Raise up to $5M USD RegCF


John Evershed

Strategic Advisor


John Evershed

Strategic Advisor

Marty Tate


Carman Lehnhof Israelsen

Marty Tate


Marty is a nationally recognized securities, finance and fintech attorney and counsels clients throughout the U.S. and internationally on various forms of structured finance, private and public securities offerings, fintech, real estate financings, venture capital and angel financings, fund formation and compliance, business formation and corporate governance. Since 2009, Marty has been active in advising clients in the crowdfunding and peer-to-peer lending space, with a particular focus on the JOBS Act, Regulation D offerings, intrastate offerings and Regulation A. His clients in this space include nationally and internationally recognized platform operators, sponsors, issuers, REITS, funds and service providers. He has been recognized as one of the top crowdfunding attorneys in the United States and continues to provide expertise and play a leading role locally and nationally in this area of securities law.

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.

Marty Tate  00:00

Doing reg C offerings on various platforms and so do a lot in the space of Regulation A and 506 C Reg D offerings. So that’s a brief overview of me


John Evershed 00:25

I assume it’s my turn to introduce myself. 


Oscar Jofre  00:29

Go for it. John,great to hear from you. 


John Evershed 00:31

Okay. My name is John Evershed. I’m CEO of FatCat club. It’s a new platform, hasn’t yet launched. Its soft, launching in March, and then opening up to investors in April. My personal background is that I’ve been in television and film primarily, doing a lot of fundraising through traditional means, raising venture capital. You know, it’s very much a digital facing company that I operated for many years prior to this. So I’ve been on the ground trying to raise money for entertainment projects now for the better part of my career, as has the entire team at FatCat. Club. And I have to laugh, though, because the name for this panel is raised up to dollar sign five M, R, E, G, C, F, it’s so cryptic. It’s like a password for your bank account, like a suggested password. And what we’re trying to do here is kind of open up crowdfunding and make it more accessible not just for issuers, but for investors. And these new regulations opening up, you know, from one to 5 million, put it put it now in a place where you can do substantially more to kind of help yourself, raise money for financing for entertainment projects that specifically we’re interested in. I sit on several boards, studios, that kind of thing. And I, you know, again, my background is very much like in the trenches raising money for entertainment financing. You’re muted, Marty.


Oscar Jofre  02:17

No, it’s okay. My name is Oscar. So there you go. Everybody gets to know why. I beg your pardon. You know, it’s okay. It’s okay. Welcome to the world of online. We all, you know, there’s a lot of buttons to hit. But now you met the panelists. I think it’s for everybody that’s here listening on. There’s so many different variations of regulation CF. And John said it best it’s when it’s not meant to be cryptic. But it’s so amazing. For all of us who have been through this. You know, I don’t know about you, Marty. But I was just thinking about the other day, I’m already going on my 11th year. I actually had to remind myself, I’m in year 11. And people were like, What are you talking about? Yes, year 11. I mean, it goes that far back when I met David Weild, and many of the others. So you know, when the Jobs Act was introduced with regulation, CF, fantastic regulation, allowing companies to raise $2 million, a lot of hard work by people like Marty, Tate, the platforms like FatCat, and others that are in the market. But now they’ve given us this gift to raise up to $5 million. And lots of questions are arrived. So today, we’re not going to go dig deep dive into every one. But we’re going to highlight some of the big components of the 5 million. And we’re going to start off with, you know, first of all, I think, personally, and obviously, I love to hear both yours, John and Marty’s view on this. I believe, when the regulator’s change it from 1 million to 5 million, something dramatically changed in the capital raise journey that a company goes through because before people used to say, a million dollars, oh, that’s just for startups. We’re in a different ballgame altogether. What do you think of that? Marty?


Marty Tate  04:02

Yeah, I think it’s, I think it’s a game changer or potentially could be a game changer. The crowdfunding or reg CF raise for the last several years is sort of been a, I don’t want to say a substitute, but it’s been used in a lot of cases, as the friends and family round or an expanded friends and family round, you can raise up to a million dollars, a lot of states have exemptions for up to a million dollar raises. So for friends and family type things, so it kind of filled that slot allowed you to bring in, allowed you to advertise and bring in non accredited investors into that race. But there were some problems with it. And we’ll talk about the amendments and some of the fixes that that were made in the process. But you know, by allowing it to go up to $5 million, you’re essentially saying hey, we might this might not only be used for friends and family round. It might be used for a seed round, or even even a Series A round. I mean, you could have, you could have accredited or institutional investors, VCs come into this, participate in this round, it’d be interesting to see. And I don’t want to, you know, rain on a parade. But I think that, you know, even though companies could raise up to a million dollars, a lot of companies do it and did it fast. And some companies still just raised 250. And I think that there were 100,000. And you’ll still see that, I think this just allows you to expand that you know, what you can do, I think, I’m a big fan of Reg A plus, but this, I think, this will cut into kind of that market as well, because you can raise up to $5 million, just by filing a Form C. It’s definitely a lot more efficient way to go.


Oscar Jofre  05:56

I agree. And, John, obviously, you’re the newcomer in the game with a funding portal. So obviously, you didn’t come in when it was a million. Now 5 million? Why do you think it’s it this time, it’s different?


John Evershed 06:08

Well, you know, we’re in entertainment, right? Entertainment, they, good creators, or good creative IP, typically has large social media footprints, right. So you’re able to tap into that footprint. And there’s a lot of these folks that you’ve seen on Kickstarter, for example, can raise easily millions of dollars around projects. So I think it’s a superior offering, though, to like a traditional Kickstarter raise, in that you’re really engaging your fans, because if you think about, like, you know, a football game, the stakes are raised when you’ve got $50 on on your team. And similarly, I think that will be the case that you know, you’ll have a very active large engaged base of fans or fansvestors, we like to call them that, you know, can participate in your products. A lot of entertainment projects, now easily cost and you know, you know, in the low millions of dollars. Indie features, video games, that kind of thing, these are all areas where we’ll be focused on so I think it’s, it’s a, it’s a little bit like Marty saying. It’s, it’s, um, it just opens up the door to more actual funding of entire projects from beginning to end. And so I think, you know, an important step here, it’s not like this, you know, it’s still hard to raise money, and you still have to market it. And we, as the funding portal, have to market it. So I don’t know that it’s a cakewalk. Like, we’ll still be experimenting, quite frankly, with lots of projects that are in the low hundreds of 1000s. So I think that it just sort of opens it up to to larger opportunities with bigger social media footprints, like where we’re engaging now with like, major, you know, household consumer brand type of projects. And I think that’s one of the differences, right, they see, okay, I can, I can do a fund raise and, you know, source several million dollars around a project. And so I think, before that, though, it was a lot more small to medium-sized players.


Oscar Jofre  08:20

Agreed. I think the the view that I bring into this, and I hope, it’d be interesting to see what you guys think is that, I think, for many of us, we saw in Marty’s right, we saw in the early days of reg CF, we saw a lot of 100,000 250s, on average. And it was only two, I think, May 2020, we started seeing a lot of million dollar raises just starting to happen. And I don’t know if it was because of the chit chat or the 5 million or whatever it was just burden. But just so everybody understands who’s here today, the attendees, just so you know, PitchBook CrunchBase, never ever wrote about the JOBS Act ever, ever. In fact, it was always hovered around us or the industry. For the very first time, PitchBook wrote an article about reg CF, that it could actually have a major impact on a Series A round. It’s a brand new type of company that’s coming in now, having a choice. I mean, this is about choices. We’re not suggesting venture capital will die, that’s just not going to happen. But imagine if you’re a company that can make a choice and say, Hmm, I’m not ready for Reg A yet, but I need this skill to get myself seated properly, boom, I can now raise up to $5 million. It is different. I think the platforms are going to operate differently with its client. We’re already hearing that. And another dynamic we’re seeing is that it’s not just the platforms where companies will be able to raise their money. Broker-dealers are now coming in to this sector. Something we have never seen before. They broker dealers, FINRA registered broker-dealers in the past would say, You know what? We don’t touch reg CF, it’s not. But now we’re talking about one to $5 million. Wait a minute, that’s my series A client. I want to keep them with us. Right, Marty? I mean, we’re seeing that already. So I think we’re, we’re, in the early days, we’re still going to get that same two 50 million. But I think over time, the fact that more mature companies, companies have already raised their seed, and now looking to do their series, they opted to do this, because once they adopt this model, the whole game changes completely how they keep moving forward, and their capital raise journey. Meaning you do a reg CF, the likelihood that you will do a Reg A is about 90%. I mean, very, very high. So that means you’re in the journey of always working with a crowd. So I mean, what do you think about what I what I think the most points,


Marty Tate  10:59

I agree, and you know, one of the things that I just to build on some John said. Is that a lot of times people, a lot of issuers will look and say a million dollars is great, but I need to raise five, I need to raise, I need to raise more than that. And I think this will allow, obviously will allow them to do that. But it we’ve been doing over the last several years, I don’t know how many of these we’ve done, but you will do a simultaneous or a concurrent Reg cf 506. C. So you’re you’re kind of juggling both of those offerings, you’re bringing the accredited investors in the 506 C and the non accreditors in the Reg CF. And this can potentially just replace that everybody just comes into that. And you know, and one of the changes that we’ll probably talk about some of the other changes is for accredited investors. There’s no limit. Before they were you know, there was limits on how much even accredited investors can invest. So they removed the limits on how much an accredited investor can invest. And so that solves that problem as well. But yeah, I agree, I think that it will be really interesting. I think that there’s there’s a lot of potential. And a lot of times companies don’t need, you know, I mean, this might, I’ve got, I’m working with one company right now, and they need $5 million. And they said, hey, if we can get $5 million, we can execute our entire business plan, which is before, they’d have to do a Reg CF and try to get in some seed money. And then they would try to have to go out and get a venture capital, like a Series A round from a VC or do a 506 C or something like that. This solves that problem. So I think it’s, I think it’s fantastic.


Oscar Jofre  12:27

Yeah, I concur. I mean, this is one of the most important and I think people need I know, for people that are here today, why is this important? Because you need to understand the journey of capital raising. Capital raising is it is a journey, and you have to understand each step you take every decision you make. When you go to John’s funding portal and you go to the Reg CF, you raise your 5 million. You need to think about what your next strategy is. Because when you’re working with Marty, your lawyer, you’re creating a legal structure that’s going to allow you to have those 1000s of new holder’s, whatever format you’re going to utilize. And then you need to think about your second raise, you do need to think about that. I mean, it there are not many businesses that after five, that’s all I’m done. I mean, if I said that’d be, but the key is that we need more additional capital. So sorry, John, I didn’t mean to cut you out there. You got our comment on that?


John Evershed13:22

Yeah, I’m just gonna expand on one thing we’re finding like entertainment financing oftentimes is slate financing, you spread your risk out over a number of projects, rather than one loan project. And I like that, we’re sort of finding that that’s what people are coming to us with, hey, I want to do three video games that a million each or you know, that type of conversation. So then it’s a superior offering for the investors because they now have stake in three projects versus one. So there’s a there’s a benefit that comes from that. The other thing that I think is interesting is that there’s kind of a there was sort of Robin Hood effect about people investing online on their phones like that sort of that sort of trend. Between that and Kickstarter obviously, I think is made people just more open to the concept of investing, you know, their money and and that the thing that’s cool about these are that they’re these are projects, right? So we, our platform is focused on Project raising financing for projects. So that’s that’s like a more sort of, it’s not guaranteed, nothing’s guaranteed, right? We have to be very careful about what we talk about when we’re marketing the platform. And similarly what what the the the issuers are saying about the raise, but nonetheless, a project based financing, like we’re talking about, the product is going to get made it’s going to go to market, it’s going to get sold and either it makes a profit or doesn’t. But that’s a shorter window for like a return on investment for investors. That may be an equity investment or you know, friends and family round in your, your uncle’s company type of thing. Right. So I think there’s some benefits here to this model for raising financing for the investors that that’s kind of interesting in that and that they have a propensity to, to, you know, go online and start investing more casually on wealth than they used to be, if that makes any sense.


Oscar Jofre  15:24

Yeah, it does. So we’re going to move the conversation a little bit over. So we talked about the high level overview and, and Marty, thank you, Marty brought in a couple of good points. And I’m going to throw in a third one, we’re going to talk a little bit of some of the real specifics about this new amendment that are very subtle, but very important. And it’s important because, you know, before you would go to your lawyer, I want to do a reg CF follow form C, but you need to think about the journey of your capital raise. I firmly believe that because if you make the wrong move, you may not be able to unwind some things, you could always on one, but because of the number of holders, you really need to think about this. So I want to switch that conversation over to that. And because there’s three things that I see, that are going to be an important one, obviously, it’s getting increased to 5 million. So that’s one. And obviously, John, this how this will impact you as a funding portal, making this decision. The second is the legal structure. So I want to talk about the legal structure right now. So which is the SEC has allowed an SPV vehicle to be utilized for a Reg CF. And I don’t know about you, Marty. But I spent a lot of hours trying to explain to people it isn’t SPV. But it’s not like the traditional SPV. So why don’t we give everybody kind of an overview, obviously, you’re the lawyer in this part, but and then let’s describe what the regulator’s intended for a Reg CF.


Marty Tate  16:54

Okay. Yeah. And I think right alongside with the increasing this to 5 million, I think this is actually, this is the change I lobbied for. There’s a lot of US attorneys out there that were writing letters to the SEC, this is the one that this is the change that we really lobbied for. What it does is your prior to this change the [uncertain], if you had to invest directly into the company, you couldn’t could there was a prohibition against using any sort of special purpose investment vehicle with this change. Now, what a issuer can do is they can create a standalone SPV an investment vehicle, that all the investors can invest into, and buy equity into. And that that one SPV can then go and invest into the into the issuer, thus making it so you just have one shareholder on your cap table versus hundreds. So it solves that question. The other issue that’s right alongside and Oscar will will agree with this is that SPV is exempt from rule 12 G which is the rule which requires if you have more than 2000 shareholders or 500 non accredited shareholders, you have to register as a public company under the 1934. Act and become a reporting company. So the so now that SPV can stand alone, and you can bring in equity holders, I think one of the things you saw in Reg CF world is a lot of these offerings were done as safes. And the reason one of the reasons why they did that one is valuation allows you to go in and not have to take evaluation. But the other is those investors are not equity holders. So they’re not coming out of the cap table. Therefore you didn’t have the 12 G problem. This solves that. So now they can you don’t have to use a safe you can come in they can buy they can come in as equity holders into this SPV, that one SPV can be a single shareholder on your cap table. So it’s to me that this is one that’s from a it’s the one that brings up the most Yeah, it is it to me this is this is a this is a really big deal. Like I said, this is the one that myself and other you know, lawyers in the space. Really lobby for sure. I’m excited about this.


Oscar Jofre  19:19

Yeah, I’m excited as well. I mean, my only my only comment to those who are listening. Yes, all those holders will look like one shareholder in the company that you’re operating. But you’re still responsible for managing the other company or the SPV. And you still have the same responsibility to all of them. So it’ll look like one year.


Marty Tate  19:43

Yeah, and that’s where KoreConX comes in. Right? That’s yeah, that’s where, that’s where Oscar helps.


Oscar Jofre  19:49

Thank you for that. Appreciate it, but I just wanted to make sure people got that because some people think that all I’ll only have one shareholder I don’t need to worry about the 3000. Well, no, you you still have to, you know report to them, what you’ve been given is the opportunity to include one shareholder why that may be. Remember what I said, your journey to capital raising, right? So if you’re during your capital raising needs to use Reg CF raise $5 million. And you know that if you hit your milestones, you could be venture backed, well, this could be a game changer for you. Because the VC will only see one shareholder there. But you’re still responsible for managing the SPV all the way through, and to make sure that it’s done properly. So, John, from your point of view, I mean, you and I’ve had this discussion regarding SPVs. How I feel about them, I, I’m, you know, obviously, I’m agnostic, but you’re running a funding portal, which is going to be very exciting, something new. So how do you see the structure playing out for you?


John Evershed 20:54

Maybe it would help if I just kind of walk quickly through the process of like, identifying a project, how it works on our platform, because I think we you know, just to back off a little bit and say, Okay, well, what are we really talking about here? So, you know, the idea is that we look at a lot of pitches, okay. They’re, they’re essentially, you know, they could be a video game, it could be a movie, they could be an ACC, a board game, any number of entertainment projects, you present us with the project, you present us with some projections you present us with, like, Hey, this is why this project is great. And we should do it. We look at it, we have Greenlight committee, they look at and say, yep, we want to put that up on our funding portal, you create essentially something like a Kickstarter looking raise for your but with the with the the expanded discussion about your offering, the shares that you’re selling in your, in your project, and post that on our funding portal, that’s the only way that you can raise money under these regulations is on a registered fundraising portal, like FatCat, then you raise the money much like Kickstarter, the money goes up into an escrow agent. FatCat actually never touches the money the whole way through this process, you raise your money on the platform, you market it, under certain regulations, you’re successful, the money gets dispensed to you, FatCat takes its fees much like Kickstarter during the raise. Then you make your product, Okay, with that money or that other money plus the money you’ve raised, then then you work with a transfer agent, in this case, you know, Oscars company is going to be our transfer agent, and they’re the ones that collect the money from the issuer once they start to make a profit and distribute it to all of the investors. So again, back to Marty’s point, you know, shows up as one line on your books, and it’s the transfer agents responsibility to distribute it. Where I see it going is is is, you know, can we as fundraising portals bring as much sunlight and transparency and reporting have that prop that whole cycle from you creating your product to you, distributing it in the marketplace and collecting, you know, the, the money around it, and distributing it to the to the various investors. I sort of see that as like an area of opportunity where going forward, we’d like to kind of really differentiate ourselves because entertainment business is somewhat especially movies and television fraught with, you know, the, what’s the definition of net and that kind of thing. So like, what we’d like to do is, is, is bring as much transparency to that last piece of this cycle that you’re on with your fine race in terms of collecting the money and transferring it to the investors.


Oscar Jofre  23:45

Thank you, John. That was great. I sorry, you have to take a sip of coffee there, you know, by the way, Marty was that was that a chicken in the background? I could have swore I heard it. I heard something cockadoodledo right here.


John Evershed 23:58

No, that’s my backyard actually. 


Oscar Jofre  24:02

Oh, that’s not Marty’s view. looks fantastic. I love watching the scenery.


Marty Tate  24:05

I think I think there might be a rooster or 100 out right now. 


Oscar Jofre  24:11

I love it. Okay, well see, we bring you everything. We bring your roosters, we bring your birds we bring you coffee. All yours. So, okay, so now, Red Rooster. There we go. Thank you. The so we talked about the SPV component, which plays out again, it’s really important for everyone to be talking to a legal adviser who knows what this instrument is. And really be candid with yourself about what it is that you’re doing in your journey of your capital raising. Because the SPV is not for everybody. Right. So you know, if you’re going to do a Reg A, it doesn’t make any sense to in an SPV? Because you’re going to have to unwind it anyway. Right? I mean, to leverage that additional crowd I mean, it, if you want that whole crowd coming in. I mean, in my view, I think it’s just you could keep it. But the whole idea is if you’ve got 5000 holders already in your Reg CF, you want them empowered to do this. The next round, right?


Marty Tate  25:15

Yeah, what you’re referencing there is, so you would want to include them and have those shares be part of the Reg A plus, so they, you know, especially so they wouldn’t be unrestricted. I mean, all of those shareholders in that SPV would be wholly restricted shares, and wouldn’t have the benefit of the, the shares issued in a Reg A plus. So that’s why you’re gonna have to unwind that. Yeah. And so that is something to think about, for sure. And said, I like what you’re saying it’s, you know, it’s a journey. And you have to think about what, you know what your long term plans are, except some people, hey. And I’m sure a lot of John’s clients, developers have, you know, video game developers, they might say, hey, we only need $2 million to bring this project to market, but other companies are going to need $50 million, or $75 million. And so yeah, I think it’s always good to go into it with a, a, you know, the long term goals in mind.


Oscar Jofre  26:09

I agree. I think a lot of companies, that’s where accelerators come in, they can guide, I think there’s a great opportunity you need to right now, but you’re going to need this x to really, you know, if you’re going after this market. But the but it is critical, we’re emphasizing this a lot, personally, is that you speak to a legal advisor. There is, as I said, Before, there is one more addition that we didn’t have, when Reg CF was first introduced as an issuer is that you do have the choice now of the funding portal, or the broker-dealer, the broker dealer doesn’t necessarily run a funding portal. So this is a very different strategy for companies who don’t want to be among others inside a crowd. environment are more mature. So Reg CF, like I said, it’s been so flexible. And now I’m going to bring it into something that really I think is important. Because, you know, the accredited investor could play such a vital role in Reg CF. And we weren’t allowed to well, we could, but they were limited. Obviously, the regulator’s heard the cry saying, Okay, if we’re doing it for a Reg A, why can we do it here and there, they’re doing that, giving them the ability to have unlimited. So obviously, this creates a bit of a different structure, but like to hear your thoughts on that Marty, because I know that’s something that’s dear to your heart, allowing more investors coming in.


Marty Tate  27:37

Yeah, I think that, you know, and one of the one of the benefits traditionally about reg CF. And, you know, John can appreciate this is, and one of the talking points and pros of it is, with a lot of projects, especially something like a video game, you’re not only getting investors you’re getting, you’re getting clients, and you’re getting fans of that, so they’re going to be coming in. So I think that this, this allows you to expand that it allows you to say, you know, we did a, a, an offering for, and this works particularly well with consumer products is you can imagine, they’re coming in and they’re buying, they’re investing in the company, they’re also, you know, you’re, you’re, they’re going to be more likely the ones that are out there not only buying the product, but also being you know, evangelists for that product. So I think that that’s, that’s a benefit that, that we’ll, we’ll see one of the things and I’ll I’m going to shift a little bit here. One of the things that the other changes and maybe maybe I’m getting ahead of you Oscar but but I think this works is it this kind of goes along with what you’re saying is one of the other changes is like a Reg A plus. The new regulations allow the the issuer, the reg CF to do to test the waters, which is basically saying, Hey, we’re thinking about doing a Reg A or reg CF offering? If we do, would you guys be interested, that’s one of the big advantages of Reg A plus is you could go out and say, Hey, we’re thinking about doing this and you could get solicitations of interest. People could say, Hey, I invest 10,000, I’d invest 25,000. And it allowed them to, to, again, test the waters, find out what interest was out there before they they looked at the time and expense of putting that offering document together. So now you can do that with Reg CF, prior to this change. You had to you couldn’t even speak of the offering until it was live with the SEC. So now I think that’s going to be a big difference to you. The FatCats and other portals are going to be able to put something up saying, you know, coming soon and people can can show their interest in that. I think that’s it. I think that’s a huge change and a great change to.


Oscar Jofre  29:56

No it is and obviously for the In particular for the funding portals, where often they’re working on so many deals, and they’re not able to say anything before in advance, as they’re prepping them. I think it will, they will show that that there is a great pipeline. And obviously, you know, coming back to you, John, how do you see the accredited investor? Or do you even foresaw that now that you can invite them in? They can they can put in an unlimited amount of capital, where before they were restricted, and again, they just have to be there for them as just as investing as easy as a non accredited but did you foresee that is that going to help you you’re from the funding portal perspective,


John Evershed 30:37

I’m I, we believe that it will evolve over time, their involvement. It’s a little like that lending, online lending where eventually the bigs came in, because they saw the obvious success that was occurring. So I think that we have two marketing funnels, one focused on higher net worth institutional investors and another funnel for sort of fan investor consumer types. And the the honest truth is that we, you know, hope both will show up, but we’re not sure at what levels early on. So there’s going to be some experimentation and trial and error here in terms of finding those investors. Again, we do have like, two, two targets, and there are different different signals that are getting sent to each of those targets, right. But we think that it might start with more consumer-level participation, but the event eventually in some of the larger institutional money will come into into play the accredited investors.


Oscar Jofre  31:37

Yeah, we’re definitely seeing them entering the reg A already, which is good news. So obviously, it would be nice to have that same trickle effect. And, again, gotta love PitchBook promoting it to the VC community. So it’s already alerting them to this. So obviously, look, we’ve talked about the great news about it’s been increased to $5 million, we have an SPV vehicle that we can utilize, you can use the funding portal, to raise your capital. And, you know, one thing we didn’t touch on the funding portals is, there are going to be different variations of it. And John has been alluding to his particular one, and we’ll get to that, as well, the, you know, the the fact that as a company, as a company, you have a choice in planning your journey. So one thing that I maybe for those that are here, or may not be aware. So as we said, we encourage you to work with the lawyer that you have your legal adviser, and I’ll come back to you and John, because you also assist here. But let’s talk about getting started. You know, is the form C going to change? Is the process going to take longer? And is should a company be going either to the funding portal first or the lawyer? So I’ll start with you, Marty again.


Marty Tate  32:55

Yeah, so I don’t think the process is going to change that much. I and whether you go to the lawyer first or the funding portal, first I is probably doesn’t matter it, I would you need to have a funding portal on board before you can do this. So a lot of times we’ll get a call on somebody will say, hey, we want to do a Reg CF offering, and I introduced them to a half dozen funding portals that I work with or represent, and that those funding portals have to approve them and say, okay, yeah, you’re somebody that we want to take through the process. So I think that’s your initial barrier to entry. So whether you start with either your lawyer or funding portal, I think is isn’t that important, but then going through the process, the form C, they haven’t, there weren’t any significant changes to the form C, so that’s still a very straightforward document. I would suggest, and this is just the lawyer in me I thinking, you know, I kind of have a rule that the more money you’re raising, the more disclosures you need to provide. It’s more of a, you know, cover your backside approach. So I would think that that form C might get, you know, lawyers might, like myself might be tempted to try to bulk it up a little bit more with risk factors and disclosures. But the basic document is the same, and that’s one of the benefits of that. It’s a document that’s not reviewed by the SEC. It’s just filed with the SEC. So let’s the processes is definitely a lot more cost effective than doing a Reg A plus offering. 


Oscar Jofre  34:38

Yeah, by far by far. And John, from your end, obviously, you’re the funding portal. Funding portals have traditionally been taking kind of that responsibility, some of them without the legal component of it, but where do you stand with that and how will your process be?


John Evershed 34:54

I think, you know, we’ll hold their hand going through that process, and I failed to mention it actually, when I describe our process, you know, it’s at that stage where it’s like, okay. We’re deciding to raise the money on our platform and the issuer. In our case, the creator is going to have to fill out this form C, and they should engage with an attorney, I’d recommend it. And again, to Marty’s point, the the more money involved here, the more legal help. But maybe if you could just really quickly quantify Marty, like, the amount of time that that report like how big of how big is the form C effort overall? And then what’s the reporting obligations, once they’ve they’ve, you know, filled out their form C and and throughout the project, I think that would be helpful.


Marty Tate  35:41

Yeah, happy to do that. So the the forms t itself is, a lot of companies, we’ve kind of taken different approaches, there’s several of the issuer platforms out there have a sort of template model that you fill in a bunch of information, and it populates a template. And, and they use that we’ve worked with a number of the top platforms out there and basically reviewed their form sees had our lawyers review, this form sees and, and there’s a typically a fixed cost for that. We’ve had other platforms where we actually in it, and a lot of times when an issuer just comes to us and say, Hey, we want to do a Reg CF offering, we’ll prepare that, you know, we have a, basically a template that we can use, and we can prepare that. So I don’t I, that remains pretty straightforward with regards to the you know, and it’s it’s basic information about the company, their financial information, their officers, prior securities offerings, their capitalization. You know, in other disclosures, employees, that type of information. So once that’s been filed, then you’re you’re required to do you know, file updates, is in connection with changes or as capital is being raised, if you’ve met targets. If you increase the amount you’re offering you, you, you file an amendment, and then you’re required to do annual reports. So and this has been something that it within the legal community that we’ve kind of looked at and said, you know, a lot of people haven’t. This is one area where the compliance has not been great. But you’re required to file an annual report that gives an update on not only the capital raise, but also your financial information. This is the compromise because you’re not a public company, but at least you’re providing those investors, ongoing disclosure and any information about the company and their investment.


Oscar Jofre  37:46

And I just want to touch on that. For those that are listening, this is really important budget for that report. It’s not a lot of money. But if you don’t I need to do on the scan, you could lose your status, you could be in default, the rule 12 G. So you know, not adding that in could be that’s why I’m emphasizing this because we what happened in the few years, we’ve learned a lot. The SEC is not going to give us that same pass going forward. It’s not $5 million. It’s not a small amount anymore. So it’s imperative, you know, the form, see filing, and understanding all the obligations ongoing, the partners you have will help you. But you need to make sure you budget for it on an annualized basis, because it will have an effect on you breaking your 12 G rule, which if you do that you’re a fully listed issuer Frank and Dodd for reporting. You never want to lose that status. It’s imperative. So you know, sorry, John, you were going out? No, no. Oh, sorry. Okay, so we covered I mean, today’s session wasn’t really to dig dive. But we gave everybody an overview of what’s emerging, everybody’s getting ready. March 15 is the date that it goes live, which means that, you know, if you’re a company looking to raise between one and $5 million, this is a great regulation. And as we indicated, you need to start with these basic steps, there’s, there’s, there’s a lot of elements to it, it’s not meant to be confusing, it’s going to take people a while, but you do need to be prepared and you need to be able to budget for it as well. So I’m just going to touch a few minutes on that because a lot of the times you know people believe that okay, crowd funding, I just put my plot my deal up there and I’m ready to go and cost me nothing. There is a cost associated with that and we want people to come in with our eyes wide open. Obviously the funding portals are going to guide you in some of the areas but as a company, you need to come in prepared. So you know the numbers. I don’t know if you’ve seen this, John and Marty but for a million dollars, they were indicating if you are raising a million you should be budgeting about $25,000. So it was because you’re going to do marketing, and you’ve got some, you know, legal preparations and stuff like that. So you kind of have a benchmark, obviously, the the more dollars you have to work for your marketing will work. John, have you guys created a budget item for your issuers? Are you going to take on that burden with them?


John Evershed 40:21

No, we’re going to take on the burden of, of most of those things. That marketing number sounds low to me 25k, $4 million, just for what it’s worth, I suspect that, you know, you might want to earmark a little bit more than that for marketing. But we’ll also be marketing the platform in parallel with you marketing your individual campaig on the platform. And then you’ve got these reporting obligations, the cost of the reporting obligations ongoing, it, you know, and the more that you inform your investors. I think, the better like, you know, the more that you can talk about how the project’s progressing and keep them in the loop and them hitting your milestones. And when you’re going to market and how it’s performing in the market. The more reporting you can do, I think the better off you’ll be with your investors and maybe raise the next round, you know, around, you know, do your next crowd funding for your next project. So, I do see like, there’s a momentum thing there. Like, if you look at Kickstarter, for example, the successful raisers are the ones that raised before like that, that’s it’s fairly direct. You know, the people are using Kickstarter now to literally as a form of distribution for certain products like board games and stuff like that. And I think similarly, we’ll see an evolution like like that, in terms of repeat, issuers on the platform?


Oscar Jofre  41:55

No, I agree. I mean, look for Reg A, it’s interesting, you would say that, we provide them a very realistic budget so they can get ready. And that’s where they go to Reg CF to raise it, but we’re forgetting to let them know that you need a budget there as well. But it’s a good point. There, there are more companies using these regulations habitually year over year, and the ones that do it right budget properly, you’re you’re dead on that, and the ones that are unsuccessful, underestimate what the market is. Marty, did you have any other comments on that?


Marty Tate  42:30

No, I think that, you know, I, we have this conversation a lot more in connection with Reg A plus offerings, you know, talking about people ask me what my, what our fees are associated with that? And I always say, Well, you know, that’s one thing, we’ve got to have a pretty big budget. But I think that one of the points that needs to be made with regards to these Reg CF offerings is, and it’s an important point, and I think you’ve hit it with saying you have to have this marketing budget, but platforms are great. They are not marketers. TYou know, by putting something up on a platform, or a funding portal, it’s it doesn’t mean that, you know, I we haven’t had, and I’ve been saying this for years now. And I keep hoping it’ll happen. And I guess you’re seeing it more and more, but there still isn’t this mass number of investors that are just cruising funding portals, trying to find their next deal. You as the issuer have to push the deal, you have to get your networks you have to use your social media, your and your contacts and drive your investors, they’re in dip the funding portal will help they’ll have their their listen their customers, and they’ll they’ll be able to recirculate it. So it’s definitely there’s something, but it’s, it’s not a, I every time I say this, it dates me, but it’s not, you know, if you build it, they will come it’s it’s a you have to, you have to do the work. And so having a budget for that having a marketing team having you know, in there, there’s some fantastic third party marketers that will help you, you know, market your deal, and work with the platforms or the portal. So, it that’s a very important thing that, you know, the legal cost in all of these things. You know, for better or worse is a lot of times your least expensive part of the raise


Oscar Jofre  44:28

I say that a lot. And I commend you guys, the entire legal community. In fact, for a Reg CF and a Reg A the lawyers are the least paid for all what they do for us. But, you know, you touched on an interesting point there and I want to finish it off because you know, us at KoreConX we deal with a lot of clients, you know, we have 120,000 companies in our platform. And each time they come back with us with stories, and it’s really interesting what people don’t realize a lot of the funding portals won’t even start According the company, even though they’ve approved you, they won’t start supporting you to bring it to the bigger crowd until you reach the minimum threshold. Have you seen that already. So certain partners will say, Look, you need to bring in $200,000 on your own before we go out and start bringing our so. So you need this is where marketing becomes very important. So if you go in thinking that, I’m just going to get listed on the front import or get older users, you’re just hoping that you’re the shining light, they’ll see. But it’s not the platform’s not going to get behind it until you reach the minimum, they want to see whatever you’re putting in to bring in that traffic. So something you everybody’s got to keep in the back of their mind that it just reminds me once again, that I think we’re due to provide a budget for everyone realistic budget now. On all the costs, including the annual returns, it’s the number one issue, obviously, we’re going to have a year from now. If we don’t address it properly for everyone. So we’re getting down to the last 15 minutes or the 12 minutes of the webinar today. There’s some great attendees. So this is the time if anybody’s got some questions, you got two great panelists here that will answer your questions, obviously, otherwise, we’ll be more than happy to pass on your contact details to them. And we will actually have a website where you can see their details, their profiles, access, so you can reach out to them. But I’m extending it to any of you today that are here. Do you have any questions? Okay, we got one, here we go. So, hi. Yeah, yes,


Doctor Hi 46:42

This is Doctor Hi from Toronto, I have two or three company in a different field of raising fundamentals pharmaceutical one is going to be on his natural health products. I want to know, the overall cost pressure that to qualify to register and successful fundraising, how much the fund we need to invest to get that target? Okay, so you can send us that you will do these these and, and these purposes, you need the money minimum money, I understand that you, you will get some percent of the Commission on the raise fund, but to get the raise funds, and you’ll get that commission. But before that, we have to spend money, right to qualify and get funding. So we need to this part has actually caused no hidden cost, no other costs. So halfway, we should not be problem for funding to these that these target.


Oscar Jofre  47:44

Not a problem. So I’m going to put you on mute now. So two, two. So it’s a good question. But first of all, I don’t know if you guys caught it. He’s calling in from Canada. So this is a question that I’m glad he he, he raised his hand because it’s come up before myself being a Canadian. I’m going to take the first point to this because this is really important. So I know there’s people out there in Canada right now promoting, hey, all you got to do is incorporate in Delaware, Nevada, Wyoming, and you’re way to go. No, you’re not. It’s not that simple. Again, remember what we talked about at the beginning. And that’s no matter what country you’re coming from, it could be Canada, Australia or anywhere. Just think about what it is that you’re doing. Think about the strategy of your capital raising the regulation SIAC was intended for us based companies, operational companies in the US. Marty can talk a little bit more the legalese component of it, I’ll give him a minute here. But from but when you make that come when you do that, in your major operations or in another country, and you do decide down the road to do a Reg A. So this is the consequence. One of our other lawyers on our ecosystem, Sara hangs with an article the consequences of a foreign issuer, tapping into Reg CF by creating a sub, and then wanting to do a Reg A and how he blows up. Because the regulators, as Marty said, You’re just filing, they’re not reviewing your offering. But when you follow Reg A, they will review everything. And that’s when they’ll discovered that you are a sub of somewhere else. So it’s really important that people get proper legal advice. This is not to discourage companies from using this regulation from other countries. But it’s just to make sure you’re aware that it it does require a plan. And in when you’re dealing with lawyers, Marty, I mean, have you run into this yourself?


Marty Tate  49:47

You know, a little bit we get this question. You know, obviously people want to take advantage of it. And and, again, it I think going back to you know, the theme that you’ve kind of said is is you know, what’s your overall plan? What’s your At your your overall fundraising goal, you know, if, if the if the solution or if all you’re trying to do is raise a little bit of capital by by plugging into a US market? You know, I think it’s possible but you’re right, there are long term consequences if you have, if you have additional plans down the road, it is something we’ve dealt with a little bit not, you know, it’s not something I’ve dealt with a lot. A lot of times the foreign issuer, it’s, you know, we get a lot of questions, and then it kind of, you know, we talk them through it, and it goes away. But are they, they decided to take another route, going back to the, you know, he was talking about the cost, and I presume that was a marketing cost that I was asking about, and maybe that goes, maybe that’s a question that you can better answer. But you know, from a legal cost, I can just say that, you know, you’re somewhere between $3,500 and, and $5,000, to do it to, from legal costs, you know, maybe more if there’s other additional work associated with that. But that’s something to budget, Oscar, you can talk about the marketing piece to that,


Oscar Jofre  51:12

Yeah, the marketing piece is going to be, you know, if you’re raising north of a million dollars, John said it best 25,000 going to be your you know, you’re going to be doing advertising in Google AdWords, you’re going to go into newsletters, so you need to budget appropriately to the raise. So you know, when you’re doing, you know, north of a million dollars, you should be budgeting for somewhere between 7000 to $15,000 a month for a period of maybe six, seven months to give you that, because awareness doesn’t come easy. It doesn’t. It doesn’t come at all and, and bright day, we just so you’re all aware, to give you a comparison, in Reg A, we encourage companies to budget between 200,000 to half a million dollars. Again, keep in mind the raising of 270 5 million. So but you do we, you know, we’re just giving you high level numbers, don’t call us to it, we’re more than happy to introduce you to the proper people. As Marty indicated, that could give you exact figures based on your company, but for the foreign companies that are here that are curious about how to use this regulation, before you start talking to marketers, because they’ll take on anything, please speak to a lawyer as Marty said, because it could be a good regulation for you to use. But if you have some long term journeys on how to use other parts of the job, Zack, it could be a hindrance going forward for you. Alright, Joshua, we’re gonna let you come on in here. You got a question for us?


Joshua: 52:35

I have a two part question. So the first part if if I have a company that’s already publicly traded, doesn’t matter if we’re alternative reporting, versus fully reporting to do the Reg A offering? And then the second part to that question is, if I have a stock transfer agent already, and I use that portal, you guys were discussing or your portal? Do I have to change my stock transfer agent? If I do a Reg A?


Marty Tate  53:04

Yeah, oh, I’ll answer that first question. And then Oscar, you can jump in the second on a Reg A offering. You said you’re an alternative reporting. So is that just your I presume that you’re like an OTC Clorox company? Okay. That’s, that’s fine. There’s there. The Reg A plus is, you know, that was expanded to allow publicly traded companies and whether they’re, you know, reporting under the 34 Act, or they’re reporting, you know, under the, the rules of the exchange that that’s irrelevant. So that’s wouldn’t be a problem at all. And then the transfer agent, you the reason for a transfer agent, is it allows you as long as you have a transfer agent, then you’re exempt from rule 12 G, and that the shareholder thresholds there to be a, you know, be COMM, A fully reporting company now. I suppose that would still apply. And you could still continue with your alternative reporting, you would also have to do the Reg A reporting meet the Ric a reporting requirements as well. So they’re, you know, maybe two sort of systems you’re having to, or two sort of tracks you’re having to comply with. Oscar, do you have any other thoughts?


Oscar Jofre  54:23

Well, we snuck in a Reg A question for a reg CF panel. But no, Marty nailed it. I mean, it’s, yeah, it’s pretty straightforward for public companies. You’ve got all their requirements there. So we got a few more minutes. Is there any other questions that anybody has in the attendees related to regulation CF raising up to $5 million? And again, just to remind everybody that this is a regulation that you can raise with registered funding portals. Okay, that’s one and then two. You can raise it with a broker dealer. So we got one year rolling, here we go. 


Rolin 55:01

Hi guys question for John. On your portal, do you allow your clients to have access to who’s gone through the invest now page to actually retarget them? If they don’t go through with the investment? Or do you keep that information? Like, a lot of other platforms? Do? You know, they don’t allow the client to access who’s been looking at the page?


John Evershed 55:34

Yeah, I think I I don’t think we I’d like to actually ask answer that question offline. I’d like to discuss it actually, with my point guy, in terms of whether we’ll permit that or not. So maybe if I could answer that just to be realistic, because I think I’d be making it up. If I if I answered here publicly.


Oscar Jofre  55:56

We’re putting the industry Rolins got a valid question it with the marketers that are out there, one of the biggest components of people like Rolin and others, all entrepreneurs were asked to spend a lot of money to do our marketing. And quite often what happens is when you bring that traffic in, that traffic is gone, right? It’s gone to the funding portal, they have no accessibility to it. So this could be a game changer move in the industry, it could drive more companies who say, Hey, I’m gonna do another round, I need that user base, even though they didn’t invest in us, since I paid for it on the marketing. So great. Question Rolin. Is there any other questions? 


John Evershed 56:33

I can just add, though, like, our intent is to be as helpful as possible, and I’m just not sure what the regulations will permit us to do not permitted to do in terms of that sharing. So I don’t know if that helps or not. But, um, and I also want to add that, like we’ve been discussing, like, all the marketing’s on on the responsibility of the issuers, with our platform are anticipating kind of like a SaaS model where if you want, we will help you do your marketing. Because I almost see that our differentiation in the marketplace, like, you know, if you’re a crowdfunding portal, you better be bringing people to your portal, like, it can’t all be on the issuer’s. So we’re anticipating that we’ll be marketing our platform, and we’ve earmarked a lot of money to do that. And similarly, we’ll be helping our issuers raise money on the platform with, you know, marketing kind of guidance and best practices, and that sort of thing. So I just want to make that point about at least our funding portal.


Oscar Jofre  57:30

No, no, that’s, that’s great. It looks like rolling about one more question there. That’s our last question. Rolin, you’re on. Let’s see, to me, hear me? Yeah, we can hear you.


Rolin 57:48

As the industry’s suffering from, you know, getting that exposure, it would be, you know, wonderful if we could all sort of participate as a group as an industry. Everybody being crowdfunding, and everyone pitches in some money that goes to general marketing, for crowdfunding and getting, you know, new people looking at the different portals as a, as an association. It might be early days, it might be wishful thinking, but I think everyone would benefit, you know, with, with some money going towards awareness as an industry.


Oscar Jofre  58:30

That’s a great point, Roland, thank you. Um, so it’s, you know, as an industry, we’d all like to do things as a whole. We, I think we tried that, Marty, then we can we have an association in the early days, it’s kind of broken down. Look, we’re in the early days right now, I, I’m excited, because, you know, oh, my goodness, six years ago, I published a book equity crowdfunding one on one. I, we had over 30 million copies downloaded, then it’s a free book. And it’s right back again, because it’s a new, but guess what, none of the things have changed. As Marty said, it’s still the same steps, you still got to do the form C if you’re going to go through a funding portal. The only addition now is that you can go to a broker dealer as well. That’s another addition. Again, it’s different. And you know, the nuances we’re going to see different now. Like, what John is going to be doing at FatCat club is that they’re going to take on that marketing responsibility. That’s a, that is different. I’ll be honest with you, that would be grand, because up until now, the burden has been on the issuers. And then that’s a lot of work sometimes. So I want to thank both our speakers today. And obviously all of you today that are in attendance. This is being recorded, which will mean it will be available on YouTube, you can subscribe. I do want to let you know there are 72 other webinars coming this afternoon at 330. This afternoon. We’re going to be talking about Reg A and we’re going to start digging in very specific subject matter today was just kind of like overall discussions about the regulation. You’re going to get bits and pieces from each of the different types of speakers we have. We have 192 speakers that are going to be participating in these webinars for you. So I want to thank everyone this afternoon, John, Marty, Marty. I’m envious. Love the sky. It looks great. I look forward to seeing you again. Thank you, everyone. Have a fantastic week, and we’ll be seeing you very soon at the next KoreSummit. All the best. Thank you.

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