Rafael Gonclaves 00:55

Well hello, everybody Hello to all our listeners, our YouTube followers, our LinkedIn subscribers, our Facebook followers, and I don’t know where else we can be. But we are there. I’m sure we are there. Welcome to the 22nd edition of our KoreTalkS. My name is Rafael Gonzalez, the communication coordinator for KoreConX, learning a little bit more about private capital markets every single day and trying to bring you guys some education to make our market grow. Today I have a very, very special guest with me. Nathaniel Dodson Nate Dodson. And if I can call you like that. It’s Nate, introduce yourself, the stage is yours.

 

Nate Dodson 01:40

Well, sounds good. I am the principal over at Crowdfunding Lawyers. We have nearly a 20-year career really doing just transactional business startups, business m&a, mergers and acquisitions, and real estate. And traditionally, my law firms have really handled everything from the contracts to setting things up. And of course, the financing and the equity, acquiring Crowdfunding Lawyers back in 2020, it’s a bigger emphasis on the crowdfunding the equity marketing, from a general aspect, which of course is KoreConX big forte there. So love catching up with Rafael, and the rest of the team over there. But beyond just being an attorney at heart, I’m an entrepreneur that works hard and plays even harder. Always enjoy traveling, golf, and all the fun things in life. But it’s important to balance the fun with the the hard work and the effort. And so that’s really where my passion comes together with helping our clients, helping the people of the United States and abroad, really reach their dreams, get their businesses off the ground. And it’s always nice. This is where I find my joy in seeing other people’s success. 

 

Rafael Gonclaves

 No, that’s a very positive view. It’s very interesting to listen to someone speak with that kind of passion about being an entrepreneur. I have to ask, what is that animal behind you picture the animal in the picture behind you, there’s not an animal behind you don’t worry.

 

Nate Dodson 03:28

This is so there’s a little story behind it. So I’ll tell a short story of promise, please do not. So it’s a painting of a water buffalo that is charging. It was actually in one of my client’s offices maybe a dozen or 15 years ago. And he had an employee that pay was an artist painted all these pictures and I’m walking through his office, and I just stop and I start cracking up. And like these bulls doing that I’ve got to pee dance. And so I’m like, this has to go above the toilet in our house. Like there’s no better place for it. And so what’s it going to cost me the guy says, Well, normally my paintings cost four or $5,000. And then I’m not going to pay four or $5,000 for a bull trying to do I’m going to do the P dance. What’s it gonna cost me his responses? What do you got in your pocket? I said I got $100 on it. Sold I take a picture of it. And I’m in Phoenix at the time living in Las Vegas. I took a picture of it sent it to my wife said look at what I got for our home bathroom. I’m so super excited of the bull doing the I gotta pee dance. And she says fantastic. Can’t wait to see you. I loaded in the car and drive back to Vegas and by the time I get there, it’s a four-hour drive. She had every wall in every bathroom in our house covered. He says, I’m sorry, there’s just no room here, you’re gonna have to take it to your office. And now it’s been proudly shown in my office for the last dozen years. That was low, but fair from your wife. Oh, complete, so I get it. And so to this day, proudly shown in every office, it’s moved from Las Vegas to Dallas and a few offices in between. It’s always there. It’s my crown jewel of the I got to, I got to do the pee dance poll. It’s a great icebreaker. That’s a great, great icebreaker. That’s a very warm story. That’s a very, very funny story. I loved it. I loved it it’s a very nice painting, by the way.

 

Rafael Gonclaves 05:48

It’s a very nice painting. But let’s get to work. Let’s get to work. I love it as much as I love the buffalo story. We just finished last week, our KoreSummit, we’ve talked about real estate, we’ve talked a lot about solutions, and about the market. Nate, Could you summarize the opportunities, you’ve seen in the sector? For those who missed it? What kind of advice would you give entrepreneurs and investors regarding real estate, in a nutshell?

 

Nate Dodson  06:19

Real estate in a nutshell, it’s really important. If you’re I know, I know, it’s tough. It’s tough, but it’s unbelievably rewarding. It’s created more millionaires in the United States than any other basic type of industry or business ever. So it’s a huge thing to learn about, and to know and to be in. And it’s one of those industries where almost anybody with any sort of net worth can go and buy a rental property. But that only goes so far. And pretty soon you need other capital, and you need more money, and it just doesn’t end. And that’s where you start with raising capital and getting into more and more deals. But that actually never ends. It doesn’t matter if you become that multi-billionaire, like Donald Trump, he’s still out there raising capital from individuals. Now the individuals have to be like Royals, other really high net worth people. But in the real estate industry is just a part of life. The only major difference is how much capital you’re trying to raise, if it’s a million vacation rental, or a $100 million, multifamily and apartment complex at the end of the day, it doesn’t change the fact that it’s just a necessary part of any real estate business.

 

Rafael Gonclaves 07:47

Yes, and what I meant about being tough was putting real estate in a nutshell, because the same that you work on real estate is like I work with the internet. I mean, it’s huge, right? Definitely. And it’s really interesting. 

 

Nate Dodson 

There are kind of two different paths for, hey, I want to get into real estate, what should I do? And one path is well, yeah, find something that you know, like, and can afford to do and stick with the path. And that’s where people have been building rental portfolios for decades for years and building it not just for themselves, but bringing in investors and continuing to expand the rental portfolio. But single-family homes, small rental opportunities, it’s always there, compared to kind of the bigger opportunities that change with the markets. Over the last couple of years, we’ve seen a massive number of apartment deals happening, but also a lot of ground-up construction. Storage units. All of these areas have been phenomenal places to target and pursue investing. But the dynamics have more recently changed, and the interest rates have been going up. It’s turning from this buyer’s or seller’s market to a buyer’s market. But not necessarily all the pricing has reflected that yet. So we’re in the middle of a shift. Where are apartment complexes have been great for the last decade. We may see less growth over the coming next few years. But there’s a huge refocus on the single-family home both for vacation rentals, as well as building neighborhoods literally, of rental streets, rental neighborhoods. So it’s still creating massive opportunities in some kind of more boring areas like a rental portfolio. Yay. But it creates the cashflow it creates the capital gain opportunities. It creates that wealth succession that can follow you beyond just what can you build to what’s there for your kids for their kids?

 

Rafael Gonclaves  

And how can you help out the investors around you? Yeah, you, you said an expression that I believe is key. create cash flow, right? Because that’s a belief that’s, that’s the big deal about capital formation, as we have been talking about the cash flow, money is scattered. As long as we have Reg a Reg CF. Right. You have possibilities for accredited or nonaccredited investors, you create this kind of flow. And obviously, investing is not only about online capital formation and growing and making money, there are risks inside every part of this, this chain, in every aspect of this flow, has risks. And as we discussed before, talking about risks isn’t as sexy, right as talking about becoming a digital marketing guru, becoming a millionaire like Donald Trump, or how to become irrelevant. Do you believe that we, as educators, and as companies, avoid talking about it, and we help make risk a gray area? Sorry. Sorry. Do you believe that we should talk about risks more often? So we don’t make it a gray area?

 

Nate Dodson 11:31

Definitely one of the most important things for people to realize is the extent of what a risk means when you’re talking about working with investors. I mean, in the worst-case scenario people have gone to jail for lifetimes. If they’re not doing things, right, I literally have an ex-client that got drug into a court case that he was abusing investors, meaning lying, taking their funds, and running, yeah. I end up having to literally testify at his trial. Because he ended up waiving the attorney-client confidentiality, something that you should never ever, ever do. But he waived it, then I get called to the stand. And this guy, he didn’t do things properly. And now he’s literally in prison for the remainder of his life in his 60s with a 40-year sentence, he’s not going anywhere. And it’s because of the risk of him not doing things, right. This was a situation where he was told how to do things right and decided not to do it anyways. So oops, I made a little mistake, I didn’t realize it, securities are a very technical area, and it’s important to have a team behind you, including the legal team, your accounting team, and your technology, how people are investing, how your marketing, all of which creates massive risks, if it’s not done properly, meaning you’re limited on what you can say or do from a marketing aspect. If you have a great team behind you, they’re going to make sure that you do it right. From a legal perspective, there are so many ways to go wrong with how to raise capital, and how to communicate with your investors, that you really shouldn’t be just relying on anybody’s attorney. Really makes sure that you’re dealing with a legal counsel that focuses on and has proficiency in capital raising and securities very specifically. Otherwise, you can trip on your way out, and it can cause some massive risk ramifications.

 

Rafael Gonclaves 14:00

Yeah, just this morning, or you read a great piece of content by Sara Hanks. She wrote it back in February. The SEC is not your mom. I mean, even though there are some people doing things, it doesn’t mean that they are legal. And it doesn’t mean that you should. Right?

 

Nate Dodson 14:24

Now, at the end of the day, the SEC may not be your mom, and they may not send you to your room without dinner. But they’re really not your enemy either. They are a regulatory authority that’s there to protect the people of the United States to protect the investors. And it can feel like they’re the enemy of the issuer. But they really are there to make sure that you’re also doing things right but they’re not part of your team. They want to make sure that you’re doing things right and if you don’t, they may take action against you as well. So it’s important to give them both the respect that they deserve as an authority. But also to realize that they’re really there to make sure that things are done. Right. And if they’re not, they are the hammer that can be brought down on you or your company as well.

 

Rafael Gonclaves15:27

Yeah, I believe this is global, any regulator any authority? They’re there to help. Right? They’re there to tell you how to do things. Okay. Things they, some things are more complicated than others. But still, if you follow your lawyer, if you follow the rules,

 

Nate Dodson 15:41

I mean, it’s always right. Yeah, you would hope so. But even as a lawyer or raising capital, I do my own projects as well. Getting that phone call. And you look at the caller ID. And I recognize the SEC’s phone numbers like that feeling deep in your heart with Oh, my God, what went wrong? What happened? Where are we at what’s Oh, my God, who’s going to jail now, it’s a real feeling that everybody always gets. It’s just human nature. But the reality is, most of the time they’re reaching out, oh, we’re just checking in on this, that, or the other. It’s when you get a letter saying we’re gonna subpoena this information, or we’re opening up an investigation, that’s the time to start to be a little bit more concerned. But as long as you did everything that your team from KoreConX to your CPA to your securities attorney has been telling you to do along the way. There really it shouldn’t be a gray area or fear of risks, you should have confidence that you’re doing everything right throughout the process.

 

Rafael Gonclaves 16:57

Yes, yes. At KoreConX, we have been saying that spending 23 is the year of trust and compliance. We have had some issues. The market has seen some issues regarding cryptocurrencies, and, I mean, it’s a developing market, we’re still going to get a lot of things right and wrong. We’re going to see a lot of people showing and disappearing, a lot of companies disappearing, and new ones coming in. But what are the risks that you as a lawyer See, that came along Capital One capital formation, because now you don’t have to, because before the Jobs Act, you had to travel and you had to bring inside meetings and you had to shake hands, then you had to raise money. Now you can just with the solutions, like KoreCOnX, they can just raise money on your website.

 

Nate Dodson 17:59

What kind of different risks has it brought, in your opinion, in my opinion, it lowered the risks, and lower the risks both for the investors as well as the issuers by implementing by including third-party compliance in some way, shape or form. Traditionally, before the Jobs Act, we had Regulation D 506, which was kind of the standard private offering strategy. And other than filing a reg D notice with the SEC in the States, it was between the issuer and the investor, and nobody else was involved. And oftentimes could literally see that okay, there’s something that doesn’t smell right about this deal. But there’s nobody else that is looking into it. Now, with the advent of online crowdfunding with regulation, most often there’s a broker-dealer involved, making sure that things are going well or properly. With Regulation CF. There’s a crowdfunding portal that’s like broker-dealer light. They have suitability responsibilities, they have compliance responsibilities, and making sure that the capital raised process goes right. And then even with that traditional Regulation D 506, 506. B is still a standard. I mean, it is the same risk as it always was. However, it gets limited by the fact that you can’t go online, generally,  solicit and look for capital all over the place. But then with these Regulation D 506 C, it’s at least limiting the potential investors to only accredited investors, that there are the third party verifications or there is a verification that they meet the accredited investor level. So even though there may not be somebody digging into the documentation, there’s almost like a built-in assumption that as long as third parties are getting involved, that there’s an additional level of protection of, if I asked you for your CPAs contact, to say, Hey, are you accredited, or your lawyer or your financial advisor, and you go and talk to your professional about it? There’s a built-in assumption that to a certain extent, there’s also saying, Well, what are you investing in? And what do you know about? A least in my professional opinion, I believe that that’s why the SEC has said, that third-party verification from CPAs other lawyers, and financial advisors is sufficient, not just because of the knowledge of the accreditation, but also the experience and knowledge in the investment industry as a whole.

 

Rafael Gonclaves 21:01

Yeah, yes, yes. That’s, that’s very interesting, special information about the broker-dealer, the broker-dealer role. I mean, you raise capital, they’re necessary. It’s important to have trustworthy partners, right? And it’s very interesting when you think about how online capital formation reduces risks, because we think that anyone can just have a website, and it’s very easy to just insert a credit card here, be a partner be a shareholder. But when things are done compliantly, of course, issuers are protected, as well, as investors, right? But only capital formation alone does not solve this risk issues, distrust issues, or compliance issues, right? As they are, they have to be taken into consideration throughout the whole process. So you already mentioned broker-dealers. So how do these other players like lawyers, like auditors, broker-dealers? How can they help create this culture of assessing risks properly?

 

Nate Dodson 22:16

Well, I can tell you from a legal aspect, at the very least. We don’t get involved with scams. It’s a kind of a judgment call a professional call on you know, we want to see good happen in the industry. And not all attorneys have that same approach. But I can say that being in the industry and doing it for so long, especially headquartered in Las Vegas, for the first decade of doing deals, I saw a lot of potential scams and a lot of potential issues. That, you know, everybody has a right to legal representation for somebody to get their back. But at the end of the day, it’s not good for society to have these scams or these weak investment offerings, really running around. So I saw my job in part as an attorney, to make sure that I’m not creating a negative influence in the investment industry. And so that’s kind of leads us to today, if it is a problematic project, you know, we have a heart-to-heart with the issuers with our clients saying, Okay, if you’re really trying to do this, we may not be the right attorney for you. But here are the issues. And here are the unnecessary risks that you’re putting the investors into. Because the way that we look at, if there’s a problem with the deal, and if there are losses for investors, Valley may ultimately sue the issuer. And drag in the broker-dealers, the lawyers, the accountants, everybody involved can be named in lawsuits. And so it’s important for our own liabilities for the entire team to make sure that only good products, only good investments are getting out there into the industry. So you know that that self-reflection of our own risks is a good reason why the lawyers, the accountants, and the broker-dealers are there to make sure that it’s a clean industry, at least as clean as we can make it. 

 

Rafael Gonclaves Yes, yes. And of course evolving because the Jobs Act is about to become 11 years old, right? An 11-year-old regulation. So things started to change. And we are definitely reaching a different. The maturity level over the past years, right? From when I joined KoreConX one year ago, to now I have seen a lot of things changing and growing, and evolving. And that’s part of the flow that you just mentioned, right? Some minutes ago. Things grow things mature, people learn. And hopefully, people grow companies grow as well. Right. And now, let’s think from the entrepreneur’s perspective. We already talked a little bit about risks and doing things right and about relying on your CPA and our broker-dealers, auditors, and lawyers. So you have a suspect successful business, you’re, you’re growing, you’re raising money or selling, you raise their money. When is it time, in your opinion, to think about your exits as an enterpreneur? Maintain property? Let go? Should you just invest in another business? How do you feel about that?

 

Nate Dodson 26:14

Um, you know, when it comes to, and it’s different for real estate versus starting a business. Speaking of real estate I mean, the market controls, and whether or not you’re in a great asset or not a great asset, about every three years or the major changes in the market, it’s important to reevaluate, are you in the right place for the coming future? As an example, construction and multifamily is exactly the right place to be for the last decade. Is it the right place to be for the next decade? And that’s where it doesn’t even matter what’s going on through your business lifecycle through your real estate career. It’s just the fact of the matter that the economy changes, and the types of real estate opportunities that it’s the place to be change every year or two. So it’s a constant evaluation, am I focused in am I investing in the right place, not just for what’s happened, but looking into the future? And when it comes to your own business, when should you be thinking about an exit, and thats as soon as your business is running without you. And that’s actually a big thing to think about. From a valuation standpoint. If I start a business, and the business relies on me to work in the business, and it cannot operate without me being involved, the value of it just isn’t there. But if I can systematize, build a team, and build the staff where the business will go on without me, my first law firm Dodson Legal Group, I actually have zero involvement with it anymore. It’s been running an operating for I think it’s been 18 years now. And I love to see what it’s doing and what is happening with it. But I’m not involved, their staff is there and their systems are happening. Some attorneys are handling the transactions and the business. So when’s the right time, it was actually a long time ago. But now I can just let it go forward. For the average entrepreneur, as soon as it’s running without you, and profitable without you, you’ll be getting the best multiple on the valuation. And even if you sell to look at new opportunities to look at something else, oftentimes, there’s a year two years, maybe up to three-year tie in with your business, even after you sell. So you’re maximizing the potential sale price by systematizing. And streamlining everything. But you have to plan ahead, knowing that any buyer who doesn’t know how to operate the business will want you to be involved for at least some time period afterward as well.

 

Rafael Gonclaves 29:18

No, yeah, that’s that’s very interesting to have the idea of creating a business and making it run without you and then you can let go. And that’s especially true for serial entrepreneurs, right? Because you see a problem, you raise your capital, you create your company, you solve the problem, then you can think about something else. Right?

 

Nate Dodson 29:43

Exactly. What’s the next problem? I mean, it’s the same thing as what we’ve been doing. I got my old law firm Dodson Legal Group running without me. Then I acquired Crowdfunding Lawyers that had no systems, no scalability to it, and that’s exactly what we’ve done here. is implementing the team-based approach, where now it really can run without me or any one particular people being involved. And then it just continues to scale and grow from there. So it across the board, it’s about the scaling, as well as the systemization.

 

Rafael Gonclaves 30:19

Yeah, and the risk as we began speaking talking about risk, the risk is like something you get used to, right? Oh, I like running risks. I mean, you have to if you’re an entrepreneur, right?

 

Nate Dodson 30:32

I mean, it’s risk-benefit. Yeah, it’s like, an analysis, like adrenaline, right, you need to have it running through your veins, right? Without a doubt, it is a risk-loving area to focus your life on. And, you know, I started my career really in Las Vegas, you know, gambling Mecca. And I kind of see it always, as you know whether or not you’re investing in the stock market, investing into real estate, or investing into your own business, there’s a level of risk that you want to be able to minimize it. But at the end of the day, the higher the potential risks, the higher the potential benefits. So you do have to learn to make the educated statistic. craps roll when it makes the right. Right sets.

 

Rafael Gonclaves 31:25

Yeah, that sounds that sounds reasonable. That sounds reasonable and fair enough. Fair enough. Because, yeah. Especially in Vegas. It’s a very tempting place to be right? When you talk about Vegas and entrepreneurship, yeah, adrenaline is all over it. I can smell it from here. So I believe we’re wrapping up, we’re ready routine, half an hour, a little bit above half an hour. We started a little bit late. I’m sorry. We had technical issues, everyone.

 

31:56

Nate, if you want to leave your final thoughts, if you wanna say your goodbyes, and ask people to follow you on LinkedIn, check your website. Feel free, please. 

 

Nate Dodson 

Well, sounds good. I think at the end of the day, the biggest thing to think about is what do you want your future to be. Either you can get a job join a great team, and you have a little bit more stability, but your financial growth may be capped. It’s just the way that getting a job, maybe being an entrepreneur, removes that cap on your family finances. Raising capital, and relying on other people’s money allows you to blow past the limitations of your financial limitations. So step one for your financial success is to remove the time barriers, which means that you’re not just working on the hour. Step two is to make sure that you can grow on an ongoing basis, and that you have a cap on the amount of money that you have. But the investors that are out there, as long as you have a good business will help support you through that. So that combination of doing your own thing I know how to learn how to raise capital efficiently and effectively can really open up those multimillionaire opportunities for everybody listening. 

 

Rafael Gonclaves 

That’s great. That’s great, you know, and we yet KoreConX, we can help you. We have the largest libraries on Reg A, Reg CF, Reg D, and REG S. On our blog, it’s completely free. You can just browse, you have our website, core summit.io  Nate Dodson is there, all our speakers are there, you can just reach out to them. You can just check their LinkedIn profiles, their company, bios, whatever. It’s all there available for everyone. And we are also here on LinkedIn, YouTube, and Spotify, you can bring us you can listen to it whenever you want. And you can follow us. And we are here. We will be here and I’ll see you guys next week. Thank you, Nate. Thanks for the opportunity. I love talking to you again. Bye and thank you