The Back Office

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.

Amanda Grange

Transfer Agent

KoreConX

Amanda Grange

Transfer Agent

Jason Futko

Co-Founder

KoreConX

Jason Futko

Co-Founder

Jason Futko is co-founder and chief financial officer for KoreConX. Prior to KoreConX, Futko co-founded Crowdfunding Alliance of Canada. In addition he was managing director of an Exempt Market Dealer and Chairman of a public investment vehicle in the United Kingdom. Jason has vast experience in financing businesses globally. He has extensive knowledge of international know your client (KYC) and anti-money laundering (AML) regulations.

Andrew Stephenson

Chief Product Officer and Partner

CrowdCheck Law

Andrew Stephenson

Chief Product Officer and Partner

Andrew D. Stephenson, Chief Product Officer for CrowdCheck and Partner with CrowdCheck Law, is an entrepreneurial attorney focused on assisting small and early stage businesses with exempt offerings under the Securities Act, especially related to online securities offerings and crowdfunding. Prior to joining CrowdCheck, Andrew was involved with evaluating internal company communications and reports as part of complex civil litigation matters. Andrew has also worked for the United States Congress, handling a wide range of policy areas. Andrew received his B.A. from Claremont McKenna College and graduated, cum laude, from the University of California, Hastings College of the Law. Andrew is a member of the California and District of Columbia bars.

Bill Humphrey

CEO and Co-Founder

New Direction Trust

Bill Humphrey

CEO and Co-Founder

Bill is recognized in the industry as an expert in self-directed IRAs, HSAs, and other tax-advantaged accounts, as well as the IRS codes pertaining to these investments. Bill has taught courses on retirement plan investment rules to investors, CPAs, and investment professionals through a variety of venues, including the University of Denver’s School of Law. An experienced Certified Public Accountant, Bill has focused on income tax, auditing, tax-related real estate issues, and forensic accounting for more than 20 years. Bill is well versed in IRA law and is current with all legislation governing tax-advantaged plans. Bill has served as a consultant to HSA platform providers, and is a leader in promoting the idea of investing HSA assets long term for medical costs in retirement. He has been involved in real estate investment and has assisted in developing the framework for debt-leveraged IRA real estate investment. Bill received his Bachelor of Science degree in Business from the University of North Carolina, Chapel Hill, with a concentration in accounting and computer science. He rounded out his technical background with graduate study in finance, accounting, and economics at the University of Colorado, Boulder.

Erin Holloway

President

Prime Trust

Erin Holloway

President

ENTJ - The Commander: I am an innovative thinker and strategist with extensive experience in global client management and Procure to Pay. I am an accomplished advocate and troubleshooter in both internal and client facing situations. Safeguarding client relationships is paramount. I have a proven record of thriving in challenging situations through collaboration and partnership. Customers see me as a trusted advisor due to my “Customer for Life” philosophy.

Oscar Jofre  00:00

All right, well, good afternoon. Well, and the journey continues, right? So you heard the investor acquisitions, that was one panel there, you’re all wondering, and Douglas and I, we’re going to make up the work, you’re going to hear from both of us, because it’s a role that a lot of people don’t understand. We call it the quarterback. And if there’s one company that plays it really well, or one individual, Douglas Ruark, I think he missed almost invented the word because I think he’s been doing this longer than anybody else. So Douglas, and I will come back to that, but this particular panel, the back office. The back office, I cannot stress you know, especially in this market today, how important it is. So there’s one thing having a dream, there’s one thing, having the lawyers, get all the filings done and everything and you’re live, you’re raising capital. Well, ladies and gentlemen, these are the people that actually make sure that it goes from, you know, someone expressing an interest to invest, to be able to then do all what is required, and then eventually put that capital in your company. So you can start hiring people and building your firm. You don’t hear about them. You don’t you know, they’re but they’re important. So I’m gonna let Jason Futko, my colleague, co-founder of KoreConX to lead us on this afternoon, Jason.

Jason Futko  01:19

Thank you very much, Oscar. Welcome, everybody. And thanks for joining us. We’ve had some great panels so far. And it’s it’s looking like we’ve got a good one for this discussion, as well. I’ve got the pleasure of joining a lot of very knowledgeable experts in the space this afternoon that are really going to help us sort of get a sense for what’s required. From the back end or the back office, what happens in the background on a lot of these transactions. You know, there’s a great panel just before this with all the investor acquisition firms, and they get all the front end, they’re driving the traffic, all the sites, and then you’ve got, you’ve got all the people that have to deal with that influx of volume. And that’s pretty much the people I’ve got on this call today. So it’s a it’s gonna be an interesting discussion. So I thank, Erin and Andrew, Amanda, Bill, and team for joining us today. They’ve all got a different perspective. So what I’m going to do is just turn it over to everybody. Give them a minute to, you know, tell you a little bit about who they are and what they do and what their firm does. You want to give us a start off there, Erin. I think you’re on mute. Can anybody hear here?

02:52

Yeah, no?

Jason Futko  02:54

No? We’re having. Yeah, well, we’ll skip try refreshing your screen and see if that helps. You want to give it a go there, Bill. You’re on mute as well.

Bill Humphrey  03:08

There you go. Sure. Jason hopefully you can hear me? Well, my company in New Direction Trust Company, we specialize in IRAs and other tax sheltered assets. So it adds another layer of complication to transactions. So we specialize in helping people buy what they’re after. And for us, helping them buy it inside their tax shelter. Your tax deferred plan is perfect for a lot of people because unlike me, who I look in my pocket, I don’t find any money most of the time. But if I look at my plan, I have money to make these sort of long term, and maybe riskier investments in hopes of achieving higher returns long term.

Jason Futko  03:55

Fair enough. Fair enough. Sounds good. Andrew, do you want to jump in?

Andrew Stephenson  04:01

So Andrew Stephenson. Listen, I’m with with CrowdCheck. We are a compliance services firm as well as a legal services provider with two sides of our operations CrowdCheck Incorporated in CrowdCheck Law. In sort of in the space where we definitely we can sort of help and advise in that process of what is it that needs to be collected from investors providing subscription agreements for the document and other documentation required in in but it’s really, I would say most of the heavy lifting is done by done by the firms that are doing the training, processing the transactions, really making sure that they’re collecting everything from investors, and especially, especially the investor funds, and that’s the real critical piece. So you’ve got their interest from the marketing side, where you’re we can help out on the documentation, making sure it’s compliant, making sure it’s everything you need for either an offering under reg CF For RegA or any other, but then [uncertain], and then turning it over to, to the other panelists who are responsible for making sure that that pipeline works. The funding comes in, and that everybody is, is accurately reflected in the investor walks of the company.

Jason Futko  05:21

Okay, Erin, you’re back with us. Do you guys want to give it a try? Yeah, we can.

Erin Holloway  05:30

So thank you so much, Jason. Hi, everyone. I’m Erin Holloway, I’m President of Fund America by Prime Trust. We are the technology platform that stands up offerings, we stand up platforms, portals, broker dealers, and individual issuers. So when when someone wants to go ahead and do a raise, we’re that technology behind it, they’ve already done all of the legwork to get it ready, but to actually stand it up and have the the technology open the doors, through the take in the investments is where we come in. And so you know, we’re very happy that we have had a long standing history in space, you know, around since the very beginning in 2012. And, you know, we’ve done over 3 billion in investments. So it’s, it’s an exciting time, because the numbers are only climbing, we’re only seeing larger volumes as regulation changes in our favor. So thanks so much for having me.

Jason Futko  06:31

That’s great. That’s true. And last but not least, Amanda, my colleague KoreConX

Amanda Grange  06:37

Hi, Jason. Thank you. Can you hear me as well? Yes. Okay. My name is Amanda Grange. And I am, as Jason said, with KoreConX, and my role is transfer agent. So I guess you could say that I am the little Caboose at the end of the the capital raise for companies and I get to work closely with the CEOs as their raise is beginning and the cap table is starting to populate. And it’s my job to manage it and make sure that they stay within compliance of SEC rules and just everything that goes along with the cap table and managing it for CEOs and investors. And so it’s a lot of fun. And I work hard to keep CEOs keep their stress level down as their raise either comes too close, or it’s ongoing and so very behind the scenes, but it’s, it’s exciting because you’re at the end of it with corporations, and you really get to see the dreams come true as their raises has come to close, and they meet their goals. So I find it really exciting. So thank you for allowing me to be here. And I’m excited to to be along with the colleagues here today and get to know you as well. Thank you.

Jason Futko  07:51

Great. Great, thank you. So let’s let’s kick things off. I guess with an easy one, I’ll throw a law above and see who can help us out on this. When it comes to getting the offerings started. For a lot of these issuers, are there things that they need to keep in mind when they’re preparing to go live? And you know, from each of your perspectives, what has to be done up front to sort of get the paperwork done and get the compliance stuff ready and move into a transaction? To jump in same order, maybe bill?

Bill Humphrey  08:28

Sure, Jason, from our perspective, we’re independent of the transaction. But what we do like to see is paperwork beforehand, so that when the first [uncertain] comes in, looking at making a certain investment, there are a few things for IRAs in particular that we’d like to see. And just to make sure nothing pops up that the IRS would be irritated by so we’d like to review those transaction documents beforehand. We’re not looking at any of the details about any of the rates of return or expected returns or anything related to that, because we’ll leave that entirely up to the investor themselves. But we do want to make sure it fits within the very broad definition of what the IRS allows inside these tax sheltered and tax preferred plans. 

Jason Futko  09:17

Andrew?

Andrew Stephenson  09:18

yeah, I mean, when it comes to sort of kind of planning and when getting ready to bring the investments and when you make sure that the company has sort of proper subscription documents ready to go, the subscription documents need to discuss sort of how money is coming in what’s so what is the process for submitting those funds? Who’s going to be is there gonna be Escrow is there it’s going to be into an account that’s controlled by the company, the methods and funds can be delivered. And then sort of in it also want to know how the how the how the securities are gonna be recorded. It is going to be sort of in the name of the investors it can be through through a party, like like New Direction where you’re able to invest through a tax advantage account. There are other providers that can also sort invest in or if they’re investing through a brokerage, but all those, but all that documentation needs to be so prepared upfront. So that way, it’s you’re not scrambling, when the, at the time the investor is ready to put in the funds, they want to be able to sort of click and go. If, if it’s you’re coming back and saying, Okay, well, we need to thank you for your investment. But before we can take your money, we need to do this, we need to do this and do this, and then provide all this other information. You’re gonna lose that investor. And and so it’s making sure there’s a seamless process that you’ve got that in those in the legal docs are not mere formalities, they’re actual the actually help affect what’s going on. And so making that smooth transition from investor says yes to let’s get the signing the documents, to get into the pipeline for the funding funds, go into escrow, and then right when ready to close, there is no no more, no further hiccups they’ve got you’ve got what you need from that investor as far as identifying information. So those are all things that need to be planned ahead. And we sometimes see a lot of companies, they want to rush like, hey, this, like they, they just want start throwing money at us what what, like, what’s the least amount of information we can collect? And it’s like, no, you don’t want to do that. Because if you’re not collecting everything upfront, you’re scrambling later, and it means that you’re not gonna actually bring in those those investor dollars. So it’s yes, you’re gonna have to put them through a little bit of a hurdle to make the initial investment. But you’re, it’s you’re much better off doing that than trying to scramble later.

Jason Futko  11:49

Right. Right. Excellent. And you raised a couple of interesting points there, obviously, the technology to make it all run smoothly. And escrow I think, if I’m correct, Erin, that’s something that you guys can help with. So that’s something you want to jump in on?

Erin Holloway  12:03

Yeah, that’s, that’s right. We absolutely helped with that. So, you know, in standing up the offering, I think accuracy is one of the most important things we see people get tripped up, just because yeah, they might have other documents, you know, ready to go. But then when they’re ready to stamp the offering, they don’t match, things don’t match exactly right, the accuracy isn’t there. And we have to, you know, we have to slow the roll and make sure that it’s correct, right, it’s got to be clear, concise, and correct. When we stand up the offering, so that we can get the escrow account opened, right, because that’s the ultimate goal, open the escrow account, start getting those investors who are so eager to put their money, you know, with their issuers into an [uncertain]. And start to roll be open and get to completion, right? The goal is to get to each of your benchmarks or your milestones, to start getting the funds so that you can expand your company, build your company, you know, go forward with your project, whatever it might be. So getting the money into the escrow is, you know, we will hold that escrow funds until those benchmarks are are met, and then start, you know, paying out or until completion and making sure that everything is right, above board, everyone’s doing it for the right reasons. And then the escrow account can be closed out at the closing of the offering.

Jason Futko  13:30

Right. Excellent. Well, I see a lot of nodding from Amanda there too. I’m guessing accuracy of information. We collect enough during the process, are two key things for you want to tell us a little bit about what the TAs role is?

Amanda Grange  13:45

Yes. Being clear and concise and accurate. I can’t stress that enough. Erin, and I support you on that. And making things seamless, like Andrew said, as well. It’s so important, especially by the time you get to the end and your cap table is starting to populate and, and you’re seeing your investors and, and the raises are closing and the information is coming through. It’s exciting. But it’s still important that information is accurate. I can’t stress enough the importance of setting everything up originally at the beginning before you even start your raise. Whenever I speak to CEOs and they’re starting a raise, I like to remind them that your current investors, the people that invested in your company originally, you need to get those on your cap table and populate it right away. Because you don’t want them, they’re the people that invested in your company originally and you don’t want them asking the question. Once you start to do your raises and they’re not seeing their original investments on your cap table and then it will just save so much friction and questions and and hassles. And it’s something you don’t want when you’re in the middle of a raise because it’s exciting. and you want to keep the excitement going. And my job as the transfer agent is to keep that excitement going and stay on top of that cap table, make sure it’s up to date and accurate. And that when something closes, it’s on the cap table right away. So investors can see their, their investments and CEOs can can see where they’re at. Live, like they know, at the drop of a hat, they know exactly where they’re at with their raise, it’s very, it’s so important when they’re in the middle of raising. Yes, so definitely agree

Jason Futko  15:35

Patience is wearing during that process. You know, during during the process, now I’m doing a little before, during and after, if you haven’t noticed the theme yet, during the process, there’s probably a little bit less involvement maybe, from Bill and Amanda. But I know Erin’s quite quite involved at that stage of the process. And so as Andrew, can we get a little sense of the types of things that happened during the fundraise that sort of you guys manage and take care? You’re on mute.

Andrew Stephenson  16:11

Yeah. So in what can you think of sort of, kind of hurdles or challenges,

Jason Futko  16:19

or things you’re gonna have to manage? During the process? I know that there’s, there’s usually things that come up from the sense of the legal side, you know, the ongoing issues, from escrow and from compliance and KYC, and probably more the broker dealer side, but Erin would probably understand that a little bit, as well.

Erin Holloway  16:40

Yeah, I mean, I would say, you know, you know, not everybody passes, KYC, right, that’s just part of the process. That’s exactly why we do it, not everybody past you know, even automatic stuff, and then we go back and check, and then I tell you, it’s probably about, you know, anywhere between five and 7%, don’t don’t make the cut, um, for various reasons, right? You never know what those those reasons might be, but there’s a lot of them. So I’d say it’s about five to seven, you know, and then there are times where, you know, investors change their minds. So we’re refunding money back, you know, they’ve got a certain amount of time that they can say, yea, or nay. And, you know, you sometimes you do get, you know, buyer’s remorse, and they do have a window that they can change their mind. And so we’re processing refunds. But, you know, you know, beyond that, it depending on how long the offering is open for, you know, it’s just making sure we watch those milestones, when the milestones hit, there’s a payout that’s made. And it’s funny, it’s pretty active at the very beginning and pretty active at the end, but in the middle, that, you know, it’s, it’s a little bit of a more steady state, it’s more of a slower roll. Unless there’s some nice marketing push, like the previous session had talked about, that’s, you know, their, their bread and butter, is making sure that the marketing pushes happen at the right time. If there’s a big marketing push, then again, you know, we’ll see a big influx as well. But, you know, the beginning is kind of the more important part is to get right, getting the investor set up getting them to pass KYC, so that we can’t take the money, they decided that they’re in, they decide that they’re out, we get it to completion. So yeah.

Jason Futko  18:24

And, you know, we’re kind of at a slight disadvantage here, because Jim couldn’t make the presentation today from Rialto and, and they’re, you know, their knee deep in the middle of it during the transaction, and that’s where they get, you know, they’re the ones that have to deal from compliance back in on making sure that the KYC is done following up on it, they have to do the AML they have to do, you know, dealing with you guys on the escrow to manage that side of things as well. So there’s, there’s a little bit of, you know, back and forth of chasing information and chasing agreements that happens during from a compliance backend as well. And then, of course, after the fundraise, there’s a whole new set of compliance issues. Anybody want to jump in on what sort of happens on closing and from that on?

Erin Holloway  19:19

I mean, I’ll say if a raise is oversubscribed, you know, you have you do have people back out you can go back to your you know, to your kind of like waitlist and you need to pull people in and finish it out. Right. It’s got to be tied up with a bow when you’ve got your cap table finalized. So you can do your your final payout or you know, maybe there’s only one payout, depending on what the structure has been. But yeah, there’s absolutely kind of like, it’s kind of after the party, we call it right party’s over there’s a little bit you have some cleanup after the party that we need to do to make sure that that you know, everything goes off as as planned on the on the closing.

Amanda Grange  20:02

And if Jim was here, he would say that I worked closely with him a lot in making sure like you say, just tying that bow on, there’s a lot of loose ends. And people don’t know, behind the scenes, there’s a lot of things like, there’ll be investors that get missed and didn’t go through. And even they passed the KYC. And their investment close, but it didn’t get up to the, onto the cap table for many, many different reasons. And so I work hard to quickly clean up those little messes and help them like you said, Erin, tie that bow on the end, so that you have a lot of happy investors and happy companies have two CEOs and and so that they’ll be ready to do another raise if they want in the future. So it is important that it does wrap up smoothly without any issues. 

Andrew Stephenson  20:54

Imagine that’s the time where you’re hearing a lot from CEOs are saying, Where’s where’s the money? They’re just not there, they just don’t understand what’s happening and that it’s not instantaneous. It’s not. It’s yeah, they’re all these procedures do take time. And in order to get it right, and to have that clean cap table that can go that the company can use and go forward with into the future. And so it’s it can be a little bit. So yeah, so there’s, I mean, we’ve seen it, definitely the companies, that’s it, especially once I want to like jump into the next thing. So you don’t see that they’re doing a CF. And now they’re ready to jump into RegA, but they want to have that final number, what they raised in CF, it takes time to process. And that’s just, that’s just, that’s just going to happen in in order to do it right. And yeah, this it’s so coming to, you certainly need to be aware of that entrepreneurs like it’s not, it’s not instantaneous. And just give everybody time to do it right.

Amanda Grange  21:54

Which is why I like the summits like this, because it reminds us that we all have to work together to support one another is the only way to keep the raises going smoothly and encourage CEOs and investors to reinvest is to make sure that we’re working together and supporting one another through the whole process. And so I really appreciate all the broker dealers, like everyone that I’ve been in touch with and work with has really helped my job go a lot smoother.

Jason Futko  22:24

Right. And it was it was mentioned earlier, obviously by Erin that there’s some time for refunds, there’s obviously time to do matching and reconciling. So you’re right, Andrew, it does take a lot of time sometimes to get that through. And then depending on the connectivity you’ve got between your, your funding platform and your transfer agent and the other pieces of the puzzle. It also, you know, causes little delays and hiccups along the way as well. So those are important, from from the wrapping up. Bill is going to give us a couple thoughts also, is there anything on the IRA side that has to happen towards the end or on closing, but that sort of needs to be taken care of.

Bill Humphrey  23:04

So not not really at the end. But just going back again, to the beginning. I think that understanding just because IRAs are a little different. Understanding what’s needed and New Direction’s been working closely with KoreConX for the past. I don’t know how many years to try and get all the questions answered up front again, just sort of greasing the rails to make sure that we have all the info we need in advance and maybe 95% of the time we do but the 5% We might need an extra piece or something happened on the money movement, but just understanding that it there may be a question, but our mission is to answer all the questions up front so we can get them signed up and get the whole process finalized without that client having to come back and say, oh, yeah, what was I doing with that particular investment? Or even worse, what is this investment? I don’t even remember doing it. But if we grease the rails in advance, make sure they understand and are confident and get all the info we need right up front then the closing is easy.

Jason Futko  24:13

Right. So these these all these people on this panel are here, they’re the kind of your unsung heroes in in this transaction. They’re not the ones frontlines taking, you know, driving traffic, but they’re the ones managing the traffic flow in the closing. So from compliance right through to efficiencies, obviously, the efficiency depends on which selections you make and in the process and how automated each of those partners is with each other. But of course the goal here is to maintain your regulatory compliance as efficiently as possible. And get through that fundraise as efficiently as you can. Any final thoughts from anybody before we wrap up, I know Oscar probably can jump on him.

Erin Holloway  25:06

Just so we’re all here to help, right? We’re all part of the process, we’re all here to help you succeed, right to have a great raise, so that you can you know, fund your company, do your project, whatever it might be, you know, create your fund. You know, create tokens tokenize something. Anything can become a token anymore, right?

Oscar Jofre  25:29

Everything, everything, everything. You know what I want to NFT your glasses? Yeah, I want to I do you want to NFT your glasses? There you go. See? That? That’s exactly it, guys. That was, you know, what, in times right now, you know, all of you know that I’ve been making phone calls to all, all of us. And Erin has been a, you know, without a doubt, really, very open. All of us are. We’re all working with each other right now to, obviously, to make sure that our clients are successful. But they also, we also need to put what I’m, I’m hoping that the industry will do as well give them proper expectations, because the work that all of you do is to know. It’s unbelievable. I got to tell you, I mean, we obviously see it from all different sides. And thank you to all of you, Andrew Stephenson, Amanda, Bill, Jason, and Erin. Thank you this is I hope for the audience, you all appreciate what’s actually happening. Because I’d often all of us, Erin, all of us in this team, Andrew all of us been on the other side of the stick, where we get an entrepreneur yelling, they’re screaming their head off. Well, why wasn’t this done yesterday? I closed my deal on Monday. Well, my friend because but they don’t, you know. So we’re all going to need to be I’m even working on a chart right now to show them how long it takes from the minute that so they go, you know, enough is enough. This is how it really happens. You know, just because the investor made them investment doesn’t mean that Erin’s going to give us the money from escrow right away. And now there’s Eric, Bill Humphrey has to do his work. So. So I think this is a really great, great insight to that. Thank you all for kicking, you know, for the wonderful year we had in 2021. I want to thank you all and 2022. Obviously the back office. Listen, everyone, if the back office doesn’t work with clean, clean 2022 The goals of hitting 1 billion in one year. The only way that’s going to happen is if you understand how the back office work. Thank you and we’ll get started in the next session. Everyone. Thank you, Oscar. Thanks so much, Jason. Thank you. Thank you

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