole different conversation.

 

Samson Williams 36:24

Well, I will add to that point where I feel that Superman can’t be super, without a villain. Otherwise just do to fly. Exactly. Yes. Yes. What happens is if bathroom kills the Joker, there is no there are no more movies, there are no more stories, right? You still have some others, but the Joker is the big deal, right? And you bring up a very interesting point. Remember, as a founder, do not associate your yourself with Yes, men. Yes, men, and yes, women. Because if you surround yourself with people who aren’t going to tell you, they’re who are going to be honest and transparent. What you’ll find is that you’re setting yourself up for failure, you’re talking in an echo chamber, and no one’s telling you, Hey, watch out, this is going to happen. So just remember, you sometimes need to purposely as a founder, go find someone who’s contrary ornery, and is just against your idea. Because they’re actually going to tell you what you need to know to protect yourself, versus being surrounded by a lot of people who are just watching you spend your life savings and telling you yes, that’s right. That’s right. Especially when it started growing, right? Do you have for example, I’m going to hire someone to help me with social media, I don’t know.

 

Rafael Goncalves 37:45

He’s a special he or she, of course, the person is a specialist. Right? Then all I want this, this and that. Maybe that’s not the best way to go, No, but I want that. Let’s try a different approach. That’s not the best. Yes, it can be done. But there are other ways that are better solutions.

 

Samson Williams 38:04

And so because you bring it up, and we’re talking about social media, I do want to take a moment. Because if you’re a founder, or if you have a startup or an established business, and you’re thinking, Oh, I would like to raise money, whatever your pitch deck is, pitch it to everyone via crowdfunding. And so if you’re looking to raise up to $5 million, you can use reg CF, the SEC exemption known as reg CF. If you need to raise a little bit more, you can use using Reg A, Reg A Plus, you can raise up to $75 million. And so Reg A plus is pretty ideal for companies looking to raise more than $5 million, less than $75 million. There is an expense involved, it’s probably going to cost you around $150,000. To put your deal together to go out and raise over $5 million, you should at least have a budget around $150,000. Even if you think you’re gonna go out and find a shark, you’re going to do a roadshow, that Roadshow is going to cost you about $150,000 before you actually find that one single investor. And so why I’m telling you this now one, so you get accustomed that money is not free. During the ICO craze, the initial coin offering in the blockchain crypto space, a lot of people discovered crowdfunding, they got on the internet, they asked strangers for investment. That’s crowdfunding ICOs were just unregulated crowdfunding. Unfortunately, few years later, we understand why they had a 98% failure rate. Because when it’s unregulated crowdfunding, there’s no checks and balances, and so you have a lot of fly-by-night operators. The other thing the reason I’m bringing this home is crowdfunding raising money comes out of sunk costs. What you need to spend your money on your time rather is building community. Because if you go to KoreConX if you go to any crowdfunding platform, they provide you a service of crowdfunding of being a platform. They don’t do marketing. They don’t do community building, they don’t do advertising. The still crowd part, just the funded crowd. Yes, the crowd is yours, right? Rafeal, you remind me, crowdfunding works best with a crowd, it’s on the founder to get the crowd. 

 

That’s where the time energy and expense really comes in. Because the platform, their fee is based typically on success. Meaning if you’re successful at bringing the crowd to the platform, then they’re going to charge you some percentage of the deal, typically, somewhere between five and 5% and 8%. But again, crowdfunding works best with the crowd platforms, by rules and law, they’re not there to do marketing, and bring the crowd for you. That’s on you. So before you go to raise money, I don’t care if it’s from a crowd of sharks, or a crowd of angels, or a crowd of investors, retail investors, you got to build your crowd, because you build your crowd. And then you go to a platform that says, hey, my deal is on this platform, click this link. Because if you haven’t built the crowd before you begin your crowdfunding journey, and you ask me, Hey, Samson, how much is it going to cost me to raise $5 million? What you’re really asking me is, hey, Samson, I want to skip 10 years worth of community building, building a reputation and a brand, and go right to the front of the line. And I’ll tell you, you’re probably going to spend half a million dollars to find out that people humans do not invest in strangers.

 

Rafael Goncalves 41:47

It shouldn’t be a difficult concept, right to understand. 

 

Samson Williams 

Stranger danger. People do not write checks to strangers. And so if you get on the internet, and you ask strangers for money, and they don’t know who you are, your conversion rate plummets. And so if you’re, if you’re not willing to build the crowd, you’re not able to access funding, because crowdfunding is a process of converting social capital into financial capital. So I really want the founders and startups to take this away. The hardest part of crowdfunding is the crowd. And that’s on you. 

 

Rafael Goncalves

Yes, yes. That’s very powerful to understand, right? Because we’re talking about ecosystems. We’re talking about brand advocates. And we’re talking about people. Basically, we’re talking about building relationships and building confidence, and showing your product and getting confidence and by the quality of your product or service, whatever.

 

Samson Williams 42:51

That is very, very helpful. Just, yes. Can I say one thing? Sure, never ever call me. If you’re in stealth mode. It irritates me so much. Because if you’re in stealth mode, it means your good product or service is not you don’t have an MVP, it’s not ready to go. You’re in stealth mode. Stop telling people you’re in stealth mode, develop your good product or service so that it’s at an MVP, so that, if you’re selling headphones, I can test them out. Don’t tell me you’re in stealth mode about a fancy widget. I can’t touch user here. So that really drives me nuts. In today. If you’re in stealth mode. The sharks don’t know you exist, the angels don’t know you exist. Your investors don’t know you exist. So if you’re in stealth mode, please be so good at being in stealth mode. You don’t tell anyone? Yeah. Because if you start telling them, you’re in stealth mode, you’re just prototyping or showing off. You’re, you’re not owning a company or a business or anything, right. They’re just showing off.

 

Rafael Goncalves 43:55

Yeah, that’s just just before we are we are about to wrap it up here. I feel like we could go on for hours. But we all have schedules. Do you have do you see any specific segments that can benefit from reg CF or you believe that any segment is good for that? Like technology med tech.

 

Samson Williams 44:17

The biggest real estate is crushing it and REG CF. It’s continually on an Upward Bound. If you have a traditional brick and mortar retail establishment, like a restaurant, a taco shop, ice cream parlor, and you’ve been in the community 510 years, you already know the people who want to invest in your business. They follow you on Instagram, they follow you on Facebook. If you’ve tied in any type of marketing where you issued a coupon, say you’re you know you run a coffee shop and your coffee shop has issued a coupon and you have 500 people redeem this coupon. Those are amazing qualified leads you already know who the 500 people are who redeem this coupon, you’ve already got a loyal if you have a loyalty program that’s already established. You’ve already curated people who love your good product or service so much that they’re already customers,. Your database is there, your database is there, you got the database of customers, you’ve never asked them what they like to be an investor. That’s what reg CF provides you. So if you got the database of customers offered them the opportunity to be investomers in the business, that they already love so much their customers. Because you’re not selling them on how great your tea or coffee is already bought in. They already bought it. Yes. So when you say which vertical is that, again, if you’ve put in the sweat to build the community to build the crowd, to have that database. That’s the ones where reg CF is really ideal for.

 

Rafael Goncalves 45:55

That’s very nice. Very nice. So I think we should be wrapping up already. We are almost 40 minutes, a little bit over 40 minutes. So any final thoughts, anything you’d like to touch and you didn’t? How can people reach you? How can people contact the crowdfunding Association, please? More is yours to wrap it up. Cool. 

 

Samson Williams 

By all means, reach out to the CFPA, definitely check out crowdfunding ecosystem.com for any of your specific technical, excuse me. Technical needs for crowdfunding. We’ve got marketers, we have lawyers, we have accountants. We have crazy people like me, who are going to tell you that entrepreneurship is so difficult. Only I suggested to my enemies. They’re the most important people, the crazy ones. They’re the most important ones. And if you want to follow me, you can just find me on LinkedIn, Samson Williams. And if you have a super technical question, you can just ask me on LinkedIn. And I will just reply back. And please, if you’re hesitant to raise money, because you don’t want to ask your friends and family for that first round, you’re not ready to raise money. Because if you’re ashamed, or if you’re hesitant of being dedicated to your business idea, because you don’t want to involve your friends and family, that means you’re actually not dedicated to that idea, which means it’s probably still an idea versus something you’ve completely fleshed out. Because part of raising money, it does require for you, the founder, to risk your social capital, and your reputation in pursuing your dreams. But they’re your dreams, they’re not your investors. And so if you want to pursue your dreams, you’ve got to risk it all by savings, 401 k, plus your reputation. I’m going to end on that point. 

 

Rafael Goncalves 

That’s, that’s great. Samson, thank you very much for your participation. It was wonderful having you over for our 10th edition of cortex. And I’d like to invite everyone to follow KoreConX and crowdfunding professional association on LinkedIn. You can find core talks on Spotify on iTunes on Amazon music, you can find our podcast in your favorite podcast player. And we’ll be here the next week or so. Please don’t forget to stay connected to our LinkedIn page. Thank you and once again, and I’ll see you soon.