Peter Daneyko  00:04

Well, welcome back. Peter Daneyko with KoreConX and we’re on the next hour from our Real Estate JOBS Act and tokenization and liquidity summit focused on Real Estate. My panel and my co-host here today is Ryan Frank. And I want to welcome Ryan here. And we’re going to be talking about RegD and RegS and all things RegD RegS, focused on the marketing side of it. Ryan’s expertise with his firm for the last funding capital, the last decade or so, gives Ryan the ability to give us some, you know, some great insights when it comes to RegDs and RegSs and specifically from a marketing perspective. So, Ryan, welcome.

 

Ryan Frank  00:57

Thank you so much for having me, Peter. Yeah, look forward to jumping in. And maybe I’ll let you kind of set the table and we can we can kind of bring people through some of the basics and get into some of the nitty gritty.

 

Peter Daneyko  01:07

Yeah, let’s start with the discussion on the definitions of RegD and RegS, a lot of our audience might have been in earlier panels and might have heard some of this information. But for new audiences, Regulation D. I mean, it was an offshoot, it also came with RegCF and RegA during the JOBS Act 11 years ago, but it was focused entirely on a different audience. Maybe I’ll turn it over to you, Ryan, and you want to…collectively we can have that discussion.

 

Ryan Frank  01:37

Yeah, so I’ll split RegD really into two broader categories that we tend to see will really focus in on one. So when you hear the term 506 or RegD 506 B versus a RegD 506 C, that’s something you’ll hear thrown around the Reg D 506 B, which we won’t focus too much on here. But that allows issuers to go and target us accredited investors. But there’s no general general solicitation and a 506. B. So really, issuers are using that within their own network to bring in, you know, contacts to the business, their own network, things like that. Whereas when you flip over to RegD 506 C, that’s where you can do the same, but also do general solicitation, and marketing for your raise. So certainly I think for today’s focus  we’ll be keying in on the 506 C, for the most part.

 

Peter Daneyko  02:33

Without question. So the key thing is, I’m doing a 506 C, if I want to market my offering to my existing shareholders, and I want to put it out there to the public for those accredited investors as well. And a 506 B, I have my network as ready and I’m just doing the proper filings with the SEC, allowing me basically to submit my offering. So, I’m going after accredited investors only, Im going after a RegD, it’s US investors. Let’s talk a little bit about some of the marketing structure that you set from a foundational perspective when you’re going to do that.

 

Ryan Frank  03:16

Yeah, absolutely. So when we’re talking, you know, RegD, and I’ll maybe compare this on some of the previous sessions where conversations were surrounding maybe RegA or even RegCF. RegD, you’ve got a bit of a different flow, at the end of the day, you’re still sending traffic from advertising and things like that, I’m sure we’ll dig into that more to ultimately an offering page. That offering page tying in with for example, KoreConX and people being to invest right there. The big difference when you’re going after a creds and typically, with that you’ve got a higher minimum investment, we can kind of dig into that a little bit as well.

 

Ryan Frank  03:52

But one thing I’ll throw out out of the gates, certainly you’re targeting a different audience, we’ll dig into that. But your whole kind of investor funnel and flow has to change a little bit. And when you think about it, the amount of people accredited investors in the US they’re going to come in, see an advertisement and you know, start that investment process right away, it’s going to be very few, right.

 

Ryan Frank  04:14

So typically, what we’re doing is we’re trying to drive somebody to an offering page, collect a lead, for example, as opposed to getting too aggressive and trying to push them into the investment flow, let’s get their name, email, phone number, for example. And then they can download our investor presentation. So we’ll kind of work through a variety of soft options there. You’ve got a much longer latency from the time someone shows interest, kind of you generate that lead of a prospective investor to the time somebody’s going to invest. That’s going to be a longer latency typically with an accredited investor and the higher minimum investment in an offering. And then once you you know, get that person into the funnel, I would say it’s, you know, the way I like to describe it to issuers is this is you know, 50% marketing 50% Investor Relations effort at that point, right? The acreditted investors, they’re going to want to talk to somebody at the company, they’re really wouldn’t want to get comfortable before they’re, you know, going to put in $10, $25, $50, $100,000, what have you. So it’s a little bit of a different process. And it requires a lot more, I would say nurturing and kind of one-on-one outreach, then maybe a RegA or RegCF.

 

Peter Daneyko  04:23

So I think one of the common, I guess one of the common denominators between all the exemptions, though, is I need to communicate with that investor, I may communicate with them slightly differently. But I but I have to earn the right. Yeah, you know, I can’t have I always like to come back to the cliche, I can put that ring on, on that pretty girls finger across the way without knowing her, I can’t even throw it. And so we establish a relationship. You mentioned, collect the leads, names, emails. Is there any categories or segments based on the raise? I’ll call it industry specific in relationship to personas, if I’m doing a RegA raise for the medical community, am I going after doctors? Or is that accredited investor looking after a broad broad range of investment opportunities? And we’re focused on Real Estate here today but is there any differentiators? You know, in your strategy?

 

Ryan Frank  06:29

Yeah. So I would say yes, like, there are cases where, you know, so I’ll kind of throw it out this way: you know, when we’re targeting, I think there’s a couple elements to it, right? So when you’re looking at accredited investors, you know, number one, I think the most recent that I saw, it’s about and this is post the SEC, kind of updating their definition of accredited investor. I believe that was not too long ago, 2021. But I believe it’s like 9% or 10% of the US would be considered accredited. So right then in there, you know, you’ve got to look at things like targeting on household income, net worth, things like that, because you really need to exclude you know, 90 plus percent of the individuals in the US from that offering, I would say, second, when you’re working with a marketing partner, and actually, we’re gonna do a quick intro here.

 

Peter Daneyko  07:23

Welcome, Andrew Corn! He’s back with us, from E5AIM. And I’m glad to have you here to join Ryan Frank. And as you both spent a lot of time on the RegD and RegS world and I’m gonna go back to Ryan as he has given us a bit of a snapshot on some of the different audience segmentation and the targeting and, and what that audience looks like. And I want to let you guys both to bounce off different ideas and strategy and structure when you’re going after a RegD community. And then we’re going to talk a little bit later on RegS. So Ryan, continue.

 

Ryan Frank  08:03

Yeah, so I was really just saying that when you’re looking at accredited in the US, I mean, you really are talking targeting about 9%, 10% of people in the US, once you look at who meets that definition of accredited investor, you know, you deal with some challenges, like they’re even accredited investors who aren’t familiar with that term as well. So part of it is a bit of an education piece on explaining what that is, and what the requirements are through the process. But I would say, you know, you’re going after higher net, so you’re looking at kind of targeting based on net worth household incomes and things like that, that typically are going to more aligned with investors.

 

Ryan Frank  08:38

You know, typically, like when I look at our firm, and really, I’d say any marketing firm in this game, typically you’re leveraging a lot of existing audience data that you have, right, so if you’ve been doing this a while, you’ve got, you know, a laundry list of accredited investors come into deals, similar to probably your deal at the end of the day. So using a lot of existing data from your marketing partner, lookalike audiences, if you have any, you know, kind of investor base or small investor base in the company kind of looking at and profiling off that.

 

Ryan Frank  09:12

And really to answer Peter’s question, you know, if it’s a real estate deal, do they have to show interest in real estate? If it’s a biotech? Are you targeting doctors, you know, that type of thing? Absolutely. If you can layer in, you know, income if you could layer into a profile of an accredited investor, and then also tie in an interest into that particular offering, be it real estate, biotech, what have you. That’s always a plus. But I think at the end of the day, too, we still see a lot of non-industry-specific targets work well for these. So some accredited investors are going to be you know, investing across all sorts of different spaces. So we do a bit of both at the end of the day, we try to layer in accredited, you know, kind of profile with the industry that’s relevant to that particular issuer. But then also, we just target accredited as well, it’s usually a mix of both.

 

Peter Daneyko  10:05

So what I’m hearing I think I’m gonna segue to Andrew here is, over the years both your firms, you guys spent a lot of time nurturing and building an audience that you can repurpose on behalf of your clients going forward. Would that be correct, Andrew?

 

Andrew Corn  10:25

No, it would not. We never use data from one client to another client, it’s an ever all that data in our view is owned by the client. What we have invested a lot of time and effort in is building our own data that’s exclusive to our agency that’s not going to be found on Facebook, or through Google or any other major publisher. And it basically comes down to match rate. We have about 800,000 doctors and dentists, just to kind of play on what Ryan was saying. But that data is ours. That’s not our clients.

 

Andrew Corn  11:05

Maybe use it on on behalf of certain clients when that fit is right. Also, we don’t use any lookalike audiences. When doing RegD. We use lookalike audiences extensively in RegA+. But even when I say extensively, we’re using it at the thinnest possible places, meaning you can just do a full lookalike. Or you can do 90%, 80%, we will do 1% or 2%. Maybe 3%, but even that’s a big stretch. But for us, also, especially in real estate, we will look to get our issuer on a custodial platform. Because we can identify every single financial advisor who has a custodial relationship with that platform, and then we can solicit them, they can then determine who is qualified for it.

 

Andrew Corn  12:03

And a lot of the rules go away, because the advisor is the one bringing in their clients, they’ll frequently do an SPV, they’ll put 10-15 clients in it, and boom, they’re in. And it’s one very large allocation. Similarly, we’ll go after endowments, and foundations and public funds. And occasionally, Taft-Hartley, if it makes sense. And again, we’ll use different marketing techniques to get to them and their consultants.

 

Andrew Corn  12:33

So you know, going after a family office is very different than going after an accredited investor. And then last is what’s the minimum investment on a RegD might be 50, it might be 100, it might be 250. Even at 100, you’re not talking to accredited investors anymore, because you know, the definition is so low, someone has got $100,000 to put in a deal with people they’ve never met before. They need to be qualified, and I am a qualified investor. And, you know, I know what I put money in and what I don’t put money in. And there are lots of people who don’t think the way I do when it comes to investing, which is fine. So, you know, like I said, on our last session, you need to be prepared for all schools of thought.

 

Peter Daneyko  13:22

So what I’m hearing from both you is it sounds like even within the RegD and accredited and accredited investor is not the same, based on the offering, size of the offering is a big indicator. So maybe talk about that or share some types of offerings that you guys have have worked with, that says, okay, I’m working with something a minimum offering of I don’t know, you guys can tell me of minimums, what are the minimums and what’s a small RegD, a big RegD? Turnover to you, Ryan?

 

Ryan Frank  13:54

Yeah, I will throw it out, and I think that inserting kind of last comment. I mean, you look at you’ve got two firms here doing the same thing, and probably taking slightly different approaches, you know, which is very interesting. We do a lot with lookalike audiences, even on the RegD side and see success there. But you know, it’s so it’s interesting, there’s no one, I think, one path to get there, I’ll throw out something more specific to kind of our strategy. You know, typically, when we’re going out and doing general solicitation, we want to see a minimum somewhere in the 10k to 25k range for a RegD.

 

Ryan Frank  14:25

And so we try to go, honestly, for a little bit of a smaller minimum, we find you know, and again, it’s it’s true, you’re looking at are you targeting individual accredited family office institutions, you can bring all of them in, but I’m kind of speaking more in the context here of an individual accredited for this purpose. So we like to not set that minimum too high. Once you get into you know, kind of to to Andrew’s point there. Once you get into 50, 100. It becomes a little bit of a different animal.

 

Ryan Frank  14:25

And typically what we find successful is let’s get somebody who’s interested, who’s qualified, maybe they’re qualified doing, you know, or they have the money to invest way more than 10 or 25 grand, right? But they’re interested, they see the offering, they’re interested, they think, hey, let me let me come, I’ll put 10k in it and take a punt at it right? Then they’re on the list. And then really, we segment out the list of who’s invested from who’s still, you know, who are still prospects, and really focusing on those who invested, they continue to tell the story and try to get them to add to the position and we see that happen all the time. They come in small, they get on the list, they get some communication, they attend a webinar, or what have you. And then they come in for a bigger amount. And so we kind of, you know, we take that approach. And again, that’s more specific to individual credits.

 

Peter Daneyko  15:37

And Andrew?

 

Andrew Corn  15:38

Yes, so it has a lot to do with what the goal is. So I’m going to agree quite a bit with Ryan here of but starting with is it $100 million raise or a $500 million raise, because we’ll approach them very differently. And we’ll look at who the audience should be and why because, you know, I agree, if you’re going after smaller accredited investors, $10,000 is a good place to start and then you can always raise the minimum later. But you know, you’d need you do the math on that, and to 500 million, you’re not going to get there, like ever. So well…

 

Peter Daneyko  16:15

You’re also going to cross over your, your 2000 individual investor threshold, aren’t you?

 

Andrew Corn  16:21

Yes, you absolutely will. So, you know, each one of these things is a factor in what we’re doing. And when I talked about quickly the SPV and getting a bunch of people to pool their money, who may or may not know each other, but doing it through financial advisor is a really good way to go. But then the issuer needs a custodial relation relationship with someone like a fidelity or Schwab or an LPL. So we do a ton of marketing, my firm also markets ETFs, and hedge funds and other things. As a former portfolio manager, I just know that world super well. So we’ll look at it and you know, what does it take to get research written by a brokerage firm, etc, if you’re already on their platform. So it’s a whole different thing than doing advertising aimed at individuals.

 

Andrew Corn  17:20

But you definitely want to push the demand into the person who wouldn’t be making that decision or recommending it for their clients. And then moving up to institutions, same thing, you have to go after their consultants, not just after that, and those are much longer timeframes, the bigger the check, the longer the relationship generally has to be. You know, in February, we had a massive number of people reinvesting some of them in the hundreds of dollars, some of them in the 10s of 1000s of dollars. And it’s all good, because the cost of acquisition was next to nothing on that new money, because they were already in, you know, playing on what Ryan was saying.

 

Andrew Corn  18:01

So, you know, every circumstance is unique. And then I want to toss in, are you in the summer? Are you in the fall, are you in the winter, because, frankly, every three or four months, since 2020, the market has changed, at least from our perspective, every three to six months, we’re looking at whatever we did needs to evolve, or radically change. And 2022, we added more new tactics than any three years before that. So you know, it’s just a very evolving world and what we do, which is one of the things that we thrive on, I’m betting that Ryan and his team thrives on as well.

 

Ryan Frank  18:46

Yeah, and I would echo that, and I would say we prior to, you know, 2020, we probably had more consistent ad spend throughout the year, and certainly that’s changed, and it’s more kind of, you know, hitting it when it’s hot, pulling back when it’s not and really respecting that.

 

Peter Daneyko  19:05

You guys both touched on seasonality. Did I freeze?

 

Andrew Corn  19:10

Your back, we heard you.

 

Peter Daneyko  19:12

There we go. You touched on seasonality? Is there times of year better or worse? Going into tax season, pre-december? Does that have any impact from the accredited investor on your RegD?

 

Ryan Frank  19:27

Yeah, I mean, I’ll say from my standpoint, it certainly does. And so I mean, you’ve got the basics, such as timing, holidays, and things like that. But also throw it out. I mean, this is kind of come back to the real estate focus. We find a lot of scenarios where you know, let’s say non-real-estate deals where we’re pulling back a little bit around the holidays and kind of saving that spend up for coming out of the holidays and the first in the new year. I tend to see in real estate deal, there’s more money moving around at the end of the year. I don’t know if Andrew if that’s something you’ve seen, but I that’s something we definitely noticed, we tend to pull back, I would say a little less on real estate towards the end of the year than we would other types of deals.

 

Andrew Corn  20:09

So I’m gonna agree with that. The cost per click goes up in December, because you know, you’re competing with every holiday present out there. And then I’m going to share a personal thing, I have two daughters. And for the holiday season, I bought each of them shares in real estate, through RegA+, so you know, an unusual holiday gift, perhaps, but one that will pay dividends for years, not just figuratively, but literally, and also hopefully teach them more about investing.

 

Andrew Corn  20:47

So we saw this December some surges in real estate investing. And, you know, when you’re looking at qualified opportunity zones versus not, you know, every day is IRA season, every day its come April 16, you’re just in the next season. And I recently read an article on that’s actually the day you should make your next IRA investment so that you’re gaining even more time on it and getting more of the power of compounding over time. So But getting back to the original thing, you know, around July 4, we might pull back. But it’s a test, measure, refine, optimize thing, if we see like this past December, normally, we’re just pulling back and we’re gonna take, you know, week or so off. No, not this year, this year was incredible. And we did not see a pullback. So.

 

Peter Daneyko  21:47

So it’s sounds like things are constantly changing…types of marketing that the both of your firms are doing. I heard references to click-through ads, I hear references to social media ads, references to existing databases. All of the above, what are you pulling back from, what are you putting more energy into? Andrew, last conversation we had, you’re talking about even TikTok was an interesting channel, which surprised me! I don’t know if that affects the RegD space as much as maybe the other spaces but let’s just go through kind of a lot kind of a list of the different marketing channels that both are using.

 

Andrew Corn  22:31

So this is going to sound odd, but we have found even professional investors that many of them are also people. And if they’re people, odds are they have TikTok on their phone. And if not, they’re looking at reels on Instagram and on Facebook and other places. So the concept of TikTok needs to be taken very seriously and embraced even if you’re not spending paid media dollars on TikTok, which we have not for a RegD. But using the mindset of you know, showing them a short piece to get them really interested so that they come in and do more diligence so that they can then make an investment. That’s not gone away. But I also want to toss out that what we do for multifamily is different than hospitality than is different for a medical REIT, which is different than self-storage or office space and, you know, single family homes for rent, they all need to be treated differently. And that has a lot to do with storytelling, media, buying and who our audience is because not all real estate is equal.

 

Andrew Corn  22:36

Well, well, let’s explore that a bit because I’m going to be somewhat naive from this perspective to say okay, an accredited investor is somebody that qualifies, but you’re gonna market to those accredited investors differently between like you said, multifamily, single family, medical REITs, Real Estate REIT. Expand on that a little bit.

 

Andrew Corn  24:13

Sure. So one of the big questions that we ask an issuer is I invest on March 1, when I received my first dividend, it’s let’s say it’s quarterly in RegD. So it’s quarterly does that mean okay, so March 1, I have till the end of March and then I’ve got the next quarter, I’m gonna get something on July 1. It’ll be well we’re not really ready and this really affects who you’re going to market to because depending upon age, and where they are socio-economically, because, you know, you read in the papers people making $300,000 a year are living paycheck to paycheck. So they’re just living at a very different level than someone earning a $10 thou, so, you know, how fast are they going to start seeing income? You know, we’ve had land deals where you know, the returns are going to be much higher, but there’s absolutely no payout in the first few years. And they’re longer deals. So all of those things make a difference to who we’re going to go after based on what we think they’re looking for.

 

Peter Daneyko  25:18

Now makes sense when you put it that way. Ryan, your your take on that?

 

Ryan Frank  25:24

No, yeah, I would agree with that, I think. You know, and I’ll just kind of layer this on to it, you know, it’s a little bit easy, you know, it’s a little bit more straightforward, if it’s a real estate, deal with them dividends, but I would say just generally speaking, you know, we’re trying to work on deals where there is that path, you know, and there is timetables like path to liquidity, timetables, if it’s dividends, they’re on schedules, things like that, you know, that is critical. And I would echo Andrew statement to say that, yeah, somebody that that’s, you know, looking for an investment opportunity for quarterly dividends or something like that, versus somebody that’s going to make maybe an equity investment, and, you know, the company behind the fund or just an equity investment in a company that might have a multi-year, you know, timeline to liquidity, it’s going to be a different person often, right?

 

Peter Daneyko  26:11

That makes good sense. I mean, as far as the conversation goes, you just brought up funds, for example, on RegDs, different investor, different type of appetite, I guess it depends on the nature of the fund, maybe you guys can give me some insight on that.

 

Ryan Frank  26:27

Yeah, I’ll throw out, so funds on a RegD standpoint, become very challenging, because I think, you know, a lot of funds are held to a 99 investor limit, I think there’s certain scenarios where that number can be 250. But when you’re doing a RegD fund, that is an inherent challenge that you’re up against with a lower investor count limitation. And there’s different things you can do maybe that you’re launching multiple funds, with slightly different portfolio mixes, slightly different strategies, and then you can do multiple of them but, you know, that becomes a real big challenge. You know, and I don’t know, Andrew, if there’s any thoughts you have, but that’s, you know, that’s certainly something we run into, we’ve worked some scenarios, like I just mentioned, and kind of made things work, oftentimes, but you know, sometimes for RegD funds, that’s a bit of a deal breaker and kind of go in the general solicitation route.

 

Andrew Corn  27:25

Yes. So it all has to do with where are they going to max out and what’s that going to look like? So, that will then determine the audience also, because, you know, if you have a $10,000 minimum, and it’s a 2000 person max., you’re still only a 20 million, might as well do a RegA and you can go to 75. So, and you can file for 75, and only raise 20, or raise 23, because with a little momentum, it just came in like that.

 

Andrew Corn  27:55

So, you know, getting in on the structure early, I think it’s very important for issuers to talk to their marketing firm, and really have them as a partner. You know, it’s really nice to hear the in-depth knowledge that Ryan has of the market and understanding these structures, because it’s part of what a good marketing firm has to do. So, you know, it’s something that we are super involved with. And anyway, so the institutional route, when you’re, when you’re doing a half a billion or a billion dollar raise, you’re going more institution, but we’ve also done it through financial advisors. So, you know, we’re it’s still basically a retail thing, but from a compliance standpoint, you’re only soliciting advisors. So that’s minimal.

 

Peter Daneyko  28:52

When you’re doing that type of marketing. What is the approach in that? I mean, you’re going after significant large dollars, you said, you’re not just going to the institution there. What’s the approach on that? How did how do you tackle that? I mean, this isn’t obviously, emails in the webs a little bit differently. I mean, this is, you know, there’s…

 

Andrew Corn  29:13

Yes, and now you’re talking about a group of people who are very hard to solicit, they don’t click a lot of ads, they don’t open emails from strangers, they don’t have time for any of it. So we need to partner with an issuer who’s got a good sales team and understands this audience and how to speak to them. So we need to arm them and prep them if that we can get them in front of someone that they have a high probability of closing. So what we ended up doing is that we use a lot of different tools and tactics to measure behavior. So we will not have 5000 financial advisors pick up the phone and call the issuer and say hey, send one of your salespeople over. Because we’re really interested, we want to gather a ton of our clients together and pull their assets in the, you know, one slot on your cap table doesn’t work like that, although some will, which is kind of shocking to me, but some will.

 

Andrew Corn  30:17

But we can, out of the 200,000 advisors in this country who would be able to do that, we probably can identify 5000 of them, who have engaged in a manner with your very sophisticated campaign that we know they’re truly thinking that they are interested in allocating. Same thing goes with pension consultants. And it’s a very similar playbook, just extremely different content, because they are operating at a totally different level. Now I write for WealthManagement.com and Investment News, which are both aimed at advisors.

 

Andrew Corn  31:00

And I’ve thought about, you know, my firm design, pension and investment ages website. So you know, we’re really tied into these markets. But not every issue is ready for them. I love it. When someone calls me and they’ve done, I bought 10 buildings and turn them around, it was value add deals, they were multifamily, they’re all really successful. And now they want to raise 200 million. It’s like, no, because you’ve never actually done a fund, you don’t have an auditor to track record in a multifaceted portfolio, it can’t be done, can’t be done with us, it can be done with someone else potentially, or they can do the hard groundwork themselves. So there’s a lot of suitability to make sure that there’s an audience funder, audience, issuer fit.

 

Peter Daneyko  31:54

I mean, you just hit on something, and I really appreciate the context that you’d given there, when it comes to what’s a good fit for you. And I think any good agency and firm, you stay in your lanes to a degree or you’re focused on your specialty, so you’re gonna have the highest success factors. And nobody wants to work, you know, 90 hours a week, just taking on business for the sake of taking on business. So I certainly appreciate that comment there. What do you guys not like to do in the RegD space? This is more of a personal side of it in this session, but it gives some, I think, flavor to the audience. You said, we do these kinds of Reg, what do you what do you never want to touch?

 

Ryan Frank  32:35

Yeah, I’ll, I’ll start here. So I think, you know, for us looking at these, you know, we kind of take this model, if we’ve got 10, or 20 issuers that reach out, it might be one or two, to where when we have conversations with them, all the pieces that are there. And I’ll kind of go back to an example that Andrew mentioned there, the kind of sales/investor relations side of it, I’ll use that term a little bit interchangeably. Even taking that away from you know, large advisors and things like that, even when you’re working with an individual accredited, you’ve seen these issuers still have to have good sales/investor relations teams at the end of the day. And you run into a lot of compliance issues there. So it’s, it’s knowing that balance of as a marketing partner, and typically marketing partners are not going to be broker-dealers as well, right, coming into this.

 

Ryan Frank  33:29

How, you know, how far can you take that ball before you have to pass it off to usually somebody that is employed by the issuer that can have a conversation, convince somebody to invest, what have you, right, working under the issuer exemption. So I’ll just say for us, like we create that whole kind of marketing and sales funnel tying into kind of the sales and IR funnel, a lot of that crosses over and we do a lot of things that are you know, a lot of people look at, you know, marketing emails and offerings like this, and they think, oh, we’re sending emails out to prospects and investors. Absolutely. What about using those same emails internally? So for example, you’ve got you know, somebody from your IR team has the issue or you know, single person that you’ve assigned as  heading up IR they’re trying to get a hot prospect on the phone maybe they had a good initial call and person sounded like they were going to invest in that person ghosts them right and they’re not hearing anything.

 

Ryan Frank  34:26

Well, you can use your you know, marketing automation CRM platform to then tell you hey, when does that person, when did they click on one of our emails? Or when did they visit our offering page because as soon as they do, let’s fire a notification off to the head of IR that was working, whoever is responsible for working that deal and let them know they’re engaged right now, right now might be a good time to call them right? So things like that, I went a little bit of a rabbit hole there but you know, IR becomes a challenge and finding companies, at least from our perspective, finding companies that are able to manage and handle IR in a compliant manner, can become difficult.

 

Ryan Frank  35:03

And it’s a you know, I always put it out up front, this is a big commitment. You’re signing up for as an issuer, this is not a small commitment. Either you’re managing that internally, right? As the issuer and that’s typically where we see that working West. Technically, you could bring in a broker-dealer, most broker-dealers don’t want to be involved with that type of thing, right? They’re just, that’s just not up their wheelhouse. So I throw that out, that’s, that becomes a challenge that usually that, you know, I’ve seen that become a sticking point many times in deals, right, where that that IR support doesn’t meet the amount of lead flow coming in, or, you know, just what’s needed?

 

Peter Daneyko  35:38

Well, you hit on something that is so, so important from a compliance perspective. And what I’m hearing here is, and I know that I’m gonna hand this over to Andrew, because I know that I’ve seen Andrew do this, where some of his clients that might not have been a RegA specific, but I’ve noticed on some offerings that are using our technology, and Andrew happens to be the guy behind making the race happen, whereby the, the offering page, or the landing page is, is saying you click on the INVEST button, but you got an option, you want to talk to somebody first, is nurturing that client, and that individual must reside within the company. And I think that becomes absolutely critical here, because I want to ask the question of what some are saying is operations that are being somewhat untoward, with call centers that aren’t necessarily licensed to do so. Andrew, takeaway on that comment there?

 

Andrew Corn  36:37

Yeah. So first, first, I want to say I want to answer your first question. And all I’m gonna do is point to Ryan and say what he said, because it looks like we both been around the block. And both had been gotten some bumps and bruises, I’m just going to add to that is we only want issuers with the wherewithal for the long haul. It’s a commitment both in time, but also in money. We’ve had offerings, which I have said, I’ve looked the client in the eye and said, I am more than just confident, I can’t guarantee you anything. But I can tell you from my 6223 years of doing this, that this is going to work, it just might take longer.

 

Andrew Corn  37:22

And take longer also means more media dollars spent and more months paying us. And that’s unfortunate. But at the end of the rainbow is not only bringing in all the cash, it’s probably doing it at the cost of capital that we talked about in the very beginning, it just took longer for that tipping point to happen. And that’s really hard for an issuer to swallow. So they need to be committed to us, we’re in this for the long haul. Because the other big thing is that when we’re done, that next day, we’re ready to do it again, but we’re not starting at the beginning, we’re starting already sprinting, and using that data all over and using everything we’ve learned about positioning and messaging and what is compelling and what is driving people. It’s so exciting for us. And by then with a good relationship, it’s really exciting for the issuer as well. And then we can raise the bar and go for even more money the next time. So…

 

Peter Daneyko  38:24

If you’re gonna graph that out, because we’ve, I’ve heard that comment, a lot of going, okay, I’m starting this journey, and it’s three months in. Do you have any metrics or any data that says on average that says, okay, in a 12-month cycle, I’m gonna get X percent of my raise from month six? Is it? Is it an exponential component because of the early marketing efforts? And is there to give comfort to that issuer, or that says, I’m three months in? Looks like we got a lot of activity. We’re following your nurturing mechanism? Is it month four? Is it month five? Is there? Is there any algorithms for that?

 

Andrew Corn  39:07

We need to hold hands and have some faith at that point, and I have seen it take longer and shorter. And some of it is we really just nailed it on one item with an audience, a custom audience or a specific message, or it was an event. Some of it is is what’s going on in the world and it just made it so that took off or made it something different. It didn’t, I mean, in March 2020 no one was going to listen to anything dealing with equity crowdfunding, but by the end of June, it was like shooting fish in a barrel. And a year later, it wasn’t. So, so many of these factors go in it, but when you have a good issuer with so what were the can for as an issuer, when they’ve made a promise, we’re going to give a preferred return of this, we hope to beat it, there’s going to be growth on the back end.

 

Andrew Corn  40:07

If we really believe and they believe they’re going to do that, it’s going to be a successful offering, it just might take longer, which means more upfront dollars before they’ve recouped, it’s a hard thing. This is extremely hard work. But it’s not, it’s not exponential, it’s more geometric. And I describe it like a snowball, it’s really small in the beginning, it’s got to toil an awful lot of times before it starts getting bigger. But once it’s big, every time it rolls, it just took on an awful lot of snow. And the money comes in like that, which is why we love serial issuers, we’re going to do it more than once. Because we’ve already killed ourselves as a team, the issuer and us, to get to the point where we have the whole snowball. Now let’s make it a snowman.

 

Peter Daneyko  41:02

I love the snowball analogy. And then each issuance is adding little balls to the top of it until you need to you have a big base again, like that. I like that a lot.

 

Ryan Frank  41:13

Hey, I’ll throw out two real quick that like, you know, trying to find some early wins to help whether some of those early storms, let’s try to focus on bringing in maybe some, maybe there’s some smaller accredited investors, things like that. But let’s, let’s try to prove out the model that the lead quality’s there that we can convert them like, you know, it may not be what they want early on, but let’s find some some ways to have small wins and weather that storm through the early stages. And I might throw out too before for Peter, I don’t think we’ve said one thing about RegS and we might be coming in closing.

 

Peter Daneyko  41:45

Go ahead, Andrew!

 

Peter Daneyko  41:45

I was just, I was just looking at the notes. So one of the topics that we had with, okay, we’ve got RegD, we know what it is, it’s for that accredited investors, up to 2000 within the US. And then we have a RegS. From a technology perspective, we’ve done a number, where we were doing the Invest tech for RegDs and RegSs simultaneously. There’s legal requirements and guidelines around those. I’m going to ask either one of you to jump in and maybe give me some of those from a marketing perspective and from a structure perspective, the good, the bad, the different and what your experiences with RegD and RegS is perhaps from a definition on the RegS first.

 

Peter Daneyko  41:46

No, no, no, no, no, you should go first.

 

Ryan Frank  41:48

Okay, so, you know, I’ll throw out one thing. So you know, and for everyone just kind of taking it. So typically, you’re seeing issuers pair a RegD 506 C general solution, they’re US accredit investors with a RegS, which then allows you to bring in international investors, those international investors, there are some, you know, there are some some legal considerations with which jurisdictions you’re going after, and are there local, you know, laws that they have that may, you know, tie in here, but let’s we’ll take that out of the mix for a moment, we could go down a rabbit hole there. International investors certainly don’t have to meet the US accredited definition. But when you’re pairing a RegD/RegS offering, typically your RegS offering is going to have the same terms often as your RegD. So you can’t just go after anyone internationally, right? You’ve got to go after somebody internationally, that’s going to be able to at least meet the minimum investment and things like that.

 

Ryan Frank  43:28

So you do have to be thinking, even though they don’t have to meet accredited definition, you’ve got to be thinking in similar terms when you’re targeting a lot of these folks, because you have to get hit folks with the, you know, similar types of wealth level. And the only other thing I’ll throw out not to get into kind of a technical rabbit hole. But when you’re executing a RegD and RegS, there’s very specific ways you need to do that. So for example, and again, I’ll kind of go with more of the more conservative legal advice I’ve got, I’ve gotten on this, but like, you don’t want a US accredited investor that’s maybe looking at the RegS, you don’t even want them to know RegS exists.

 

Ryan Frank  44:06

And so what you’re talking about there is that you’re running, you’re leveraging a lot of the same assets, but you’re running two separate campaigns in parallel. Typically, we’re talking two versions of the offering page, two versions of pitch decks. Again, a lot of the contents are the same, but it’s really segmented. And then even from a portal standpoint, like KoreConX, you’ve got to geoblock, you know, people from one side being able to access the other. And so I just, you know, not to go into too much of a rabbit hole, but I’ll say this. I’ve seen a lot of people that really don’t understand the compliance piece of running a RegD and RegS in parallel.

 

Ryan Frank  44:42

I’ve seen large funding portals that don’t understand it and couldn’t support you know, things certainly I’m not talking about KoreConX but you know, I’ve just seen a lot of people that don’t understand it. And I would say if you as an issuer, really make sure if you’re running those in parallel that your marketing partner and the funding portal don’t really understand how to execute RegD, RegS in parallel and understand that the compliance considerations because it’d be really easy for an issuer to go hire a marketing firm that doesn’t understand that, and then you’re doing a whole lot of stuff that is nowhere near compliant. So I’ll shut up now. But that was, you know, just…

 

Peter Daneyko  45:17

If I hear what if I hear one more time people go, Peter, we want to do this, whatever, whatever they want to do, because I see it over there. I mean, I don’t have any hairs that is, but I pulled the last hair out I go, just because they’re doing it over there doesn’t mean it’s compliant. So I’ll turn it over to you, Andrew.

 

Andrew Corn  45:35

Yeah, it’s, it’s fascinating, because we’ve been forced to even just block our sites from non-US traffic. And I’ve got an employee in Africa, I’ve got an employee in Dublin. And, you know, it’s like, oh, they can’t see the live site? Well, that’s a real, real, real difficult thing. And there’s some intranet and FTP. And there’s all sorts of ways of getting around that. But it’s not just that you need to run them in parallel. But is the jurisdiction you’re going after not just compliant? But do they speak English? Do you have to translate everything, and then you need a broker-dealer in that jurisdiction as well. So there’s so many complexities to it, it’s easy to take a non-US, a single non-US resident into a RegD.

 

Andrew Corn  46:33

But if you’re really going to go out and solicit, that’s a whole another ballgame and a whole another campaign. But I’m just laughing because we run into this even just internally, because we’re not all in the US. And we found out recently, oh, well, yeah, we had someone in the Virgin Islands for a little while the US Virgin Islands, they can’t see it either. Because that’s not considered. It’s not one of the states, it’s a territory, and we have a full-time person in Puerto Rico. Also, ton of people have gone there for the tax jurisdiction, and the weather. And it’s just fascinating. And then KoreConX won’t even allow us to share data with those people. Because they’re not in the continental US. They won’t even send the daily reports to them, even though it’s got no security number, no, nothing. But KoreConX is just like, nope, walls closed.

 

Peter Daneyko  47:30

Hey, you brought it you brought up something, a friction point when you talk about the data capture that we need to do upfront when it comes to the investment. And this is the tech side. So we know that as an accredited investor, they need to validate their accreditation. And I think there’s I want overstep my legal skis, nine potential added stations associated, I think that’s we put on our best tech, where it says, Hey, I got a letter from my lawyer, my accountant, my authorized financial A, B, or C. And that in the way that we work from a tech perspective, is to try to take out friction so that investor, okay, I’m making a commitment to the investment. I’m not approved yet. But I clicked on the box that says, I’m gonna get a letter from my lawyer.

 

Peter Daneyko  48:14

Now somebody has to collect that later on. Within the platform that the insider, the issuer, or a broker-dealer logs in and says, hey, I need to make sure that, that I’m going to get that documentation from Peter. But I’m nine tenths of the journey there, I’ve made my $50,000 investment. And, and, geez, you’re not going to let me have what I wanted to invest in until like, I do something on your behalf. I get issuers that say, can you turn off social security numbers, because it’s a friction point, I don’t want to do any anti-money.

 

Peter Daneyko  48:49

You know, we’ll deal with the anti money laundering from a tech perspective, we can do it all and from a legal perspective, you’re, you’re doing a RegD and you’re the issuer? We are the technology trying to facilitate and assist you with visibility to the audience. What’s your take, and what’s your experience? Do you get as far as I mean, you’re accountable. I mean, the issuer or many, many higher broker-dealer as far as the management of compliance perspective, what percentage of your issuers do it in house, maybe they’ve got an compliance offer versus utilizing a broker-dealer in that regard to assist them with with compliance.

 

Andrew Corn  49:30

I’m going to jump in because it’s quick. We very rarely will work for an issuer without a BD.

 

Peter Daneyko  49:36

Okay.

 

Ryan Frank  49:38

Yeah, I’m seeing more I’ll say this. I’m seeing more issuers opt to not use a BD on say, a RegD. But typically, those are issuers with who have done a RegA maybe done. They’ve used multiple regulatory pathways and it’s not their first rodeo. It’s a like a first time issuer on a RegD without a BD support. I can Be a little hairy and questionable, sometimes, I’ll throw out just, you know, and I’m speaking more of individual accredited investors, the documentation thing becomes a rub, right?

 

Ryan Frank  50:12

Nobody wants to take the time to go get the CPA letter and all this right, like, that just becomes a challenge with any RegD offering at the end of the day. And I would say, you know, just to be thinking about it from a couple of perspectives. Number one is, you know, making in KoreConX does a good job of like, you know, not saying that, yes, you’re gonna need this, but like, you can keep going through the process and provide it later. So you want to make sure that like, technically, you’re not putting that as a hurdle, right?

 

Ryan Frank  50:39

I mean, I think I’ve seen some platforms that you have to upload it before you complete the investment flaw and that people are going to bail out at that point, because they’re not going to have it handy, oftentimes. The other thing is, you know, there’s a next, you’ve got to expect the kind of IR side, the kind of sales IR side, this tends to be, or if it’s a BD, this tends to be the type of stuff they’re chasing down. And it’s going to be a lot of chasing down and hand holding. And that’s just a bit of the name of the game. So it’s you know, that’s the documentation is one of the least fun parts, I would say about one of these RegDs, but it’s necessary, and it just requires some some legwork to get it done.

 

Andrew Corn  51:19

And then all of a family trust or something that’s obviously going to make them accredited, it’s even harder. The lower on the food chain you get, the more arduous it is to get that paperwork done, because they’ve never done it before. Or they don’t want to reveal anything.

 

Peter Daneyko  51:37

Well, we do we do a lot of RegDs now from a tech perspective, and we evolved. So we go through all the problems and mark my words, we understand we’ve had problems, you know, and it’s to do with the asset station, it’s to do with the paperwork, it’s to do with last minute changes to subscription agreements, and all of these things come into play.

 

Peter Daneyko  51:57

So my comment is that, you know, good planning, you know, is obviously necessary upfront, and we, as a tech provider, need to continually educate ourselves and be more knowledgeable about all these regulations. Somebody has a question here, and maybe I don’t know if one of you or whether it’s, can you elaborate with my RegS ID if capable? Thanks, RegS/ID?

 

Ryan Frank  52:24

I’m not sure I’m following that one.

 

Peter Daneyko  52:25

I’m not sure either.

 

Andrew Corn  52:27

Either. We would not do a standalone RegS either. So that’s just I’ll toss that out there.

 

Ryan Frank  52:35

So I’ve never had someone request that. But yeah, I think we’ve been…

 

Peter Daneyko  52:39

Yeah, we talked about I think from a legal, require, a legal perspective, you could and the only logic I could see there is I reside in the US and I’ve got a very structured pool of investors in a specific country. And I just don’t want to fly over there. I don’t know, I’m just…

 

Andrew Corn  52:58

We’ve done an international D also. And it was not a problem. It was for a software firm, not for real estate, but it went very well. Okay,

 

Ryan Frank  53:10

I’ll throw out one thing that just came to mind on, you know, pairing, the RegD and RegS, and kind of some of the considerations there. And this is just kind of a recent, you know, memory piece. So, you know, oftentimes we’ve run into issuers where they’ve maybe they’ve done a RegA or something like that, or they’re coming into it with some sort of, you know, they’re coming into it with maybe some email list, some prospects, maybe a small investor base, that type of thing. That becomes a challenge in itself when you take on a RegD/RegS, because then you’ve got, you know, think about all your email communication, like going on what we said before, is segmented, right.

 

Ryan Frank  53:44

So, you know, I can’t tell you how many times where we get yeah, an issuer or they’ve got some lists this, that and the other, they dumped out on us. And, of course, there’s no indication of what country they came from, and things like that. So you start to run into challenges like that. And then it’s, you know, how do you deal with some of those existing assets and then start to categorize them by country? There’s a number of ways to do it, but I just throw that out there. These are, these are the types of things when you’re getting into these raises that you know, seemingly are minor, but then become a real challenge. You know, when it comes…

 

Andrew Corn  54:14

That tax are even legal in that country? Yeah.

 

Ryan Frank  54:17

Yep. You’re on mute. Peter.

 

Andrew Corn  54:21

You’re muted Peter. Peter, you’re muted. Okay, he’s doing something else. So thank you.

 

Peter Daneyko  54:32

Thank you. Thank you both. I suddenly realized that I have another meeting that had just come up and we’re past the hour, and I wanted to, I can close out you gentlemen can finish the conversation. But I really every time I meet both of you, I learned something new. I definitely know that our audience had learned a lot from today.

 

Peter Daneyko  54:54

And I think we’re just, there’s so much more so I appreciate all the viewers that we had today and by all means, reach out to Andrew Corn and Ryan Frank to get more information to learn more about their firms. You can get that information on through LinkedIn and through the tags here at the same time. There will be a recap and a posting of this video and I want to share that with you. So on that note, I have to wait six minutes, eight minutes and I’m gonna have to depart for…

 

Andrew Corn  55:25

I should have gone as well. So thank you very much!