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The importance of working with a well-experienced team for RegCF


Oscar Jofre  00:32

All right. Well, good afternoon, everyone. Once again, welcome to KoreConX summit webinar series 2021. What a week we are having we’re only day four into the new monumental day. And this discussion today is going to be a lot of fun because I think it plays well into the whole the theme of our discussion. But before we dive in, I think it’s important that you get to meet our guests. And you’ve met them before, but it always helps to understand who they are. Max, please take a moment to introduce yourself.


Max Rich 01:09

It sounds great. I’m Max Rich. I’m Republic’s Deputy General Counsel, and I serve as the chief compliance officer of Republic’s funding portal. We’re one of the larger Reg crowdfunding portals, and have been in the space since 2016.


Oscar Jofre  01:26

Jason, please. 


Jason Fishman  01:31

Absolutely. Pleasure to be here with you, Max, especially this week. Oscar, thanks for having me. Again. I’m Jason Fishman. I’m a marketer. I’ve been working on investor acquisition campaigns since 2014. With my agency DNA, first accredited investor Reg Ds, we’ve been working on Reg CF right out of the gate. So I’ve been anxiously awaiting this expansion, and began on Reg A plus campaigns in 2016, as an agency as well, over 200 campaigns to date, nine figures in funding. I’ve worked on over 12 portals, including Republic, and I’ve had Chuck on my podcast test optimized scale, big Republic fan. So again, it’s a honor to be here with you, gentlemen.


Oscar Jofre  02:16

Well, it’s great. I’m glad. Yeah, it’s gonna be fun and blood, I get mounts, I actually didn’t know if you knew Jason. So when I saw both your names together, go, this is great. East Coast, West Coast.


Max Rich 02:28

Its a smaller community than you think.


Oscar Jofre  02:31

Well, it does take a few hours to drive it. But you know, you’re right. With the internet today. It’s just one thing away. Listen, today’s just the discussion, we’re going to have just for everyone, it’s really, it’s kind of a fireside chat. Grab a cup of coffee, have a little java juice, we’re gonna have a discussion about the importance of, you know, what it means to have people that know what they’re doing. And, and I think this plays so well into what just happened a few days ago. And I think it’s going to be part of that we’re going to certainly bring that up. But let me remind everyone why we’re so excited. We’re so excited that as of Monday, March the 15th 2021, you as a company can raise up to $5 million. From the general public. I mean, this is a 5x increase from where we were before. It’s a major, it’s a monumental milestone that the industry has reached. And from here on is just as they say, it’s not smooth sailing, it’s just gonna become even more critical. So gents, today. I mean, I had one yesterday regarding Reg A. Obviously, we use the term team sport a lot in Reg A because it requires a lot of different people involved in the capital raise. But sometimes we take it for granted that sometimes in Reg CF is just purely the funding portal, maybe the lawyer and that’s it. But that’s not always the case. So I’m going to start with you, Max. I mean, tell us the first of all, your role as compliance officer and when you’re working with companies, how many other participants are you working with that are externalized to help that company achieve its goal in either getting listed, and then of course to have a successful raise?


Max Rich 04:30

Yeah, so you make a good point, which is that there’s there’s a difference between getting listed in preparing for the offering and then conducting it successfully. Um, to get listed you have to convince a funding portal such as Republic or any of our other illustrious colleagues and competitors to host your deal. Funding portals have an obligation to do an assessment for fraud and other nefarious activities. And then each has its own independent listing standards which can be there based on you know, anyone who shows up or host or some like Republic, we’re a little bit more judicious and we have objective criteria that you need to meet, to come onto our platform. But to get there, either way, you’ll need to prepare a pitch deck, a business plan, you’ll need to have some traction, you’ll need to have some trusted advisors to make the right introductions for you so that you can get connected to a platform. We do get a lot of cold inbound, but the best way to get introduced to a platform is through a warm introduction. So trusted advisors and marketing help is great. 


When you’re preparing for the offering, you will need a trusted attorney who’s done this before. I’m an attorney myself, and I’ve worked with too many attorneys who are trying to be in the space but don’t actually understand securities law. They say, Oh, I help my client with intellectual property, I can do this, or oh, you know, I’m a litigation attorney, and I met this client because they had a minor litigation, I can help them with this crowdfunding. And securities law is is like an old club. It’s not a boys club, because it’s very diverse. But it’s an old club and you, you need to be in it. And you need to be steeped in it to really understand how it works. And so it’s critical that you have an attorney working with you that actually understand securities law, because this is serious. You will also need a CPA in many situations, whether to get reviewed or audited financials. And you may need a business advisor if you’re trying to shore up your business plan or make decisions about the terms of your security. Once the offering goes live, those people are still important for keeping you compliant and helping you be ready if and when your offering ends. And you need to do continual reporting. But you do need trusted advisors to help you with the marketing for two reasons. One, marketing drives investment dollars. But two since it’s a regulated activity, you need to know how to market within the rules scope. You can’t just shout from rooftops invest in my company and out you’ll make 100x. It’s a very bad idea. So it’s so it’s important to find vendors who can provide marketing guidance and support to you that will both produce investment dollars into your offering but also not get you in trouble with a regulator during or after the offering.


Oscar Jofre  07:28

Sorry, I sometimes forget I’m still in Mute. So in you know, you you mentioned, I like the word trusted. It’s funny how we’re, the language of trust is becoming so critical in the online world. I don’t know if you caught on to that. Jason, you and I had a discussion about this. This is a, this is one of the things that I’m a big believer on I have been for the last 11 years that the the whole phenomenon of online investing does not take away from that whole component of trust. It is the essential piece. And it’s still humanly driven. Look at that. It’s still humanly driven, you can use the tools to connect that you need those connecting parts. So but thank you for those points. And lawyer auditor you, you also mentioned business advisor, we’ll get back to that. But I want to go on to you, Jason, because obviously, you’ve had the scene, both Reg A and REG CF. From your point of view outside of the activities you do, which I want you to describe as well. But what do you see the essentially the size of the team that it takes to deliver that type of offering versus a Reg CF? Because it because our companies are going to do both, and it’s very old. In my view, it’s overwhelming. But that’s just, I get to see from the outside. Interesting to hear from your point of view.


Jason Fishman  08:48

Absolutely. Absolutely. I want to get back to that trust factor. But to hop right into your question, Reg A plus reg CF campaign, just by nature, the Reg A plus team, the internal issuer team is going to be larger based on the value of the organization where they’re at. We have solopreneurs to an extent with team members who are less part of the day-to-day on Reg CF campaigns, Reg A plus usually a lot of moving departments at that point. So you have the initial team, I would say anywhere from five to 25 people and in many cases that I’m seeing I’ve seen. I’m talking to much larger organizations that are now approaching this type of a filing this type of campaign. But beyond that, you know, I’m a big fan of KoreConX community and bringing in a lot of the top service providers, that whole team bringing any resource to the table that’s going to be able to amplify what’s occurring and get to the goal. Get to a quicker I definitely support so we’ll work alongside other marketing agencies, in many cases. Many of the portals have in house marketing teams at this point, including Republic who has, you know, great marketing in house resource. Up start engine has promote different groups have in house team members who can support with these things. And I really look at the ecosystem as a collaborative versus any type of competition in that regard. So even speaking just to marketing, if there’s video groups that are coming on board, PR, various types of email newsletter providers, all of these are additional tactics, additional, you know, to use the word resources again, to get to that goal. If you look at the success rates, and Oscar, I know you guys just put out some metrics for for Reg CF. And it looks like there’s about 1000 deals, if I’m not mistaken, somewhere around 228, that raised over seven figures for the raise seven figures or more, the majority of deals are not hitting their benchmarks. So really looking to bring whatever you can to the table to get there, you know, excited to see the success rates improve over the past 12 months. 


But again, just examining the marketing side of things, we’ll generally see three or more groups involved through the duration of the filing through the 12 months. Definitely legal, different advisors working on the audit, a much more in depth audit and Reg CF, of course. So I think it’s not uncommon to see, you know, eight or more different entities collaborating on a Reg A plus. You have to look at the exact data to give you a more concise range. But just as an average looking at campaigns we’ve worked on and different pivots they’ve had to make throughout the Reg A plus process. Then in terms of what we do, and going back to trust, as a whole, as a rule of thumb, people don’t believe what they see online. So putting elements of social proof in an offering page, in the landing page that funnels into that offering statement to any marketing assets that are being used. Whether it’s paid via advertising, organic from content marketing, that are the driver. If you’re able to show case, elements of third party validation, it is typically reflected in the click through and conversion rate. If it shows publishers that have featured you different types of industry partners that serve as a vertical validation, endorsements from I don’t want to misuse the word influencers. But individuals groups with a existing, loyal, engaged audience, these all go a very long way. So you know, to do the top line of what we do, we create marketing funnels, and test traffic sources to drive in to that funnel. The funnel is designed to take audiences from awareness, consideration intent to a point of conversion to a point of investment. More importantly, below that we’re seeing second investments take place a greater and greater percentage of the time. But peer-to-peer marketing is what we’re really playing for. We want an investor to come in, participate, share with their friends, their peers, their their family, and really maximize all of these traffic sources based on that occurrence. So marketing funnels, trafficking within testing, optimizing and scaling throughout the entire process.


Oscar Jofre  14:01

And so I summarized it into three buckets, the only bucket that I added that we had not heard before, which is the one that you brought in Max, which is the business advisor. I mean, the commonalities from legal audit investor acquisition is the same in Reg A and the importance of it. You did touch on a really good point there, Max. I think it’s important for the audience to hear including my eight-month-old who’s teething in the background, you guys love them. Maximus is telling all of you listen to this part, this is the important part. I agree with everything that you have to say regarding lawyers. Unlike lawyers, and I remember when Max and I first started talking you recall years, years back and he has been a student of this industr. And because he already had the legal background, he immersed himself into it and all that and it is It becomes a different world. So you can’t just come from commercial real estate and say, oh, yeah, I can do a for C. It’s not just a form it, I want to be very clear, this becomes a critical piece. Accounting is accounting. You know, that is, I think it’s pretty great. You know, it only depends on the size of company you are. But I, I do want to emphasize on the legal Spark, because I have been recently dealing with two scenarios. I don’t know, if you run into this, Max, I’d like to hear your feedback, where we have a lawyer who runs the firm. Oh, yeah, I’m going to use Reg CF, I’m going to create my own pharmacy. Have you done it before? Oh, come on. I’m a lawyer. I should be? No, that isn’t the question. It’s not I’m not questioning your legal capabilities. And questioning whether you’ve done a form C before what the requirements are, because it does make a difference what you’re putting in. And so I’m not describing people, I think it’s important to have them as advisory, but I have I mean, I think it’s probably the most critical piece one. And I’d like to hear your feedback on it. But then I want you to also talk to me about, we’re now getting to the stage, Max, that the issuer has choices. And we we’ve always had choices. But now the choice you make on the funding portal, let’s say with all the introductions and all that, but it, it is just as important that that you pick the right portal for the right reasons for you. I’d like to hear your comments on that.


Max Rich 16:32

Yeah, that those are great points. Oscar Um, we dealt with a number of companies that were started by lawyers or have lawyers in-house. And with few exceptions, we do not let them use those people to prepare the form C. We’ve had one or two companies where they had a dedicated General Counsel, who was an actual securities lawyer by training, and we were comfortable with them doing the legal work in house, because they they truly were the full time lawyer, they had the right, they have the right stuff. But we’ve also hosted companies that were like liquor companies where the guy used to be a lawyer, and then decided he didn’t want to be a lawyer anymore. And he’s the CEO of a liquor company. And we basically said, Look, you’re not acting in an independent capacity. The point of a disclosure form is to be objective, it’s very hard to be objective, when you’re describing yourself, you should, you should find someone qualified, who’s not you to do this. So it’s not just a matter of having a lawyer that is in that has the relevant knowledge. It’s also having a lawyer that’s independent of the issuer, because someone who’s in your pocket is not going to encourage you to make the right disclosures or make the right calls on materiality, because there’s just that inherent conflict of interest. On the other end, which you said, is choosing your platform, or your portal. They’re all different, right? They have different, they have different listing standards. And they have different, they have different advantages and disadvantages. And they have different ways of going about different ways of going about their deals. We’re big proponents of the Safe. And we use custodial accounts in certain situations. And we offer real estate deals, there are other platforms that are all about issuing common stock directly to people, but having them proxy their voting and information rights to a lead investor. There are platforms dedicated solely to debt, and platforms dedicated slow solely to water. So picking you’re picking your platform is kind of like picking your college or high school, if you were lucky enough to be able to choose. You want to find the one that best aligns with your goals and your interests. And that’s both what you’re trying to offer and who you want to purchase.


Oscar Jofre  18:58

And, and that’s a, that’s a good point. Because that it’s it’s so important to look at that now, more than ever, because we’re seeing verticals, right, you’re gonna see this, where it’s a little bit different. And sometimes, like, the advice I give people, you have choices, but you have to do your homework, you need to know what, which one provides, which audience matches your opportunity. And, Jason, I’ll bring it back to you because you’re often having to do the marketing, you know, does that make a big difference? Does it matter so much about the funding portal? Let’s say I’m, you know, I have a veggie, vegetarian play, and I’m in a in a tech funding platform. Does it really matter? Or just rather curious to hear that from your perspective?


Jason Fishman  19:48

Yeah, absolutely. It’s one part of the equation. It’s not the sole factor. It’s not to say you list on one portal, your campaign is successful regardeless of the vertica. Lot of moving pieces I should emphasize before getting into it. We are unbias towards, you know which portal, an issuer should select the type of questions, the type of considerations that I hear on a daily basis consists of investor audience size, successful deal rate, and there’s all types of great platforms to look at those analytics today. Niche focus, and investors with that type of affinity. These are all part of the discussion, I of course, want to look at conversion rate. If the conversion rate if the average investment value are low, it’s going to significantly impact the returns that marketing produces. On some portals, it’s more common for these days at 250 to $500, average investment value, where it makes exponential difference if it’s 500, to 1000, really 750 to 1000 as the average investment value. Taking in account minimum level investors as well as individuals participating at 510 25, higher 1000s of dollars at a time. So these are all different components that I look at. In comparison, at times, I always recommend that issuers speak with with multiple parties. They explore, hosting it on their own platform, KoreConX with the tools that you guys have, you’re obviously able to speak to a lot of those advantages, where data can be owned. Also, you know, speaking to multiple portals, and getting an understanding of who their campaign manager mayb. What type of relationship could develop there, I’ve seen that team element between the portal play an important role as well, too. Even just pointing out the experience that a founder may have. If there is some type of gut response of hey, we’re going to get more attention over here, they talked about different types of campaigns in our vertical. And you know, going back into you know, Max was saying, for vertical focus, those are all going to be important elements of the decision process. But from there, it’s it’s it’s really more strategy than black and white concrete, hey, these portals are best for these issuers. And really what you do with it from there. It’s, it’s like setting up a website, if you’re not putting different traffic drivers in place, it’s going to get very low visibility. The the portals themselves are powerful tools to amplify any traction that’s being produced. If you’re bringing your first degree connections there, you’re bringing in prospective investors through digital marketing traffic, you could see, you know, a third half of your investments come from the portal itself, but it’s still involves a heavy, heavy effort to get that type of movement on any initiative. So yes, portal selection is important, but still comes down to the issuer at the end of the day.


Oscar Jofre  23:34

I, as you were talking, I was just thinking to myself, you know, the we’re we’re now getting more precise about what we’re looking for. We’re telling people, you know, you need your trusted advisors, you need your trusted clients, you need warm introductions, or you need your lawyer, your knee jerk auditor. Obviously, Max, I’ve got two fears recently regarding the increase, I like it, but I also see another fear because, statistically speaking. I see that the average investment for 2020 was still it was only 308 380,000, which is a significant number. There’s nothing wrong with it. And I know you guys have never been shy about the dollar amount that the company raises. But what happens when a company doesn’t have that? Are you bringing them on? Is there kind of an incubation component to it? Or are we having to rely on any or create an ecosystem to support that mechanism to bring them up here? I’m, I’m really curious about because Reg CF is the one that gets, you know, Reg A is very different. They got to come loaded or they don’t Reg CF, the whole idea was, it’s for everyone. Right? And yet, but you need to be you need to have certain things. So I’d love to hear your comments on that.


Jason Fischman 24:53

Yeah. So I would say that as the industry developed, listing standards got harder and there’s a, there’s become a more of a standard for having more developed issuers on platforms because that’s what investors are looking for, which has led to higher valuations but also higher success rates. That being said, that goes against the initial intent of right crowdfunding, which was to let any company potentially raise money from their neighbors, friends, customers, random people who believe in their mission. We are actively exploring ways to basically open that access back up in a responsible manner, possibly by making a sub platform that is specifically for very, very early stage companies that don’t meet our current listing standards. But, you know, the idea has promised the company is not run by bad actors, they’ve taken all the appropriate steps to prepare for crowdfunding. But but it is, it is, it is a problem. These the industries is slowly moving towards a more mature company audience, someone impinging it infringing on what Reg A plus used to be about, and also trying to compete with Reg D in some respects. So I think the industry as a whole needs to, you know, take a step back and just make sure that they’re not cutting out the really little guy who could maybe most benefit from this, with putting appropriate controls in place to make sure that that’s not too risky of an investment or not to improve into the decision for the investors that we, you know, provide access to.


Oscar Jofre  26:36

Yeah, it’s, you know, the way you worded it, it’s rather interesting, but it is true, I mean, my my biggest concern, I get black and white but, my biggest concern is now that has been increased to 5 million from the existing platforms. I better off going after the $5 million deal, because they, you know, there’s a it’s going to be a more mature company, at least we hope it is. And they’re going to become more prepared versus the little guy that only wanted 50,000. But we need to remember, I mean, David Weild reminds me of this. And he, he did predict this, as soon as the increase occurs. Funding portals almost become just like broker-dealers, the very people we were criticizing when the Jobs Act was coming around, the intermediaries would not take on smaller deals, because it wasn’t worth their time. And here’s the irony of this. For the very first time, broker dealers are coming to Reg CF for the very first time. And why because now a year it Reg CF is going after their sweet spot, which is the one to 5 million. And they’re you know, they will use it for the for the step up. But I’m glad to hear like for me, I can’t I to us, it doesn’t matter if it’s you’re raising 10,000 Or a billion. I mean, we’ve have we got those ranges inside. We don’t care if you got one shareholder or a million that we have that choice in between. But what What scares me is that if nobody thinks about that, and I’m glad to hear you guys are because these companies need. They that was the intent of the Jobs Act, right. And I know Jason, for you, it’s a little tough because you’re a service provider, you’re not like a funding portal where you’re going to get paid on on a commission or success base you you do need to. But are you running against that as well, where the smaller guys now come? Like I’ve had a few phone calls now with the smaller guys? The platform’s won’t take me because my, I’m just not big enough, or at least hold on a sec, I should say this. That’s the way they’re interpreted it. You know, people are right. Don’t interpret things that way. But I’d love to hear your comments on that.


Jason Fishman  28:48

Yeah, you know, there’s been different stages, we’ve seen some of the portals years back 2017 2018 take on a high volume of issuers that didn’t hit their milestones, didn’t hit their goals, had seen some investor sentiments, about the quality of these types of issuers and associating them with portals. And we’ve actually, you know, been a fan of some of these processes that have been been, that have been put into place. I look towards them when measuring success over the past 12 months past 18 months. So I can’t say that it’s entirely bad for the vertical and what I’m hearing the portal say isn’t, you know, go away as much a. Hey, if you work on these different pieces and come back, you’re more to be more successful with our investors. And that’s what they’re really encouraging is, you know, you come on to a portal you are bringing your existing clientele you have a A large enough audience that even at a small conversion rate, it’s going to be meaningful. If you’re showing, you know, 45k 100k 200k, in a quick window of time from going live the existing investors on that portal that are starting to receive emails about you and see you in more key placements on those portals sites are going to statistically invest at a higher percentage. Where we work with a variety of portals and some of them will list deals with 3,000 raised 12,000 raised and I can tell you, it’s it’s difficult, it’s an uphill battle. And it is encapsulating potentially a lack of audience a lack of audience that wants to be an owner, potentially a user owner, but an owner. So I do believe in the formulas that some of these portals are putting in place. And the these the recommendations that they provide us years to get to that point, so that they’re more successful. And as I as I’m mentioning here, as a marketer, that they are relevant, there are different factors that are in place, success is more likely achievable. You know, that being said. Yes, we’re talking about issuers who are anticipating to go live on a different platform and are later declined. And that is a tough statement. But we point right back towards those best practices and say, Hey, there’s other portals you could speak with, there’s different ways to you know, list this on your own depending on the filing. But these, these steps are still going to be important to you, if you’re going to be able to, if you put these into life, regardless of what platform you’re going to be on, you will have a higher probability of hitting your milestones. Be it 250k 500k, some of the lower increments you were mentioning their Oscar, or whether it’s the historical 1.07 to 3 million based on valuation size, or the full five, those, you know, best practices stand true.


Oscar Jofre  32:16

Yeah. And it’s, you know, you know, what I’m hearing here today, and, I mean, look, I’ve heard it bits and pieces everywhere. So you know right, you got the lawyers, or you got other people say, you know, the 5 million is for everyone. So you know, what it’s like for an intrapreneur to hear that, oh, I can go. And so you mentioned something x, and I don’t know, if you’re at liberty to talk further, I respect that. You couldn’t. But I like that idea of a sub platform. I’m cuz I’m thinking of every, you know, David, David is working, you know, David Weild, working with publicly traded company doing Spax. And, you know, not hiring him, but he’s willing to understand that this is the reason why, and he reminds me why he goes Oscar, in order for the United States to get out of debt, and the real growth in the economy is the small business. And I’m like, Why? Because it has, it has always will been, and always will be a small business. So we can’t lose it that because if you start knocking on one group you will knock off another group. And we’re back to where we were before. So am I putting you on the spot, if you can talk a little bit more about or we’ll just go into generality,


Max Rich 33:28

Just just generally, we realized that there is a, a need for smaller companies, who really just want to raise a friends and family round. And don’t necessarily even want the exposure that a platform may provide to them, which is, you know, sending them to the whole user base. But even under the way rule 506 B works, they’d be better off utilizing Reg crowdfunding, rather than having to provide, you know, audited financials to unaccredited investors. So we’re exploring ways to basically help companies do their seed rounds through Republic as kind of a sub offering without the same typical amount of promotion and with smaller offering amounts. And admittedly much smaller valuations because these would be literally brand new to incredibly early stage companies. Those that you’re investing in because you personally believe in the founder, not perhaps because they have a proven market concept, because they’re just too early But it’s still in progress. We’re, we’re also Republic works on a bunch of other things like private placements and Reg A, pluses ourselves and video game development. So we’re always balancing good ideas with the ability to execute on them.


Oscar Jofre  34:49

eUm, you know, I’m wondering how do you think incubators and accelerators or a new subgroup to help these companies but they need to understand why they’re doing it. Because like I said, I, I’ve been having these discussions a lot lately, and in people just have this perception, I’m ready to go out, just go to the platform, and then they get pushed all the way back. And, and as you said, Jason, the platform’s tell them, Okay, you may not be ready now. But where do we send them to? Where do you think, where do you just have? Like, I mean, do you have some ideas where they should be going to to help them? Because obviously, we, we now know, and I agree with you 100%. platforms need to do more than what they’ve done, just purely listening. And they need to listen to the investor base, they need to do that. But if a company has all their requirements, they should have that opportunity to live. Right. But I’m not ready yet. So where that readiness preparation, where’s that going to happen?


Jason Fishman  35:51

Sure. Preparation, I think that is definitely the title of the article can ride on this. In the sense of there are places that they can list I’m actually very intrigued, max by that element of the portal for public, I think that can be, you know, very successful. And there should be a checklist, there should be systems in terms of what to do before when to go live based on your measurements, what actually is coming to fruition. You’re not 100% sure on the filing, how I’ll be set up. But you know, leveraging test the waters looking at reservations, at what stage a deal is going to be visibly, let’s say trustable, from an audience that has never heard of the brand before. Or even just from, you know, a customer, that there should be different recommendations put in place of, hey, if you go live with, if you start promoting, I should say. With this many investors or this much already raised, if you’re leveraging these, these content channels, if you’re sending out a frequency of emails, using this type of overarching template to make sure that it’s very clear what is being presented everything compliant. Of course, and there are different marketing foundations that they can follow, I would be a larger supporter of it. And I say larger supporter, because I do believe there are smaller portals out there that may not necessarily over promise, but set the wrong expectations for what’s going to occur by listing on that platform today. And I’m referencing past conversations that we’ve had. And when we speak to them as marketers, we try to be very straightforward about what we can do what we can’t do. I’m confident that I can bring historical investment, crowdfunding audiences, historical equity, crowdfunding investors to an offering page, what they do from there, that that’s where the variable is going to lie, I can bring them back, and back and back with retargeting. Get them into different marketing funnels, that are going to add more depth to the engagement. But if they’re expecting, you know, to hit their goal, overnight, if they’re expecting to hit a larger goal and surpass that initial metric in a quick window of time, it can become a, a difficult pivot for them to really wrap their head around. So all of that to say, you know, with the right systems in place, with the right expectations, and really using the platform, as you know, the location to point to for their first degree connections, as Max was saying, Yeah, I definitely see validity to it. Just again, want to make sure the communication is there. And all parties are playing for the same actual goals, because I don’t see that to always be the case today.


Oscar Jofre  39:19

But thank you for that. And I like that preparation, Reg CF. I don’t like to toot my own horn. But it’s funny that I wrote a book equity crowdfunding one on one 6,7 years ago. And it’s still the same valid book. It’s all the same things. But we all need to be reminded of this. On how to do it. But I’m going to circle back to to max on this one. I know you can speak of your platform, and I respect that. But let me let me put it this way. Let me put it from the perspective that you weren’t doing it. Where do you think we’re, where should these companies be going to who could we be training to Start beginning those early preparations for those types of companies, because remember, we’re going to be we’re going to be scrutinized later on saying, oh, yeah, look at you guys, you guys are no different than the broker dealers, I’ll tell you, we’re there to look at that though. All it’s going to take is one journalist to talk to one little company that applied and got no assistance. So besides what you guys are doing, which is a great initiative for what could be incubators, the facility could be maybe not accelerators. But is there another form that could be that first place where they can help them with all these things that, you know, even to get to the checklist? They need to have all this?


Max Rich 40:37

Yeah, no, we’re inactive negotiation with some of the most prominent accelerators and incubators for startups to try to get them to make crowdfunding part of their curriculum, or part of their playbook. You know, the old YC playbook was get your pitch, put your name in our safe, and go talk to some rich people. We would rather say make your pitch, prepare your form, see and access the crowd to prove your to prove proof of concept. So yeah, we think that the current market participants that just use to push people towards institutional capital should be pushing them towards the crowd. And I think with the new rules going live, and the way that the industry has been on the uptake over the last five years, and the lack of fraud, and the lack of the lack of bad experiences, on the whole. It should encourage alignment. And, you know, we’re hoping to see that come to fruition pretty soon.


Oscar Jofre  41:43

Yeah, I agree with you, I think it’s going to be very, very end, it’s, I’m really excited to hear you say that because I believe that I’ve spoken to a few incubators and accelerators. I always I say, Hey, I applaud you for your success for the companies that have went to the VC route I go. So out of 100 companies you get how many make it through there, and what happens to the other ones, and the other ones just drift away. And the interesting thing is that they, they, they just need to add this to their curriculum to make sure that companies understand and to make it preparation. Jason does anything else come to mind? I mean, those are usually the obvious, but I feel like this client might not even make it through that incubator, you know what I mean, or accelerator program? You know, if I’m a dry cleaning shop, I’m just going to get, you’re not going to go to one of those things here. So where are we sending them to? I? That’s where I’ve been asked that a lot lately. I’m asking all everyone, because I’m getting that asked from, you know, I’m having discussions with regulators, I’m having discussions with, you know, the people working on JOBS Act version 4.0. And I was stumped. Actually, I really was, they go, be careful what you wish for success is there for all of you. So what happens to the little guy, and I’m like, Well, I have this got it. But they need to get to there before they’re so who’s going to help them here? Jason?


Jason Fishman  43:15

Sure. And you work with accelerators, I just lit up three-day marketing workshop with a group out of Santa Monica here last week, and we’re seeing it become a larger and larger part of the conversation. Like Max, that’s definitely something that we champion for as well, too. If there’s an anchor lead investor on the round, it’s it’s displayed on an equity crowdfunding portal, it’s very likely that with the support of different marketing channels put in place, far more can be raised, you know, in that actual sequence. So it’s something that we’re in conversations for regularly. Oscar, to your point about the smaller organizations, the smaller entities, you know, I hope it doesn’t sound like I’m coming off with a negative lens towards this. And in my past response, it’s just that those success metrics are very real to me, you know. 20 25% of these deals, hitting over seven figures. And we’ve talked about this before. And you mentioned not all of them are playing for that some of them it’s the 50s. It’s the 200 50s. But even if it’s a 50k round, just looking at a smaller increment, is not to say that it’s going to have 100% success rate. So if there’s a 20, 35% success rate for those smaller milestones, and I know there’s strategies to have a lower external goal at first surpass that and from a marketing angle, I could tell you, it’s very valuable to do so. There’s something about the visual appearance of that, and the strength and numbers that it provides. But either way, there’s there’s going to be percentage that that don’t hit their goal. And I’ll see different issuers that will list on a platform that will allow them to be there for extended periods of time. And there’s very little traction around it. I’m hearing more options for self serve models that don’t require the same type of approval processes. So wherever they go, I would want to make sure that there’s the right campaign success support, whether that’s marketing. And, you know, that’s part of why I focus on this because I feel it’s at the front line of performance on many of these deals with early stage marketing as a whole, to be clear. But particularly in investment crowdfunding, so I would just want to make sure there’s the right resources available for them. I know it becomes tougher as well. Some of the top marketing agencies in the space, as we were emerging further and further into it, let’s say in 2016, we’re starting to only focus on Reg A plus deals, they didn’t want to talk to Teg CF. And I know that’s the case for other types of service providers in the vertical as well. So if we’re now starting to talk about 50k 250k, level Reg CF ‘s, I would have some concern on how much support they would get, you know, how the number shape out there and allow for different parties to, you know, come into the team. I could definitely see the use of templates, not not to be copy pasted, but working formulas that can be leveraged for those groups to go out to their friends and family to start to market further their target audiences and also bring them in towards position towards an interest in the entity. So I definitely see ways it can be done correctly. And I would want to make sure there’s a highlight around campaign success formula.


Oscar Jofre  47:08

Okay, I yeah, I, I apologize if I focus a lot on that, in part of it. It’s just as I said, my concern is that I, I, I feel like I’m a custodian of the like all of us. So the Jobs Act, and I, I never want to lose sight of it. In fact, I got a reminder here, the JOBS Act was for everyone. And, and I always want to make sure that even the one that doesn’t know, we give them the tools, so they do know, so they can. But that’s one part of the equation. We’ve talked about getting on boarded, we talked about having the lawyers, the auditors and all that the part that we didn’t talk about in the early days of regulation CF, what happens afterwards. And this has been now we’ve all paid dearly, we’re thankful that the SEC has was grateful enough to increase the limit. But we need to, we need to be we need to applaud them. First of all, one, number two, we need to make sure that we correct what has been occurring up until now, to rectify some of these things. And the education is going to be critical during this part. We’re in Reg A it comes right at the beginning. In the end, where in Reg CF, it becomes an afterthought. And I’m referring to the role of the transfer agent. And this is I’m just saying in general, the role of the transfer agent in the many discussions we have with the issuers. It’s an afterthought no matter how many times the platform’s made have made them aware of that requirement. It was sort of like the same way. People were treating broker dealers under Reg A, and now they’re starting to realize that wait a minute, this is an important role. So Max, I mean, your firm I know you guys been there. It’s been a an interesting educational ride. And throughout it all in I know you’re providing that education. What more is is the industry do you think we need to do because I know we want the FOC to go to 20. That’s obviously the next goal to get it there. To get it there. We’re going to need to demonstrate some really good statistical information to the SEC, the annual filings proper management of the of the securities. So where do you think the education needs to happen at the portal level first, and then the issuer? Where do you see this coming from to make sure that on the post as well, that they’re there, that part of the team part comes in right away?


Max Rich 49:45

That’s a great question. So we actually already posted the first 5 million deal and it hasn’t closed yet, but it’s received more than a you know. It obviously isn’t closed yet, but we’re expecting it to. But I think in general, as I said before, this is a holistic issue. We need everyone on the same team. So the incubators, the platforms, the advisors, the lawyers, the accountants, it’s all on us to work collaboratively to do the right thing, because it just takes one mess up, or one bad actor to sour, to sour the sound of the bunch. And I think that’s one of the reasons why the SEC was comfortable expanding this registration exemption is because the first four years went so well, people were very respectful. Many service providers such as KoreConX stepped into the space and said, not only do we want to participate, but we want to thrive, and we want to encourage people to do the right thing. And many of the negative many of the negative things that people assumed would happen with right crowdfunding just never came to fruition. So my my hope, and my, my goal is that, as the industry expands, people, instead of saying, let’s take advantage of this, they say, Okay, we have our chance to make this big, let’s protect this baby. And let’s make it a normal course of business so that more people want to come and do this. And it’s a trusted source of capital for companies, and a way to diversified investments for investors.


Oscar Jofre  51:25

Whoops, I had myself on mute. I think that’s an industry all came well together. I’ve, I’m, I’m hoping that the same way, just so you know, Max, in, in the Reg A space, in even if Tom Butler a download, I think in one of the webinars, he said it, a lot of the times the fact that the transfer agent, they treated as an afterthought, but now they understand how important it is to make sure it’s part of the equation right at the beginning. And this, this comes back to a thesis that we ride. And you mentioned, Jason, thank you for your comment is that we believe in a team sport, this is crowdfunding means team. Crowdfunding doesn’t mean uno, it means mucho, lots, lots of people. And for that reason, I think we all need to play well together there is I don’t treat anybody as a competitor, there is no competition, we’re all just growing in a very large, massive amount of space. And we need to work collaboratively together. Because if we don’t, we’re going to, we’re never going to tap into the remaining 232 million Americans that we have not tapped into yet . In order, if we’re going to get access to them, which everybody we’re opening all the time, we need to keep thinking of the friction that is associated. And sometimes we need to remove ourselves from some of these parts. And I like the way everybody’s working together. Now I do see a shift, I will say this. I will say that, from the Reg from the Reg A it was always there that the broker dealer knew the role. Jason did his part, they will work collaboratively the lawyer, the auditor, everybody knew and it worked nicely, fluidly. It still had bumps don’t get me wrong. And because we now are dealing with secondary market. I mean, this is the reality now, Max, I’m bringing, this is what I’m bringing to you to all to all of us, not me, but through this is that we all do our part correctly. Jason, who just bought shares in that company that just raised 5 million on the Republic platform, can now opt to the whole period is done, and so on. And if all is there, they can have a secondary market venue where for the very first time, an investor can trade $10 That’s, I mean, that’s this is the you know, we’ve been working with this with a a registered ATS the only one of its kind to do this for at the moment. It’s the only one been FINRA approved. And to first it was $100. That was our goal. Now we brought it down to $10. That’s a game changer in our space. Because up until so now we are dealing with for Reg CF, Reg A, Reg B, all the way through for the individual investor to be able to do that and and the only way that can happen is all of us working together fluidly in thi/s. And that’s going to be the key for anybody doing and I know Jason, the a lot of the components that you provide are critical both for the primary and secondary. This is you know, people think that I only need investor acquisition for this part. I only need the funding portal to raise my money and I’m down here you’re never done. If we only needed money once we the jobs wouldn’t have been created. So clearly, we all know that it takes more than that. I’d love to get your last comments on this are obviously related to the topic at hand, which is the whole idea of working together as a team collaboratively, and then helping. So Jason first, and then I’ll go to you, Max, please.


Jason Fishman  55:14

Yeah, and as you mentioned, it’s not a finite process more of a never ending effort. I learned this, I was at a social gaming startup in 2010. And I started seeing our CEOs full time job to get out there and raise capital, and we did it successfully. I had changed up our Investor Pitch over 75 times. And then once that was complete, we’re already starting to structure discussions and framework for the next round. And we’re working on our fourth round with some issuers third round with others, who who are, you know, seeing significant returns, their organizations are growing, it is then a very, very valuable vehicle for them as a whole, and the team, the team sports has changed up for them throughout that process. They’ve found very effective, efficient team members, they found other groups that were not able to deliver for their given roles. And they’ve had to change things up, bring on additional parties to combine different types of assets in different areas. So we subscribe to ways of thinking that include, you know, always be raising, which took me a while to really get behind. But I’m seeing I’m seeing the user owner aspect of this really come to life. And as marketers, we look at that as the premium audience these days. So you know, anything we can do to make issuers more successful, whether we’re a part of them or not, we try to always contribute. That’s why we do pieces like this, and to share insights and what we’re seeing, and are very excited for the chapters ahead, based on all of the successful pieces today.


Oscar Jofre  57:11

Well said. Max.


Max Rich 57:13

So I think what’s most exciting about this is that we’re testing the waters, you’re able to start your marketing and your outreach, before you actually file the Form. C now. It really is going to change the way that companies approached this before, you had to basically be in silent mode, as you were getting ready. And then one day you file your form, see, and you premiered here out and people can learn about it. But now you can tell people with the disclaimer and use the correct methods that you’re actively considering this. And you want people to tell you if they’re interested in investing in your company, so you can decide whether to move forward. So I think testing the waters actually is just going to change everything because it’ll allow companies to self select whether or not this is a good idea. If you if you post via social media, and make a few public announcements that you want to open yourself up for investment, and people are knocking on your door, great, I’m really interested, it’s a good sign, you should you should plow ahead. But if if you make the announcement and it’s it’s an air cannon, nothing happens. No, no one is coming. People are saying why, it may be it may be a sign that you need to reassess your you know, you may need to reassess your plan. So I actually that I’m that’s what I’m most excited about, because I think it’ll help companies make a more informed decision about whether or not to utilize this registration exemption and the best method to do so.


Oscar Jofre  58:45

That’s perfect. Thank you guys. And and listen. Obviously, the journey is it just getting started for all of us. 2021 is going to be a great year, try to keep in the back of your mind why we’re all doing this all the time. I think that I I’m going to be championing for the big guy, but as well for the little guy, anything we can all do together to, to give them the tools so they can be prepared to come to us. That’s, that’s one of the things that I’ll be working on. And I love to get everybody support. I love the incubators, they’re going to do a great job, the accelerators, but I’m always thinking of the one that isn’t going even going to make it there. Right. And I know, Jason, I look I see you posting a lot of stuff for education, as well. Max, the Republic team, you’re doing a lot of webinars. I know we’re doing our part, but I almost feel like we got to keep doing more. Because I I never want that company ever to say that. I was never given a chance. You were given a chance. You just chose not to do the things. That’s a different story. Right. That’s a very different story. So thank you again to both of you. Great discussion as always. Jason having you Max. It’s good to see you. You can see as well. Yeah, and congratulate On the announcement and you got to say we say speaking great endorsement to the industry from the your backers out there. And for everyone else. Thank you so much once again, joining us on our KoreConX summer webinar series. If you want to see this webinar again, you can go to koresummit.io or a YouTube channel or KoreConX. You can see Max’s contact details and Jason and reach out to them. And anytime you need help on anything, please reach out we’re here to help you. Introduce you to the to remove the friction. Have a good afternoon a great week everyone.


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