How do I prepare for my RegA+


Oscar Jofre

CEO and Co-Founder


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.

Kendall Almerico

Securities Counsel

Almerico Law

Kendall Almerico

Securities Counsel

Kendall Almerico is best known as the securities lawyer and "quarterback" of the Reg A offerings for BrewDog (one of the most successful equity crowdfunding companies ever) and Goldenseed - the first private U.S. cannabis cultivator qualified by the SEC to sell stock to the general public. Kendall was named “one of the top crowdfunding and JOBS Act attorneys in the country” by Forbes. Venture Beat named Kendall as the top practicing attorney on their list of the most influential thought leaders on crowdfunding in the world. Inc. magazine named Kendall to its list of “Top 19 Crowdfunding Experts Startups Need to Know.” Onalytica ranked Kendall #1 on its 2016 list of the Top 100 crowdfunding influencers in the world. Huffington Post called Kendall “One of the country’s leading experts on equity crowdfunding.” Kendall and his crowdfunding websites have appeared in the New York Times, USA Today, Washington Post, Washington Times, Forbes, Bloomberg,Reuters, the New York Daily News, Business Insider, Christian Science Monitor, Fox Business Network, Yahoo News and hundreds of newspaper, blog, radio and television interviews including CNN, CNBC, CBS, ABC, NBC, FOX, CCTV and Bloomberg TV. Kendall was a regular crowdfunding columnist for and is a highly sought after international keynote speaker. Mr. Almerico practices law with the law firms of Almerico Law in Washington DC.

Andrew Corn


E5A Integrated Marketing

Andrew Corn


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

Andrew Corn  00:10

You’re frozen. Oh, there we go.

Oscar Jofre  00:15

I did that on purpose. It’s only the best way to do it. All right, welcome. Good afternoon, everyone. Welcome to another great KoreConX KoreSummit webinar series 2021. So we’re pretty excited to have everybody here today. We are still waiting for one of our well, there he is. Surprise, surprise. All right. So listen, everyone, what, uh, well, we’re on our second day of the monumental day, March the 15th 2021. Depending on which regulation you look at, you either got a big smile on your face, the other one to go, Whoa, what happened? skidmark. So today, we are going to have a great discussion with two panelists that we’ve had on our show before on our webinar series. Sorry, I show like a television. And we are going to have a great discussion about one of those particular regulations. But before we do, let’s have them introduce themselves. Take a couple minutes. Please, Andrew, if you could please say hello to everyone.

Andrew Corn  01:34

Hello, everyone. I am Andrew Corn. I am the CEO and founder of E5A Integrated Marketing. We are a systematic data driven investor acquisition firm. And we’ve been working for two to three years on reg A plus, and I’ve gotten involved recently with REG CF, because it has moved up to $5 million. So there you go.

Oscar Jofre  02:00

Geez, you took the thunder, I was gonna leave. You know, that was my big opening. Sorry. Okay, can you think of another one? Please, Kendall, it’s good to have you back.

Kendall Almerico  02:12

I asked her I’m Kendall Almerico I am a by trade a securities attorney. And I have been involved in Regulation A since the very beginning. Did one of the very first Regulation A offerings, but I do things a little differently than other attorneys, I don’t just handle the legal work, I take on a second role in all of my clients offerings, whether they’re Regulation A regulation CF, where not only do I handle the securities laws aspects of it, but I also act as the as I call it, the quarterback of the offering, where I help make sure that all of the moving pieces necessary to have a successful offering are in place. So I help with overseeing the marketing, the video creation, the ad placement, all of the the accounting, the auditing, broker, dealer relationships, platform relationships, there’s a lot of different things that have to be done. And rather than having someone from your company take on a role have to do something they’ve never done before I take on that role, and basically act as the project manager for every aspect of the offering. So that’s sort of my little weird part of the world that I live in. But it’s a lot of fun. And it also makes it a lot easier to know if you’ve got someone who’s been there before and has raised, you know, a lot of money using these things and brought hundreds of 1000s of investors through a system and knows how all those processes work, rather than trying to train someone who’s never done it before. And so that’s what I do I take that role on as well as doing the securities laws work.

Oscar Jofre  03:46

Perfect. Thank you. So it’s good to have you both very, two distinctive different backgrounds for each of them. One’s coming from the legal side. And obviously, Andrew with a if I’m not mistaken, and you come from the fund administration, hedge fund world, right.

Andrew Corn  04:06

I come from the investment management side, I’m a former multi factor model, Chief Investment Officer equity portfolio manager, I’ve designed the index, or been part of the team that designed the index behind six exchange traded funds. And I’ve run to small hedge funds, but have managed billions of dollars through separately managed accounts, both institutionally and retail. So I look at everything with two different perspectives or two different lenses. One is, is what would I do as a portfolio manager? And then the second is, is the process stable, scalable and repeatable? Which has a little bit of a software feel to it, which I’m okay with, but it’s very much an investment management mindset. Because essentially, that is what you’re selling when you’re an investment manager. Is your investment thesis and your investment process. And we bring that to every project with every issuer. And every client we have, regardless of what we’re doing.

Oscar Jofre  05:12

Perfect, thank you. So it’s good to have you both here today. You know, the timing of this discussion is, is really important. And I’m just going to, I’m going to put a little sugary to this, because the last probably 72 hours. For a lot of people in particular, one of the regulations is everything, just it was a bubble, and then poof, it all fizzle away because people did not properly prepare. And, and I shouldn’t just say people didn’t properly prepare that, we really need to uncover every little piece of the regulation to make sure that when people are about to engage with an offering, whether it’s reg A or reg CF, that we don’t overlook anything. And I’ve learned this now, you know, it’s creating these checklists is imperative. I’m referring to reg CF. Reg CF, the big, the big discovery, I shouldn’t discovery or alert or, you know, people didn’t think it was there is that companies and require audited financial statements, if they wish to raise anything over 1,070,000, which was, again, we assumed, and, as most of us did, assumption is the the killer of most things. So, hopefully, in reg A, we will not have these assumptions. So we will dive right into the discussion, and dig in deep, because there are many different pieces to our reg A, that are important, and sometimes we skip over them very quickly. But they’re imperative in order for a company to be ready. So can, Kendall, I want to start because you said something really interesting. In the beginning, you said, you know, not only do you take on the role of the lawyer part, but you’re also taking the role of a quarterback per se, with the client, to, to guide them through that journey of making sure they meet all their obligations. So, you know, in preparation to work with, with, uh, with yourself, what is what is the the takeaways that company needs to have in order to be prepared to work with you in that environment that will relate to the reg A?

Kendall Almerico  07:43

Well, Regulation A is basically, you know, people like to make it out, like at some magic law, and that you have to have all these complicated legal things go on. The reality is, it’s the legal work is the easiest thing I do. And it’s not, you know, you have to have a lawyer do it, because there’s securities laws involved. And there’s a lot that goes into making sure you’re doing things the right way. But the best lawyer in the world, and some lawyers that aren’t even that good of a lawyer can get these offerings through the SEC and get the SEC to qualify the offering. That means nothing. That means you now have the ability to go out and sell your stock to the public. The real part, that’s the hard part of Regulation A that I do and other people do is get the word out so that someone will buy the stock. And that is not a one size fits all, there’s no cookie cutter approach to add, you don’t just say I have this thing, and you do A, B and C, every company is different. So examples, if a company comes to me, and they already have a half million customers in the company, and people love their product already, and they’ve been out in the market for a long time, they need to be able to reach those customers of theirs through whatever means they can and say you have a chance to invest in the company. Let’s take a startup company that comes in and says we don’t have any customers yet we have a product, but we’re really just getting it out into the market. They don’t have that they have to go out and find people that are investors, and there are a number of different ways to do that. But the requirements, you know, the law or not really the issue here, it’s really what do you do to prepare to market? You know, how are you going to get eyeballs to a screen where they’re going to say I want to invest in this company? Is there going to be a broker dealer involved who’s going to be selling this for you? Probably not, there’s probably not a broker dealer out there finding investors for you. So it’s up to you. It’s up to the company, you’re going to place ads, you’re going to do public relations, perhaps you’re going to have a video, you may have influencers involved. There’s a number of different social media. All of these things play into the equation, but every company is different. You know. So for example, we launched a Regulation A offering a couple of weeks ago that Oscar you’re aware of for a company called evolution development group Evo and Evo is an athlete management company basically they get athletes to come in, they sign them to a contract and when investors invest in EVO they will eventually earn part of whatever that athlete earns. So if you get an athlete who wins the PGA tournament or wins a big boxing match or wins the Indy 500, and EVO has signed that athlete, the investor sharing that, that’s interesting, it’s great. It’s a lot of fun. But when you launched that offering, the fact that Andretti auto sports is a partner with Evo and is helping to find the athletes who will be in the you know, as part of Evo, and who was already a shareholder in the company is all helping you to spread the word amongst. This is Andretti the biggest name in auto sports. Boy, it really changes the equation as to how you market that to the masses to get people to invest for as if the same company launched without that, how are you going to convince people that you have the legitimacy and the ability to find a racecar driver, for example. So every company requires different things. And, you know, first thing that has to happen when a client comes to me or to anyone who’s doing this is you’ve got to come up with a game plan of how you’re going to go find investors.

Oscar Jofre  11:14

I know you said the legals is the simple easy port.

Kendall Almerico  11:20

Well it is for me .I mean, I’ve been doing this for a while. It’s very simple for me.

Oscar Jofre  11:24

Yeah, no, no, I appreciate that. And the thing is that we’re, it’s like anything else it I, obviously, the legals it’s a it’s a starting point of preparation. And making sure everything is there. But you know, what, I don’t mind focusing on the fact that the important side of all of this is the investor acquisition, I think that, you know, sometimes the, the idea of these webinars is to say, say, go with the flow in and see where it goes. And, you know, the two of you have a massive amount of clients using various techniques. So, you know, Andrew, I’ll call to you, because I want to put you on the spot on the legals elements of it. But I will touch on that a little bit later with the audience to make sure that they understand the other elements. But this has been that this is the one that actually decides whether the company will succeed in its process. So walk us through that in your end.

Andrew Corn  12:23

Yeah, so I want to go back to legal. It’s actually the very first question I ask an issuer is, who’s your lawyer, to they have a lawyer who’s been down this path before, to they have a lawyer who understands the compliance of what’s going on with this? You know, I see a lot of techniques and tactics out there in marketing, that I consider to be gray, and things that I wouldn’t involve myself with. On the other hand, we are probably doing something on clubhouse very soon, we are actually just about to build a couple of tiktoks for a client. So there are a lot of things that can be done. But it all starts with, you know, who’s doing the paperwork? And how long is that going to take? Because one of the things I see that’s a big problem in the industry, is we get hired too early, we get hired, but the audits not done or we get hired. So we want to make sure that the right timeframe is there because everyone’s in a nice big hurry to get everything done. We got it done. And then we’re going to sit we’re going to wait 30 days, 60 days, 90 days, now what needs to be updated. So, you know, whoever is quarterbacking, this needs to make sure they really understand the timing, and how busy is the SEC because there’s getting qualification, then there’s working with a broker dealer, and you definitely need a really good broker dealer. And the broker dealer not only has to go through its diligence and do it properly. Or, you know, if they’re using crowd check, then go through crowd check diligence, which is arduous, but certainly worthwhile. So depending upon what’s going on there, they have to get a 5110. Now, why do I know about stuff like this? Because everything affects all of us within the ecosystem. Is that going on? Now some issuers work without a broker dealer. I won’t work with an issuer. My firm will not work with an issuer without a BD. So who’s doing compliance? Is it the BD or is it the law firm? And what have they seen before because, you know, we market financial products investment products every day, we take in millions of dollars in the exchange traded fund world, retail, even larger amounts with advisors and we also do institutional work anyway. So who is actually doing the compliance because when it comes to storytelling, we want to be able to make sure we can get that story out properly. And that involves a partnership with whoever is doing the compliance. Because when we aim to do something, we’re not making a promise. So meaning that’s a little compliance joke right there for everybody. So we want to know who’s doing the compliance to make sure that we’re going to get all the storytelling done, right. So anyway, but backing up to the original, when it comes to preparing yourself to do a reg A plus, that’s the topic of the day, there definitely needs to be a lot of focus on the team. Oscar loves to say reg A plus as a team sport. I agree with that completely. So we want to know who else is going to be involved. And of course, it’s very different. As Kendall said, if you have 500,000 clients, versus your tech startup, and it’s going to be b2b SaaS, you need to even think should you be doing a reg A. And we have a lot of b2b companies that have great retail following when it comes to shareholder base, even though none of them will ever become a customer. But what that company does is easily explained. And there’s still an affinity with a retail client base. So, you know, we have, we start with, we’ve got a million angel investors who are all accredited in the proprietary database that we’ve built, believe it or not, really in the last six months. And we start with accredited even though no one needs to be because they are more likely to invest in an illiquid deal, which most reg A’s are. And also they understand the timeframe of I give you my money today, how long will it be till I see something in return? So there needs to be a lot of thought about what’s the investor going to get. And that’s a big part of the prep process as well. So, you know, those are the things that we think about, beyond those angel investors, who else are going who’s the most likely, and who are the best shareholders. And once in a while, we’ll get oh, it’d be great if we got a couple of VCs or some family offices. And it’s like, you can forget about that. Now, it’s extraordinarily rare that a professional investor looks at the same terms and conditions, as someone who’s putting in $500 or $1,000, you know, they’re gonna want a slightly different deal if they’re coming in. Anyway, so we then no need to build a second custom data set based on Affinity. So that we may already have it in house, because we’ve been doing this for so long in the financial product world. So it might be we have it, but it might be we have to build it from scratch. So all those things affect timelines, but a lot of that we do in our diligence process when we’re interviewing issuers. And I know that sounds backwards, but when when issuers are interviewing us, we’re interviewing them as well, as a lot of people in the ecosystem will tell you, this week alone, two times, we declined to write proposals. So not every issuer is truly prepared to do a reg A plus. And now that the game is different, it’s at am I stealing your thunder? It’s saying 75 million. Anyway, now that the game, the stakes of the game have been raised, we need a different level of diligence to make sure, gee, we can raise money for this company, but can you raise 75 million? Because that’s a different game. And that is something you know, we make sure we’re really prepared to do when we take something on.

Oscar Jofre  18:59

Yeah. Thank you. You took two thunders away from me, you know,

Andrew Corn  19:04

You left that second one open.

Oscar Jofre  19:05

[Uncertain] for Super Bowl. And you take that. So, you know, you you bring up an interesting point. I mean, $50 million, is not an easy, it’s, it’s it, it’s a great thing to say that that’s the target or that’s the achievable goal. But very rare, very few companies have hit that. We’ve upped the ante to 75. And it’s going to become even more important. I know, we’ve discussed this before, that we’re going to need to so let’s say the legals and the BD and all that are in place. So that’s, I’m gonna focus this conversation today. If you’re both okay with it with the investor acquisition because I think you just nailed it right there. Andrew by saying that, we’ve upped the ante, upping the ante it. It it means you can brace more. But now you really got to have your game in order for that. And one of the questions I have for you Kendall or both of you, but I’ll start with you candle is distribution. I mean, distribution is a key word that I’m using now, we’ve been relying on certain channels for now, are you expanding those channels beyond the traditional because obviously, like 75 million, it’s not going to just come from the same sources we’ve had it before. Right, given as you said, marketing marketing is a key element right now.

Kendall Almerico  20:29

Right. So, you know, again, this goes back to, you got your legal stuff done. And just like Andrew said, I turn down 25 to 30 companies a month, I only take on a very small handful of people, because people see the success that we’ve had with the Brew Dogs and the Golden Seeds of the world and building these, you know, companies into not just, you know, raising capital, but helping them acquire customers, who are also their investors, which is a really interesting model, that regulation A is great at, if you’re the right company, you know, hey, a guy gives you I’d rather get $100 from an investor who spends $1,000 on my product every year, then get $1,000 from that investor period, it just means more of my product being sold more margin, more everything. So getting 10,000 or 15,000, small investors and an offering, what does that do for your bottom line of your company, it’s great, you can get that same amount of money from one person, but that doesn’t grow your sales and grow your reach and grow your brand. So a lot of the things we do with companies like BrewDog, who has now 130,000 investors across the world is you know, help build that customer base. That takes time. Getting back to the $50,000,000 to $75 million question. And the statistics from the SEC are very clear. And we all see this. All those in the industry, most people aren’t raising $50 million with reg A, most people won’t be raising $75 million with reg A, why? If you want to sell $75 million worth of stock, you have to have a company that has a legitimate valuation that allows you to do that, if your company is only worth $50 million, you can’t sell $75 million worth of stock, your company is worth $100 million, you’re not going to want to sell $75 million worth of stock, most likely, because you just gave away 75% of your company. So the reality is the number of people that are going to raise that amount of money are few and far between. However, the same methods that have been used in the past to gain acquisition of customers will still continue, or investors will still continue to work, but they’re gonna have to be scaled up, you’re going to have to spend more money and marketing, you’re going to have to get more of these, you know, other places that you’re offering is sent out and shown to investors to participate, you’re gonna have to get better investors and bigger investors at times. But one of the things we really need to see that has been a, you know, just a thorn in my side since the beginning of this is to get broker dealers who are willing to come in and help sell these offerings. And to date, there have been very, very few who have done that, for a number of reasons, most of which are legitimate reasons. But as the Regulation A market matures, being able to find broker dealers who are willing to go out and having a bigger number at $75 million helps because broker dealers want to make money, they get a percentage of everything they sell, if they’re out there selling and they’re making a piece of it, and they can sell $75 million worth of stock, they might want to do it. If it’s a $2 million offering or a $5 million, offering a $10 million offering, it’s really hard to get broker dealers to come in, and the people who are actually physically selling going out and soliciting clients from their client base. So I think what we’re going to see, and I’ve been saying this for a couple of years now, I think as the market matures, more and more people are successful, and even with regulation CF bumping up to $5 million, that helps with the visibility of this whole concept of raising money online. I think we’re going to start seeing more and more broker dealers dipping their toes into this market, and coming in and saying, hey, I’ll be a part of a selling group and I’ll go sell 10 million or 20 million of your stock to our customer base, just like they would in an IPO where it’s doled out amongst various different investment banks and what have you, when that happens, and it will happen someday. I don’t know when I hope sooner rather than later. But when that happens, then the reliance on things like how much money are we going to have to spend on digital advertising? And how much are we going to have to do for those types of you know, the things that will raise you a million or $2 million, but are not going to probably raise you $50 million, that Reliance will go down and then having the actual network of selling group or syndicate out selling the stock will kind of take that place and that’s when you’ll start seeing more and more companies that are bigger companies, more mature companies using reg A, because you’ll have the ability to raise that kind of cash without having to spend $1 For every, you know, three or $4 You’re trying to raise.

Oscar Jofre  25:08

That’s interesting. So, obviously, this would be a very different type of BD, than we currently have today, this would have to be a BD that would have a retail network in place that traditionally uses it for, you know, for IPOs. And gathering

Kendall Almerico  25:26

Or for private placements, you know, that go out and say, Hey, we’re involved in this private placement, we think it’s a great fit for you, you know, it fits your risk risk profile, why don’t you put 25 grand into it, or 50 grand into it, or 100 grand into it, we really don’t have there’s been some people that have played in that world of Regulation A in the past, and it hasn’t worked real well, for a lot of reasons that we don’t need to go into here, because it’s really kind of esoterica. But the reality is, that is going to become something. Listen, broker dealers or financial people, they want to make money. All right, when they realize they can make money. And when they realize that the risk is not as great as they seem to think it is with regulation A in a lot of cases, you’ll see them starting to jump into it. But just at what I was getting at the very beginning of this was, the SEC numbers showed the average regulation that raise regulation, a rate is below $10 million. In fact, most of them are around $5 million to date. And so you’re not talking about a lot of people raising $20, $30, $40, $50 million, you’re gonna you know, it’s just not there for the broker dealer world to jump into yet where it’s really a viable financial model for them to go into, but it’s going to change. And that’s why increasing the limits to me, was an incredibly important part because it lets bigger companies, it lets a company that’s worth half a billion dollars go, you know, we’d like to go raise $75 million. And we can do that and use Regulation A rather than an IPO or apply a private placement.

Oscar Jofre  26:48

Good point. Good point. That’s obviously, you know, that’s first time, we’ve actually flushed that out as, as a distribution that I’ve never even, it’s, it’s good to see that that would be the next migration, we’ve been talking about broker dealers stepping in, not just for fulfilling the role of compliance, but actually assisting. And I’ve always found that difficult. Again, it because it would be a different type of BD, there’s so many different types out there, Andrew, I mean, you’ve been on both sides of it. So we we’ve talked about this a lot, we keep talking about different distribution, we’re hitting the 75 million mark, and to Kendall’s point that the average rate is still way below what the max is. So obviously, people are falling short of the investment. You know, I look at the population size, and I see what we reach, do still got a big gap. So how do we get there? 

Andrew Corn  27:42

Yeah, so just a bunch of things to underscore some of what Kendall said and then to take the other side on a couple of the points is, you know, we’ve seen on the reg D side for years, which we’ve been involved with, since we opened our doors, you know, we’ve done $500 million raise is $800 million raises, but they’re you’re dealing partially institutional, or it’s all accredited, but we’re really only going for qualified. So you know, when you’re shooting that hire looking for larger checks. So if you want to do something where it’s $100, minimum or a $200, minimum, you know, then you’re going to need 10s of 1000s of investors to fill that raise. So, you know, I agree it’s possible to convert customers into investors, for some companies, others, you know, we started a reg A plus they 220,000 people in their monthly newsletter, and we got about 20 grand. And that was what I expected when looking at the list. They just weren’t going to be investors. They’re, they’re great. And they’re lovers. But demographically, they weren’t about to put money in an illiquid investment over the long term. And it was an ESG thing, but it’s still, it was a little early for that anyway. So looking for how you’re going to scale things up is an important thing. And a lot of people who come to us and this is where I totally agree. People come to us and say, Oh, we want to do a $30 million reg A plus. And I’ll look at their deck and then kind of laugh a little and say, okay, great idea. You seem like you have a great team. What’s your pre money valuation? Oh, it’s 25. It’s like, Oh, so you’re gonna sell more than 50% of your company right now to individuals makes no sense. So there wasn’t a great way to do it before because of the cost of getting reg A plus off the ground is not inexpensive. So now CF is faster and cheaper and it’s up to 5 million. We’re encouraging multiple All companies to do $5 million CFs, hit some milestones come back to us in 18 months, raise their valuation. And then let’s see how much money they really need and find the right balance there. Keep in mind, I don’t have a series 79. I’m not an investment banker, I’m not an attorney. But I started my career with literally hundreds of IPOs for major and some second tier investment banks as well marketing those deals, and spent almost a decade doing that. So I’ve seen an awful lot of deals and have actually written or designed the IPO roadshow for a lot of very premier companies out there. Anyway. So looking at what do you do to raise 75? Yeah, you’re going to need a lot of channels. I think the broker community is not really ready for this. And I get why people would think that they are because they do sell IPOs. There’s a couple of issues, there’s the custody issue, where will the stock reside. And if it’s going to reside a KoreConX, I’m not sure what good that does for a broker. Unless they’re one and done, they’re selling the stock, and it’s going. So if I’m a broker, and I’ve got a client, they’ve got half a million dollars with me, and just 25,000 into this reg A, that money’s gone, and I’m not going to be able to work with that anymore, I’m not going to watch that grow. And I’m not going to be on that side of the table with them. So I think that that’s a hard sell, because the money is leaving the brokerage. And I think after a while that whoever’s running, the brokerage would say, Great, we just sold $2 million worth of stock, but we also have $2 million left in the money that we can use for investing. So there’s a big deal with that a lot of private placements end up getting a way of being on their platform, so that they can charge fees, not only on the transaction, but it’s on a consolidated statement and other stuff like that. So there, there are logistical reasons why some brokers will want to do it, and other brokers won’t want to do it. But you know, I brought up two channels that we are just beginning with in the way of clubhouse and tick tock, and I think we’re gonna find a lot of new investors and different types of investors than the way you know, a lot of the marketing firms that market reg A, they use Facebook, Instagram, the web, you know, we use those tools as well. But we find other places where we see that investors already clustering and finding those clusters or clusters of where their affinity groups who would be interested in the offering. And then we have to see whether they’re actually invest or not. We’re looking at that as well. So we do expect that we will be the only way that you know that there won’t be brokers or other channels for most of the work we’ll be doing in 2021. That may change though over time. And Oscar, you and I have talked about the independent financial advisors, the fee based, guys, and what do we do to get on their platforms? And that’s something I’m working on in the background every day. Because I used to sell to them. And actually a bunch of them are clients as well. So you know, there are some exciting things happening there. And I hope Kendall’s right, and then I’m wrong on the brokers. So we’ll see what happens with that.

Oscar Jofre  33:54

Yeah, I mean, the way it looks like there’s still so much exploration to be done by so many different ways. We started with purely social media, right,

Andrew Corn  34:04

we’re at the top of the second inning at best here. Like we have a very long way to go before this is a mature industry. It’s still a bit of the Wild West. It’s just not that wild for you know, we market ETFs every day, we did reg D for years. So this transition was not a big one for us. But it’s still the Wild West and finding, gee, this is an ESG investment. And we just got a 22 year old to put $300 in it. They told five friends and they also put in 200 except for the one who works at Goldman Sachs who put in five grand so and we’re getting these very young people involved. So it’s interesting to see depending upon the investment, the angle and what’s going on. We have found PR to become more and more powerful for us as well. And we don’t PR we partner with PR firms? And, you know, there we’re seeing more and more engagement and more, quote, unexplained traffic that’s easily explained by timing, and also the referral source. So, you know, that’s another thing that we see really stepping up as well.

Oscar Jofre  35:21

That’s pretty interesting. No, you know, this this discussion, it’s amazing, you know, it, when you think about, as we said, you know, how do I prepare for our right day we, we we get to the legal are important, the preparation and the amount of documentation you need in the audit. And these are the requirement, but it’s amazing the amount of work. When you sum it all up, I don’t know what the percentage is of time and effort and strategy that you’re spending Kendall, but it seems like the, you know, once you got the opportunity, now, there now you got to get this thing out there so people can invest. And so there’s the strategy and the distribution. So they’re, they’re both coming together. And the distributions are opening up. And I wonder, is that changing your strategy a bit, you think or, as things start evolving?

Kendall Almerico  36:14

Well, I mean, absolutely, you have to look and say what’s best for this client that wants to raise money. And many times people come to me and say, hey, I want to do a reg A, and I want to do this, and I want to do that. And they end up doing something totally different. They do a reg D, or we ended up putting them into CF or what have you. But it all depends on their prepared, you know, the level of preparation, I have people come to me with completely clean financials and completely clean corporate documents. And it’s really easy, hey, let’s get this over to the auditor and get the audit done. The SEC filing is very easy to do if everything’s in order already. But then you have clients who come to you that just have this, you know, pie in the sky idea that they’re this is the field of dreams, and they’re going to build this ballpark, and all of a sudden put it online and millions of dollars are going to come in. And the reality is both of those clients as crazy as that seems they both have to go out and drive investors to their page, they have to drive investors to the site, they have to get people to invest, there is no place, you can go online and go, Hey, I want to go raise money, I’m gonna stick this there and magically $10 million, or $50 million, or $75 million dollars people are going to invest, it doesn’t happen. It’s all the effort of your team, you know, going out and finding the way to do that. And most of that is preparation and hiring the right team, as you said, you know, Oscar, it’s a team sport, you have to have all the moving pieces, and there’s nobody out there who does all of it. You know, there’s a lot of people that do big parts of it. And then there’s a lot of people who do a lot of it and don’t do some of it well, but do other parts well. And so having you know someone who can oversee all of that, and there’s been through it a lot of times and understands what works and what doesn’t. And just even down to the micro level. My time, you know, frankly, I would say 85 to 90% of the time I spend is on the quarterbacking duties about 10% is on practicing law. And so that’s the reality of it. And the primary reason for that is Is anyone who’s worked with me knows, I do most of that quarterbacking part of it most of the time for an equity position. So I have every incentive in the world to get that company to be successful. Because I want my equity position to be successful, I get paid very well to do the legal parts of it. And that’s all fine and good. But the reality is, I’m on the same page they are and so I’m able to take off my lawyer hat and put on my quarterback helmet and say, hey, you know, this is something that will help drive things and listen to the professionals we hire. You know, and listen to the people, we partner with the PR firms or marketing firms and listen to what their strategies are, give my two cents worth from my experience. But getting professionals to do what they do. And let them do it well, is really the most important thing. And I’m a big proponent of bringing that team together at the beginning. And primarily because I’m probably a little different than other people. When I say at the beginning, I mean when I get retained because I am already through the process of knowing this is a client I’m going to take on that they’re going to be able to get to market they’re going to be able to get audits done, they’re going to get I don’t sign them up, they come back to me when you’ve got this done. So I’m ready to start the pre marketing part of it the testing the waters, the lead generation, when I sign on so that 60 to 90 days, it typically takes me to get them through the SEC to get qualified for a reg A I want to be marketing during that time. Whereas if someone came into Andrew’s office, and they don’t have an audit, they don’t have a lawyer and they don’t really have a game plan. I don’t what’s going on? Yeah, it makes no sense for anybody to be out marketing point because you don’t know what’s your marketing. But typically, I like to use that 60 to 90 day period to start generating as much interest as possible. Get people lined up to invest, get as many leads into the system that are legitimate hot or warm leads as possible so that when you do launch, and the SEC finally says, you’ve got the green light, you have people coming in on day one that have been ready and eager and excited to invest for 30 to 60 days.

Oscar Jofre  40:15

That’s very, very interesting, as you said, 80%, the amount of time that’s spent in this, and in particular planning and in getting through, and as the distribution channels are going to change the dynamics of all there. So I think that’s the exciting part for me right now, sitting back and watching it unfold. I mean, when I first came in, there was very low visibility into even what this was, which is investor acquisition. Number two, who did what everybody thought they’re competing, and I, you know, I ended up realizing that they’re not really competing, they’re all working together with the same client at different times. So that’s why I bring everyone together, everybody comes together, I should say, we just merely made a ring ding ding and everybody heard that bell, and we’re all working together. But I often wondered now that we we are as collective as new distributions, how we’re going to evolve our strategy? Because one thing that I’ve, I think I heard under, you can correct me if I’m wrong, but one of the things you said is the fact that your starting point will be going after the accredited investor. That’s the messaging, basically change how a company approaches that versus if it was just going to go for a general kind of audience.

Andrew Corn  41:39

Yeah, so I get asked that question a lot. And generally, it doesn’t change a lot, what the, the arbitrage that we’re looking at is, is that if we’re starting wealthier, what happens when our minimum investment is low, we want it accessible for the 20 Somethings, but we want larger checks. You know, most of the time on a reg A, we’re looking for median investment at 2200, which means we need a bunch of 20, some 20 fives to pull up the ones that are way lower, we need a bunch of fives. So generally, the overarching message, what we refer to as the messaging platform is the same for everyone, be it an institution, because we do some side by side, Reg D reg A. And that’s one of the reasons sometimes someone will raise 10 8 12 15 in the A, but there’s a side by side D, and we’re raising the 50. There. So that’s one of the reasons that people may not see as many larger As when the overall race was much larger anyway. So there is nuances to the messaging. And what we love to do is run multiple campaigns essentially, simultaneously, you know, the way we’ll talk to the investors versus the affinity group, is tends to be more more different than just based on income or net worth. So you know, and every client is different when we’re looking at that. So we need to, you know, make our assessment, decided what our initial hypothesis is. And then from there, we do four things from the day we start until the day we’re done, which is test, measure, refine, and optimize the refinement is in messaging in size and placement. And optimization is both data and where the media is. And sometimes it’s even tonic. You know, we look at media as a series of dimmer switches to be turned up and up and down, and pause. And, you know, we live in, I live on the east coast, some people are on the West Coast, what’s the most likely time someone on the West Coast is going to invest? We better be there and make sure we haven’t turned down our advertising. You know, same thing on the East Coast, or how many west coasters wake up early to be, you know, in line with the stock market? Well, guess what, no one cares about the stock market on this particular investment. It’s not, they’re not looking at as financial. So there’s so many nuances that go into this type of planning. You know, we’re in a profession where we have chosen to wake up every single morning and reinvent the wheel. That’s basically what we’re doing. That doesn’t mean that we don’t have things that we can apply that have been tested and are true and work 85% of the time. But the nuances are what makes the difference between it really working and not really working. And, you know, you take your eye off that ball for even a minute and things generally don’t have a great outcome. One thing which is you know, One of these big differences is that we’ve all been one run one test the water campaign. And we’ll probably never run another one. It’s just not something that we do or believe in. I could spend 15 minutes explaining why. And I’m sure that if I were to listen to what, Kendall why he does it, I’d probably agree with most of his reasoning. And I think if he heard why I don’t I think he’d agree with most of my reasoning. You know, these are the differences that well, because there’s two sides of every coin, you know, lead generation, that’s something we do in a reg D, we don’t do any of that in a reg A why, then they want to call on people on the phone, who we’re going to then call them. In fact, if you ask anyone on my staff, they’ll say, oh, no, Andy’s doing a webinar, he does way better with data and writing than he does with humans. So it’s what they’ll tell you. So anyway, so we don’t think about lead generation when it comes to that yet we run lead generation campaigns every day. Generally, those are aimed at financial advisors and brokers. Sometimes they’re aimed at consultants and institutional investors. But we’ve never done that on a reg A. So, you know, hearing that those tactics are in use. And Kendall, obviously, I would say, successful track record. It’s something for us to consider. But it has not been the way we’ve operated with what we feel the immediacy is when someone makes a decision to invest, we want them down to be able to do it right then and there and go to completion. We don’t want to come back to them 30 days later and say, Hey, you want to do this? Because you were excited about it a month ago? On the other hand, building excitement, I got that just like, why do we start press? Why do we insist the PR happened before we launch? You know, we want to make sure that we’ve got some logos on the offering page of places they’ve been seen in, that’s a real confidence builder. And then also, it can support traffic. So we were on a call today with a PR firm and our mutual client. And I said, Oh, try this reporter at this publication, it was a publication they were looking to get into why I was a shameless self promoter. When I was a portfolio manager, I know that I know, that particular reporter, or I was Chief Marketing Officer at the There were 50 staff reporters there. I know all them on a first name basis. So we don’t offer that service. But certainly, we put our thumb on the scale when appropriate for a client. Because whatever it takes to get the right traffic and is the most important part, because traffic in and of itself is kind of meaningless. It just makes your statistics look bad when there are too many people coming and not converting.

Kendall Almerico  47:59

Yeah, and by the way, that’s a great point. I think I use the term testing the waters because legally, when you’re out before you go live with a Regulation A offering anything you do in terms of lead generation or anything where you’re talking about the potential investment, legally, it’s testing the waters. And so Andrew is right, you know, a press release is testing the waters and when that PR company sends it out, and better have that testing the waters disclaimer on it, as Andrew knows, and we all know, just like if you’re doing social media posts or saying hey, we were just in the street, or we’re just in the Wall Street Journal, or what have you, if it’s talking about the investment, you have to have a certain disclaimer, so I kind of refer to that whole thing as testing the waters. But he and I will both agree. Everyone knows in this industry knows the story of Elio Motors when they first went out and let the very first Regulation A to get through the SEC. They were bragging everywhere, you wanted to see that they had $47 million of indicated interest from testing the waters, which everyone knew they were never going to raise that much. I think they ended up raising 17 million. But to go out and in the press tell people we have $47 million circled as they say in the financial industry. And then you only raise a third of that you look like an idiot. And so I you know, I don’t test them. I never asked people when we’re doing these campaigns

Andrew Corn  49:21


Kendall Almerico  49:24

Yeah, exactly. So and by the way, it’s funny at the very beginning of this, I had my second client ever in the reg A world back in 2016. Right, an early part, I had a client who insisted on doing it because of what Elio Motors had done. And I said okay, let’s do it. And and we went out and we tested the waters and we got $32 million of indicated interest. They never actually did the reg A round because they ended up raising the money privately and so they didn’t do it but the funny part about it was I saw every one of those people and it was literally like Prince so and so from Nigeria $5 million. These are real investors. So so people I I tend to agree that testing the waters in the traditional sense of we’re going to go out and see who wants to invest, like an investment bank would do you know, in an IPO when they’re allowed to in those types of things. That’s not what this is about. In my sense, it’s more of a, let’s build a customer list because I agree wholeheartedly with Andrew, I had had this conversation today with a client, I have it pretty much every day, you’ve got big things that are going to drive people to that investment page, the last thing you want to do is put those things out there before you live, because when you have something big, that’s going to drive a ton of traffic, you want people to be able to invest, you know, when you have this big announcement, or this big press release, or this big thing that really makes a difference. You want people to invest, right, that our lead generation system is much more subtle, it’s much more of a brand building, it’s much more of a, let us get you interested in this company, we don’t ever talk about you’re going to invest, it’s more of a Do you want to learn more? Do you want to be a part of this? Do you want to follow us on social media, campaigning to them with emails and other things to let them know a little bit about what’s coming, but it’s really not that much about investment. But it’s partially about investment. Because I can tell you, and this is marketing 101, if you’re getting the wrong leads, it doesn’t be any damn good. I won’t go into any particular war stories. But I did have one client that had 250,000 leads that were all gotten the completely wrong way, kind of like Andrews story about the customers and they came to me and I said none of those are going to convert to investors, because they were basically giving away something free in their business not saying are you interested in being part of our company and owning it, you know, and kind of teasing them, let me educate you over the next 30 to 60 days about the company, it’s kind of like you get a little bit of a, you know, a chance to give them but my experience has been we convert a pretty big percentage of those people. And so that’s why we do it. And again, I don’t do it for every client, there’s some clients where it makes no sense to do that. But if it’s especially a smaller company, a newer company that’s trying to build the brand, because again, a lot of this is, as Andrew said, credibility when they come to that page to invest, if they don’t see that you were featured in something and they were they go to your social media page, and you have two followers, if they don’t have a website, I mean, these are all things that have to be taken care of before you ever go live, you know, building that online credibility that you exist, and that you’re actually a legitimate company, and that you do good things and you have sales or whatever it is, if you don’t have that people don’t just go to a page and go, I’m going to give you money, they’re going to do some level of research, that may be just clicking on one link. But those little things of getting that all put together. And making sure that’s all in place, is really the most important thing to me in terms of preparation. That’s why we do what I call the lead generation process before by the way, we do lead generation, after we’ve launched to sometimes we will go out to try and bring people into the top of the funnel, you know, with different messaging than we do with people we’re trying to close because one of the other fun things that we get to see is I can tell you every single reg A offering I’ve ever done, we have people that came in through that lead generation process 60 days before the offering went live, they don’t invest until the last two days of the offer, they literally have been sitting in the hole in the queue for the whole time. And then the last few days when they realize it’s over FOMO kicks, and this is the last chance to do it. We see 100 of those people invest on the last day. And it always cracks me up because everyone assumes those things were six months old, or three months old, or four months old, no one’s gonna, that’s not the case, as long as you continually market to them, continually put things in front of them, show them how you’re doing, show them the progress in the company and keep them you know, I’m not going to read every email you send, I’m not going to see every ad you put in front of them. So that’s part of this thing is getting that message out to those people. And keeping that funnel knowing where people are coming in at the top and coming out at the bottom as investors but not all of them come out. But you got to get the people in the top to get them out of the bottom.

Andrew Corn  54:00

And of course, they’re not all going to come out. So we actually develop nine different levels of communications. So there is an overarching messaging platform. But if they’ve never heard of you before, or they’ve been to the offering page twice, is extremely different messaging. So understanding where they are in the journey, what we refer to as the investor journey is a key part to what we do. So that I think is, you know, it’s a very, very big thing. The other thing is is you know, I have built a lot of websites in my life. And when E5A got going, I said well, I’m out of the website business, but to candles point about, you know, jumping on the credibility thing. It’s like a no, we’re gonna burn your website to the ground and we’re going to start and do a whole new one. We’re not going to put a bandaid on yours, because I don’t even know how to get around what they’ve done to screw up your SEO, but your messaging is, even though the websites two years old, your messaging is five years old. So we need to get you to where you are today with some of the aspiration of where you want to bring clients over the next couple of years, because it’s a corporate website. It’s not the offering page where we’re bringing investors. But when they read it, there’s got to be graphic synergy messaging synergy, they need to know it’s the same company, you know, what we like to say is, when we’re working with a PR firm, and they’ve got their own graphics department, we’re still doing all the graphics. Why? Because we want everything to look smell and taste like it came out of the same kitchen from the same chef. And, you know, one last thing on that is, people will occasionally say, can we see a campaign you’ve done before? And I used to look at them very perplexed, because I don’t understand why anyone would want to see that. And the reason for that disconnect with me and prospects is we don’t have a design attitude, no to have our clients look even vaguely like why we look like our clients, we don’t look like what we think a design attitude for 2021 should be, because that doesn’t exist, one needs to be true to the brand, and to the client. Not true to an agency’s perspective. So I think my time off of marketing and portfolio management brought a level of intellectual honesty that I may have not had if I continued in marketing the entire time.

Kendall Almerico  56:38

Extra one last thing and that I think was a great no brought up just to expound on it, this is going back to so this is this is clearly most people that are watching this would understand this. But I like to make this point because it’s a very basic marketing point. When you bring people into what we call the funnel, the sales funnel, however you want to refer to these are leads people that may be interested in investing however you contact them, you know, a huge, huge, most important because as Andrew says everyone has their own way of doing this week, he has his nine step program, whatever he caught, decided that sounded terrible, because nine level sounds like every investor is an alcoholic just having you know, these different levels of things that is an integral part of making sure you’re messaging correctly. Because once people get into the funnel, then and this is marketing 101, I open up my Gmail or I open up a website or I open up a whatever today, I’m going to see ads that are being fed to me based on what I’ve done online and what I’ve done, maybe not online, maybe whatever Siri picked up and heard me talking about, or however conspiratorial you want to get maybe they’re listening to your phone calls. But the reality is, you’re getting targeted with ads all the time, which is why you go on Amazon and say, Hey, I really like this, you know, new toaster, all of a sudden you see toasters, everywhere you go online, that’s part of this process is knowing who’s already in, where are they in the process in your funnel, are they, as Andrew said, if they’ve been to the offering page twice, if they started to fill out the forms, if they have gotten through a certain level of the forms and then dropped out, the marketing has to be different to those people than someone who you’re just trying to get interested and what you’re feeding them. And the messaging behind it, and how it goes is incredibly important to closing those people. Because anyone who does this for a living like we do will tell you, a lot of people start to invest and don’t finish a lot. The statistics vary dramatically, depending on the offering. But it is a lot of people that start the process, they actually get to your offering page. That’s that’s one huge step, then they start to fill out the forms and don’t finish, that’s another huge step. And those people need to be brought back in and they can be brought back in and very successful if you have the right people doing this. But you’re losing a lot of investment dollars if you don’t have someone running that the right way. And you know, one of the downfalls that I see of the CF platforms out there is you know, again, having run offerings on all of them. Most of them won’t share that data with you. Whereas in Regulation A you typically have all that data. And there are ways to get some of that data but the openness of data that you have when you’re running an offering a Regulation A with with you know a third party who like your system Oscar where they actually have the backend where they can see what’s going on. And if they have the right analytics and everything set up on their pages and what have you. They have a lot more data than you have on some of the CF platforms where they won’t share a lot of information with you until someone’s invested. And so a lot of the retargeting and things that you would like to do that aren’t necessarily ad driven where you know, you can put a pixel on a page and hit people you can’t do with a lot of the CF platforms. I think that’s a big weakness that I fight with them over all the time because I don’t understand why they won’t share that. These are people you drove to the page you know, they don’t give it to you. They will give you the info

Andrew Corn  59:59

Yeah, we found one CF platform that allows us to do pretty much what we need to do. And I will say, almost 30% of our effort is converting people who started the investment process. But absolutely. And, you know, it is part of our initial planning processes, what are we doing about that, because it is that big of a deal, because you’ve already paid X amount of dollars to get them to the page, probably back to the page to watch a video or to read something, and then click the invest button, you don’t want to lose them then. So, you know, there are we’ve actually got a very large bag of tactics that we can deploy on getting them what we refer to as the complete your investment people. So we’ll need a simpler way of saying that one of these days, but that’s what we call it internally. So

Oscar Jofre  1:00:53

You know, this discussion, it’s great. I mean, I let the both of you go on because it’s it’s important that it’s so in depth, right? It requires so many do call it nine level. So clearly, there is more to be discussed here. Because the success that everybody wants is to reach the goal, right? They want to reach to 50, 75, 25, whatever it is, and it’s important that they understand it is not simply putting ads out there. There’s a lot of different things that need to be considering. I noticed just my closing remark is that I noticed they need commerce company who is approaching to do this. And they’re very methodical because they run an e commerce Store online. So for them every hit, they need to turn into something and they know how to remarket, and they’re easy client to kind of get them to understand there’s a trade off, though, is that because they know, they figured that they know the messaging which could be so there’s kind of a bouncer. So I’m looking forward to having you both back again, because I think now with 75 million, I do still think that there’s still room in here for additional tactical strategy to get to that final goal and I don’t know what it is it could be the BDs could be the RIAs could be the credit investor could be the institution. That’s the beauty of it. We don’t know yet but and it is going to be a fun journey ahead. So I want to thank the both of you this afternoon. I’ve taken two pages of notes with you today. So it was it was a doozy. That’s right. Just let you go on. So thank you both for a wonderful afternoon. Have a great week everyone. As you heard from Andrew and Kendall. As of yesterday, you can now raise up to $75 million with reg A. $5 million, with reg CF. I hope you also successful but do not undertake the fact that you need to plan and strategize with the right team to make sure you’re successful. Have a great week everyone

Join the all-in-one platform empowering private capital markets.

Free forever, KoreConX makes it easy for participants in private capital markets to manage their investment portfolios, raise capital, and meet global compliance standards along every step of the way.

Book a demo